STAND. COM. REP. NO. 3379

                                   Honolulu, Hawaii
                                                     , 2000

                                   RE:  H.B. No. 2023
                                        H.D. 2
                                        S.D. 2




Honorable Norman Mizuguchi
President of the Senate
Twentieth State Legislature
Regular Session of 2000
State of Hawaii

Sir:

     Your Committee on Ways and Means, to which was referred H.B.
No. 2023, H.D. 2, S.D. 1, entitled: 

     "A BILL FOR AN ACT RELATING TO AGRICULTURAL INFRASTRUCTURE,"

begs leave to report as follows:

     The purpose of this bill is to provide a five-year income
tax credit for agricultural infrastructure investments and
drought mitigation water storage facilities.

     In particular, the agricultural infrastructure improvement
tax credit is to be equal to ten per cent of the cost of
agriculture infrastructure improvements over $200,000 made by the
taxpayer.  "Agricultural infrastructure improvement" is defined
as the planning, design, construction, reconstruction,
improvement, altering, or repair of irrigation systems and
drainage systems.

     The tax credit for drought mitigating water storage
facilities is to be equal to ten per cent of the cost of
construction of a new water storage facility or the
reconstruction or improvement of any existing facility necessary
for drought mitigation purposes.  "Water storage facility" is
defined as one with a capacity of more than forty thousand
gallons and certified by rules adopted by the Department of
Agriculture as necessary for drought mitigation.

 
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                                   STAND. COM. REP. NO. 3379
                                   Page 2


     Your Committee finds that the downsizing of the sugar
industry and transition to diversified agriculture provides an
opportunity for the expansion of the State's agricultural
industry.  Plantation agriculture created valuable
infrastructures, such as irrigation systems, roads, and drainage
systems.  Because sugar companies are unable to construct and
maintain these infrastructures, tax incentives are necessary to
support new agricultural ventures and encourage private
investments to preserve and enhance existing infrastructures.

     Your Committee further finds that farmers and ranchers
suffer from loss of crops and livestock during periods of
drought, which can be minimized by the construction of water
storage facilities to alleviate water problems.  A drought
mitigation water storage facility tax credit is necessary to help
farmers overcome the present drought and to plan for future
droughts.

     Upon further consideration, your Committee has amended this
bill by changing the effective date from upon approval to July 1,
3001, in order to facilitate further discussion on this measure.

     As affirmed by the record of votes of the members of your
Committee on Ways and Means that is attached to this report, your
Committee is in accord with the intent and purpose of H.B. No.
2023, H.D. 2, S.D. 1, as amended herein, and recommends that it
pass Third Reading in the form attached hereto as H.B. No. 2023,
H.D. 2, S.D. 2.

                                 Respectfully submitted on behalf
                                 of the members of the Committee
                                 on Ways and Means,



                                 ________________________________
                                 CAROL FUKUNAGA, Co-Chair



                                 ________________________________
                                 ANDREW LEVIN, Co-Chair

 
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