CONFERENCE COMMITTEE REP. NO. 19-04

Honolulu, Hawaii

, 2004

RE: S.B. No. 3207

S.D. 2

H.D. 2

C.D. 1

 

 

Honorable Robert Bunda

President of the Senate

Twenty-Second State Legislature

Regular Session of 2004

State of Hawaii

Honorable Calvin K.Y. Say

Speaker, House of Representatives

Twenty-Second State Legislature

Regular Session of 2004

State of Hawaii

Sir:

Your Committee on Conference on the disagreeing vote of the Senate to the amendments proposed by the House of Representatives in S.B. No. 3207, S.D. 2, H.D. 2, entitled:

"A BILL FOR AN ACT RELATING TO ETHANOL TAX CREDIT,"

having met, and after full and free discussion, has agreed to recommend and does recommend to the respective Houses the final passage of this bill in an amended form.

The purpose of this measure is to:

(1) Change the ethanol investment tax credit to the ethanol facility tax credit (EFTC);

(2) Allow the EFTC only:

(a) If the amount of the EFTC claimed does not exceed one hundred per cent of the investment amount;

(b) In years that the ethanol production facility is operating at seventy-five per cent of nameplate capacity or more;

(c) If the facility is in production on or before January 1, 2012; and

(d) If no other tax credits for the same taxable year are claimed if the EFTC is claimed;

(3) Clarify the definitions for "credit period," "investment," "nameplate capacity," and "qualifying ethanol production facility" or "facility";

(4) Delete the definition for "maximum annual credit allowable" and fold the definition of "qualifying ethanol production" into "qualifying ethanol production facility";

(5) Require the Department of Business, Economic Development, and Tourism (DBEDT) to maintain records pertaining to the EFTC and issue certificates verifying investment amounts, credit amounts, and cumulative tax credit amounts;

(6) Place a cap of $12,000,000 in the aggregate for all credits certified by DBEDT in any year;

(7) Require all information pertaining to the EFTC to be available to the public under chapter 92F, Hawaii Revised Statutes;

(8) Allow partnerships, S corporations, estates, and trusts to claim the EFTC; and

(9) Provide the Director of Taxation the authority to audit and adjust the certification of the credits.

Your Committee on Conference believes the EFTC will have a beneficial impact on the State's economy by encouraging the construction of large-scale ethanol production facilities and reducing the State's dependence on fossil fuels. By promoting large-scale production of ethanol, the EFTC will create new jobs in a growing alternative fuels industry. The increased need for organic feedstocks and waste materials to meet the demands of large-scale ethanol production will have a beneficial effect on the agriculture industry as well.

It is the intent of your Committee on Conference that the calculation of the amount of the EFTC be based on a percentage of the production capability of a qualifying ethanol production facility, based on a one dollar for one gallon equivalency conversion, to encourage maximum nameplate capacity for that facility. For example, a qualifying ethanol production facility that has a nameplate capacity of ten million gallons of ethanol in a given year will be entitled to claim an EFTC of three million dollars (thirty percent of ten million) for that taxable year.

Your Committee on Conference amended the measure by:

(1) Specifying that the annual dollar amount of the credit shall be equal to thirty percent of the qualified facility's nameplate capacity if that capacity is greater than five hundred thousand but less than fifteen million gallons;

(2) Restoring the definition of "qualifying ethanol production" in section 235-110.3, Hawaii Revised Statutes, with an amendment to the types of qualifying production methods;

(3) Deleting the additional language to the definition of "qualifying ethanol production facility" that pertains to ethanol production methods;

(4) Making the measure effective on July 1, 2004, and applicable to taxable years beginning after December 31, 2003; and

(5) Making technical, nonsubstantive changes for clarity and style.

As affirmed by the record of votes of the managers of your Committee on Conference that is attached to this report, your Committee on Conference is in accord with the intent and purpose of S.B. No. 3207, S.D. 2, H.D. 2, as amended herein, and recommends that it pass Final Reading in the form attached hereto as S.B. No. 3207, S.D. 2, H.D. 2, C.D. 1.

 

Respectfully submitted on behalf of the managers:

ON THE PART OF THE HOUSE

ON THE PART OF THE SENATE

____________________________

HERMINA M. MORITA, Co-Chair

____________________________

J. KALANI ENGLISH, Co-Chair

____________________________

THOMAS WATERS, Co-Chair

____________________________

RUSSELL KOKUBUN, Co-Chair