STAND. COM. REP. NO.428

Honolulu, Hawaii

, 2003

RE: S.B. No. 1422

S.D. 1

 

 

Honorable Robert Bunda

President of the Senate

Twenty-Second State Legislature

Regular Session of 2003

State of Hawaii

Sir:

Your Committee on Economic Development, to which was referred S.B. No. 1422 entitled:

"A BILL FOR AN ACT RELATING TO ECONOMIC RECOVERY,"

begs leave to report as follows:

The purpose of this measure is to establish an economic zone commission to designate and develop economic stimulus programs for economic zones and economic recovery zones.

Testimony opposing this measure was received from the Department of Business, Economic Development, and Tourism.

Your Committee finds that there are areas throughout the State that are in desperate need of economic revitalization. These areas include Waipahu and Kalaeloa on Oahu, Hamakua on Hawaii, and many other regions. Upon review of the provisions in this measure, your Committee decided on a different approach. Your Committee finds that tax incentives provide clear benefits to investors, entrepreneurs, and residents and have proven to ignite economic activity. Therefore, your Committee has amended this measure by replacing its contents with provisions that:

(1) Authorizes the Governor to designate up to eight "renaissance zones";

(2) Exempts persons and business entities located and operating within renaissance zones from paying one hundred percent of state income and general excise taxes and gradually reduces the amount of the exemption over a number of years; and

(3) Requires the Department of Business, Economic Development, and Tourism to annually report to the Legislature on the economic effects of the renaissance zones.

Your Committee recognizes that enterprise zones in Hawaii have had a positive effect on their designated areas. However, the potential benefits may be limited by current law which does not allow retail businesses to receive enterprise zone tax benefits. Therefore, your Committee has further amended this measure by requesting the Department of Business, Economic Development, and Tourism to submit a report to the 2004 Legislature on the prospect of providing enterprise zone tax benefits to retail businesses, including its feasibility, probable impact on state revenues, and on the probable social and economic impact on communities.

As affirmed by the record of votes of the members of your Committee on Economic Development that is attached to this report, your Committee is in accord with the intent and purpose of S.B. No. 1422, as amended herein, and recommends that it pass Second Reading in the form attached hereto as S.B. No. 1422, S.D. 1, and be referred to the Committee on Ways and Means.

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

____________________________

CAROL FUKUNAGA, Chair