STAND. COM. REP. NO. 169

Honolulu, Hawaii

RE: S.B. No. 697

S.D. 1

Honorable Ronald D. Kouchi

President of the Senate

Thirty-Third State Legislature

Regular Session of 2025

State of Hawaii

Sir:

Your Committee on Commerce and Consumer Protection, to which was referred S.B. No. 697 entitled:

"A BILL FOR AN ACT RELATING TO AN INCOME TAX CREDIT,"

begs leave to report as follows:

The purpose and intent of this measure is to establish a nonrefundable individual income tax credit for expenses paid to retrofit a residence with wind resistive devices.

Your Committee received testimony in support of this measure from the Department of Commerce and Consumer Affairs, Hawaiʻi Emergency Management Agency, National Association of Mutual Insurance Companies, Hawaii Insurers Council, and three individuals.

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

Your Committee finds that the State is prone to an increasing number of catastrophic weather events, including hurricanes, that may cause significant damage from high force winds. By allowing residents to offset costs to retrofit their properties with wind-resistant devices, households and communities statewide can mitigate personal risk and prevent or reduce the impacts of natural disasters, and potentially make their properties more insurable. Your Committee further finds that, while public safety is of paramount importance, ensuring proper usage of financial incentives is necessary to prevent potential abuse. Clarifying the terms of the tax credit proposed by this measure will help establish eligibility while preventing lost revenue to the State. Amendments to this measure are therefore necessary to address this concern.

Accordingly, your Committee has amended this measure by:

(1) Changing the amount of the wind resistance retrofit tax credit from the lesser of $40,000 or actual costs to an unspecified percentage of costs;

(2) Providing that no credit issued under the wind resistance retrofit tax credit may be carried forward for an unspecified number of years;

(3) Inserting a blank appropriation to the Department of Commerce and Consumer Affairs to pre-certify wind resistance retrofit tax credit claims;

(4) Changing the wind resistance retrofit tax credit to apply to taxable years beginning after December 31, 2025;

(5) Inserting a sunset date of January 1, 2028;

(6) Inserting an effective date of July 1, 2050, to encourage further discussion; and

(7) 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. 697, as amended herein, and recommends that it pass Second Reading in the form attached hereto as S.B. No. 697, 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,

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JARRETT KEOHOKALOLE, Chair