STAND. COM. REP. NO. 216

Honolulu, Hawaii

RE: S.B. No. 732

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 Economic Development and Tourism, to which was referred S.B. No. 732 entitled:

"A BILL FOR AN ACT RELATING TO THE FILM INDUSTRY,"

begs leave to report as follows:

The purpose and intent of this measure is to:

(1) Require qualified production costs of a taxpayer that exceed $1,000,000 to be certified by an independent third-party certified public accountant to qualify for the Motion Picture, Digital Media, and Film Production Income Tax Credit;

(2) Increase the total amount of tax credits allowed in any given year from $50,000,000 to $60,000,000;

(3) Include broadcast and streaming platform productions as a qualified production under the tax credit; and

(4) Extend the sunset date for the tax credit to January 1, 2039.

Your Committee received testimony in support of this measure from the Department of Business, Economic Development, and Tourism; University of Hawaiʻi System; Honolulu Film Office; SAG-AFTRA Hawaii Local; IATSE Local 665; Hawaii Media Inc.; Island Film Group; Hawaii State AFL-CIO; Kamamo House; Fandoms of MagnumPI; ALA Hawaii; and one hundred seventy-eight individuals.

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

Your Committee finds that the film industry in Hawaii is an important component of a diversified economy and that its financial impact can be strengthened significantly if existing incentives for the industry are improved. Your Committee further finds that the Motion Picture, Digital Media, and Film Production Income Tax Credit has had great success in increasing state revenues and gross domestic product since its enactment. This measure increases the total industry cap for the tax credit, updates antiquated language to better address the film industry's current practices, and extends the sunset date to give certainty to project developers for long-term planning, while holding productions with qualified production costs that exceed $1,000,000 accountable by requiring verification to receive the tax credit.

Your Committee has amended this measure by:

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

(2) Making a technical, nonsubstantive amendment for the purposes of clarity and consistency.

As affirmed by the record of votes of the members of your Committee on Economic Development and Tourism that is attached to this report, your Committee is in accord with the intent and purpose of S.B. No. 732, as amended herein, and recommends that it pass Second Reading in the form attached hereto as S.B. No. 732, S.D. 1, and be referred to your Committee on Ways and Means.

Respectfully submitted on behalf of the members of the Committee on Economic Development and Tourism,

________________________________

LYNN DECOITE, Chair