STAND. COM. REP. NO. 301

                                   Honolulu, Hawaii
                                                     , 1999

                                   RE:  S.B. No. 800
                                        S.D. 1




Honorable Norman Mizuguchi
President of the Senate
Twentieth State Legislature
Regular Session of 1999
State of Hawaii

Sir:

     Your Committee on Transportation and Intergovernmental
Affairs, to which was referred S.B. No. 800 entitled: 

     "A BILL FOR AN ACT RELATING TO TAXATION,"

begs leave to report as follows:

     The purpose of this measure is to exempt from general excise
tax the amounts received by a wastewater reclamation facility
from a county for processing and cleaning wastewater, and
returning the water to the county.

     Testimony in support of this measure was received from the
Department of Environmental Services of the City and County of
Honolulu and U.S. Filter Operating Services, Inc.  The Tax
Foundation of Hawaii submitted comments on this measure.

     Testimony in opposition to this measure was received from
the Department of Taxation.

     Your Committee finds that it is in the best interest of the
State to encourage the development of wastewater reuse projects
in the State.  The general excise tax exemption provided in this
measure will encourage further development by making the
wastewater reuse projects more cost-effective for both the
respective counties and the private entities contracted to
develop the projects.

     Your Committee has amended this measure by making technical,
nonsubstantive clarifying changes.

 
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                                   STAND. COM. REP. NO. 301
                                   Page 2



     As affirmed by the record of votes of the members of your
Committee on Transportation and Intergovernmental Affairs that is
attached to this report, your Committee is in accord with the
intent and purpose of S.B. No. 800, as amended herein, and
recommends that it pass Second Reading in the form attached
hereto as S.B. No. 800, S.D. 1, and be referred to the Committee
on Ways and Means.

                                   Respectfully submitted on
                                   behalf of the members of the
                                   Committee on Transportation
                                   and Intergovernmental Affairs,



                                   ______________________________
                                   CAL KAWAMOTO, Chair

 
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