CONFERENCE COMMITTEE REP. NO. 177-22

Honolulu, Hawaii

, 2022

RE: S.B. No. 3075

S.D. 2

H.D. 2

C.D. 1

Honorable Ronald D. Kouchi

President of the Senate

Thirty-First State Legislature

Regular Session of 2022

State of Hawaii

Honorable Scott K. Saiki

Speaker, House of Representatives

Thirty-First State Legislature

Regular Session of 2022

State of Hawaii

Sirs:

Your Committee on Conference on the disagreeing vote of the Senate to the amendments proposed by the House of Representatives in S.B. No. 3075, S.D. 2, H.D. 2, entitled:

"A BILL FOR AN ACT RELATING TO FRANCHISE TAX,"

having met, and after full and free discussion, has agreed to recommend and does recommend to the respective Houses the final passage of this bill in an amended form.

The purpose of this measure is to:

(1) Ensure that the Compliance Resolution Fund receives $2,000,000 of the revenues collected under the franchise tax for use by the Division of Financial Institutions of the Department of Commerce and Consumer Affairs;

(2) Specify that if the revenues collected are under $2,000,000, the difference is to be received from revenues collected under income tax, in an amount not to exceed $2,000,000; and

(3) Require excess revenues collected under the franchise tax to be deposited into the general fund.

Your Committee on Conference finds that existing law requires that $2,000,000 of franchise tax revenue collections be deposited with the Director of Finance to the credit of the Compliance Resolution Fund every fiscal year to be used by the Division of Financial Institutions to support its mission to effectively license, supervise, and regulate the constantly changing and complex financial institutions within its jurisdiction. However, there have been situations where the deposit of the franchise tax revenues was delayed from one fiscal year to the succeeding fiscal year, which risks interference with the Division of Financial Institution's mission and functions and can delay payments or the ability to enter into necessary contracts. This measure will resolve payment timing issues and specify the source of revenues to reach the necessary $2,000,000 to fund the Division of Financial Institutions.

Your Committee on Conference has amended this measure by:

(1) Specifying that, from the franchise tax revenues collected each fiscal year, the sum representing the first $2,000,000 of such revenues shall be deposited with the Director of Finance to the credit of the Compliance Resolution Fund before tax credits are realized;

(2) Deleting language that would have required that, in the event the revenues collected are less than $2,000,000, the difference is to be received from revenues collected under income tax, in an amount not to exceed $2,000,000; and

(3) Making it effective upon its approval, provided that it apply to taxable years beginning after December 31, 2021.

As affirmed by the record of votes of the managers of your Committee on Conference that is attached to this report, your Committee on Conference is in accord with the intent and purpose of S.B. No. 3075, S.D. 2, H.D. 2, as amended herein, and recommends that it pass Final Reading in the form attached hereto as S.B. No. 3075, S.D. 2, H.D. 2, C.D. 1.

Respectfully submitted on behalf of the managers:

ON THE PART OF THE HOUSE

ON THE PART OF THE SENATE

____________________________ AARON LING JOHANSON Co-Chair	____________________________ ROSALYN H. BAKER Chair
____________________________ CHRIS TODD Co-Chair	____________________________ MAILE S.L. SHIMABUKURO Co-Chair