Public Service Company; Tax

Authorizes state director of finance to allocate part of the
public service company tax revenues with the counties.  Prohibits
a county from receiving a share of these tax revenues if the
county levies a real property tax on the public service company.
(HB1514 HD1)

a                                                        99-1786
HOUSE OF REPRESENTATIVES                H.B. NO.           H.D. 1
TWENTIETH LEGISLATURE, 1999                                
STATE OF HAWAII                                            

                   A  BILL  FOR  AN  ACT



 1      SECTION 1.  Chapter 239, Hawaii Revised Statutes, was
 2 enacted to impose the public service company tax on certain
 3 public utilities in lieu of all other taxes and as a means of
 4 taxing the real property (owned by a public utility or leased to
 5 it by a lease under which the public utility is required to pay
 6 the taxes upon the property) and the personal property of the
 7 public utility.  Specifically, section 239-3, Hawaii Revised
 8 Statutes, provides that public utilities are exempt from the
 9 counties' real property taxes.  Although the public utilities do
10 not pay real property taxes, they still use many services
11 provided by the counties that are funded by the counties' real
12 property tax revenues.  The legislature finds that it would be
13 equitable for the State to share a part of the public service
14 company tax revenues with the counties to compensate them for
15 unrealized real property tax revenues without incurring
16 significant additional administrative costs and burdens.  The
17 purpose of this Act is to provide the respective counties with
18 revenues collected under the public service company tax which are
19 in lieu of real property taxes.

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Page 2                                                     1514
                                     H.B. NO.           H.D. 1

 1      SECTION 2.  Section 239-10, Hawaii Revised Statutes, is
 2 amended to read as follows:
 3      "239-10  Disposition of revenues.  (a)  All taxes collected
 4 under this chapter shall be state realizations[.]; provided that
 5 after June 30, 1999, the amount of taxes collected under section
 6 239-5(a) from levy and assessment after June 30, 1998, in excess
 7 of four per cent of a public service company's gross income shall
 8 be kept by the state director of finance in special accounts in
 9 the state treasury.  Out of these special accounts, the state
10 director of finance in carrying out this section shall deduct any
11 cost incurred by the state director of finance and then shall pay
12 the remaining balance to each county as provided in this section.
13 The payments made by the state director of finance to a county
14 shall be made within five months of the end of the applicable
15 fiscal year.
16      (b)  The director of taxation shall establish by August 1 of
17 each year that portion of taxes collected during the state fiscal
18 year under section 239-5(a) to be paid into the special accounts,
19 and the county, except for the county of Kalawao, to which the
20 taxes should be distributed.  The amount of taxes in the special
21 accounts to be paid over to each county shall be based upon the
22 proportional contribution of actual tax receipts generated under
23 this chapter within each county, taking into account a

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Page 3                                                     1514
                                     H.B. NO.           H.D. 1

 1 proportionate share of refunds to taxpayers and contingent
 2 liabilities, such as tax appeals.
 3      (c)  No county shall have the right to appeal any assessment
 4 of the public service company tax on a public utility subject to
 5 section 239-5(a), nor shall any county have any access to any tax
 6 returns or tax return information submitted to the department of
 7 taxation under this chapter.
 8      (d)  No county levying a real property tax on any person
 9 subject to taxation under section 239-5(a) shall receive any tax
10 moneys under this section.  All taxes kept in the county's
11 special account and designated as payable to the county under
12 this section shall be paid by the state director of finance to
13 the state general fund upon the date the county first levies the
14 real property tax and thereafter."
15      SECTION 3.  If any provision of this Act, or the application
16 thereof to any person or circumstance is held invalid, the
17 invalidity does not affect other provisions or applications of
18 the Act which can be given effect without the invalid provision
19 or application, and to this end the provisions of this Act are
20 severable.
21      SECTION 4.  Statutory material to be repealed is bracketed.
22 New statutory material is underscored.
23      SECTION 5.  This Act shall take effect on July 1, 1999.

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