STAND. COM. REP. NO. 2857

Honolulu, Hawaii

RE: S.B. No. 2478

S.D. 2

Honorable Ronald D. Kouchi

President of the Senate

Thirty-First State Legislature

Regular Session of 2022

State of Hawaii

Sir:

Your Committee on Ways and Means, to which was referred S.B. No. 2478, S.D. 1, entitled:

"A BILL FOR AN ACT RELATING TO TAXATION,"

begs leave to report as follows:

The purpose and intent of this measure is to promote the development of renewable fuels production.

More specifically, this measure reinstates the renewable fuels production tax credit.

Your Committee received written comments in support of this measure from the Hawaii State Energy Office, Alliance for Automotive Innovation, Biotechnology Innovation Organization, Hawaii Clean Power Alliance, Hawaii Gas, Simonpietri Enterprises, and six individuals.

Your Committee received written comments in opposition to this measure from the Climate Protectors Hawaii, Pet Food Institute, and one individual.

Your Committee received written comments on this measure from the Department of Budget and Finance, Department of Taxation, and Tax Foundation of Hawaii.

Your Committee finds that Hawaii is vulnerable to soaring prices and disruptions of its energy imports, which can hinder, cripple, or even devastate the State's economy and the well-being of its inhabitants. As the most isolated land mass on Earth, Hawaii imports nearly ninety percent of its energy and almost one hundred percent of its transportation resources. Your Committee believes that it is critical for Hawaii to ensure greater energy security by becoming more self-sufficient in its energy and food supply.

Your Committee further finds that Act 202, Session Laws of Hawaii 2016, established a renewable fuels production tax credit for the purpose of achieving greater energy security for Hawaii. However, the tax credit was repealed on December 31, 2021.

Your Committee has amended this measure by:

(1) Changing all references to the "Department of Business, Economic Development, and Tourism" and the "Director of Business, Economic Development, and Tourism" to the "Hawaii State Energy Office" and the "Chief Energy Officer of the Hawaii State Energy Office", respectively;

(2) Extending the credit period from five years to ten years;

(3) Authorizing a taxpayer claiming the tax credit to receive a refund for excess credit amounts if the taxpayer agrees to reduce the amount of the tax credit;

(4) Changing the effective date to July 1, 2050, to facilitate further discussion on the measure; and

(5) Making technical nonsubstantive amendments for purposes of clarity, consistency, and style.

As affirmed by the record of votes of the members of your Committee on Ways and Means that is attached to this report, your Committee is in accord with the intent and purpose of S.B. No. 2478, S.D. 1, as amended herein, and recommends that it pass Third Reading in the form attached hereto as S.B. No. 2478, S.D. 2.

Respectfully submitted on behalf of the members of the Committee on Ways and Means,

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DONOVAN M. DELA CRUZ, Chair