STAND. COM. REP. NO. 1224

                                 Honolulu, Hawaii
                                                   , 1999

                                 RE: S.B. No. 1144
                                     S.D. 1
                                     H.D. 1




Honorable Calvin K.Y. Say
Speaker, House of Representatives
Twentieth State Legislature
Regular Session of 1999
State of Hawaii

Sir:

     Your Committee on Consumer Protection and Commerce, to which
was referred S.B. No. 1144, S.D. 1, entitled: 

     "A BILL FOR AN ACT RELATING TO FINANCIAL INSTITUTIONS,"

begs leave to report as follows:

     The purpose of this bill is to allocate a percentage of
revenues and amounts received from financial institutions under
the franchise tax law, to be credited to the Financial
Institutions Examiners' Revolving Fund (FIERF). 

     Presently, all of these funds which are collected pursuant
to chapter 241, Hawaii Revised Statutes, are deposited into the
general fund.  This measure will allow the Division of Financial
Institutions (DFI) to become self-funding.
p
     The Commissioner of Financial Institutions from the
Department of Commerce and Consumer Affairs (DCCA) and Hawaii
Bankers Association submitted testimony in support of this bill.
The Tax Foundation of Hawaii offered comments on this bill.

     Your Committee finds that this bill will move the DFI
towards full self-funding, which will give DFI the flexibility to
regulate and deal with the constantly changing and complex
financial institutions industry, without subjecting DFI to the
constraints of fluctuations in the general fund.  This insulation
from uncertainty in funding will also help to assure DFI's
accreditation by the Conference of State Banking Supervisors.

 
 
                                 STAND. COM. REP. NO. 1224
                                 Page 2

 
     Your Committee notes that this bill is similar to H.B. 1082
which was passed out of your Committee earlier this session, but
there are two substantive differences.  This Senate bill leaves
blank the allotted percentage amount to be credited to the FIERF,
while the House bill allots forty per cent of the collected
revenues to be deposited to the credit of the FIERF.  Also, this
Senate bill makes the Act effective on July 1, 1999, while the
House bill provides that the Act shall take effect retroactive to
January 1, 1999.  To facilitate further discussions, your
Committee has amended the Senate bill to replace its contents
with that of H.B. 1082.

     As affirmed by the record of votes of the members of your
Committee on Consumer Protection and Commerce that is attached to
this report, your Committee is in accord with the intent and
purpose of S.B. No. 1144, S.D. 1, as amended herein, and
recommends that it pass Second Reading in the form attached
hereto as S.B. No. 1144, S.D. 1, H.D. 1, and be referred to the
Committee on Finance.

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



                                   ______________________________
                                   RON MENOR, Chair