STAND. COM. REP. NO. 2133

Honolulu, Hawaii

RE: S.B. No. 3075

S.D. 1

Honorable Ronald D. Kouchi

President of the Senate

Thirty-First State Legislature

Regular Session of 2022

State of Hawaii

Sir:

Your Committee on Commerce and Consumer Protection, to which was referred S.B. No. 3075 entitled:

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

begs leave to report as follows:

The purpose and intent of this measure is to:

(1) Clarify that the Compliance Resolution Fund is to receive $2,000,000 of the revenues collected under chapter 241, Hawaii Revised Statutes, provided that, if the revenues collected are under $2,000,000, the difference shall be funded from revenues collected under chapter 235, Hawaii Revised Statutes, not to exceed $2,000,000; and

(2) Require that the excess revenues collected under chapter 241 shall be deposited into the general fund.

Your Committee received testimony in support of this measure from the Department of Commerce and Consumer Affairs, Department of Taxation, Hawaii Financial Services Association, and Hawaii Bankers Association. Your Committee received comments on this measure from the Tax Foundation of Hawaii.

Your Committee finds that existing law requires the Department of Commerce and Consumer Affairs to receive $2,000,000 annually from taxes collected under chapter 241, Hawaii Revised Statutes. The Department of Commerce and Consumer Affairs has dedicated those funds for the use of the Division of Financial Institutions to support its purpose of effectively licensing, supervising, and regulating the financial institutions within its jurisdiction. With the recent establishment of several tax credits, revenues collected can vary significantly, sometimes resulting in a negative balance and the Department of Commerce and Consumer Affairs was not initially provided with its share of the franchise tax as established by law. This measure will ensure the certainty and timeliness of funding so that the Division of Financial Institutions may continue to carry out its purpose and functions of licensure, supervision, and examination and provide necessary consumer protections.

Your Committee has amended this measure by making technical, nonsubstantive amendments for the purposes of clarity and consistency.

As affirmed by the record of votes of the members of your Committee on Commerce and Consumer Protection that is attached to this report, your Committee is in accord with the intent and purpose of S.B. No. 3075, as amended herein, and recommends that it pass Second Reading in the form attached hereto as S.B. No. 3075, S.D. 1, and be referred to your Committee on Ways and Means.

Respectfully submitted on behalf of the members of the Committee on Commerce and Consumer Protection,

________________________________

ROSALYN H. BAKER, Chair