Report Title:

Drought Mitigating Water Storage Facilities; Tax Credit

Description:

Promotes the construction of drought mitigating water storage facilities by extending the period that the tax credit is available and including costs for ancillary structures as qualifying costs for the tax credit. (SD2)

HOUSE OF REPRESENTATIVES

H.B. NO.

955

TWENTY-THIRD LEGISLATURE, 2005

H.D. 1

STATE OF HAWAII

S.D. 2


 

A BILL FOR AN ACT

 

relating to drought mitigating facilities.

 

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF HAWAII:

SECTION 1. The legislature finds that farmers and ranchers during periods of drought suffer from damage to crops and livestock. This results in losses, including loss of income and jobs for hired workers, loss of business for agricultural suppliers, and loss of tax revenues to the State. It often takes farmers years to recover from these losses. However, these losses can be minimized by the construction of water storage facilities to alleviate water problems during times of drought.

To promote the construction of water storage facilities, Act 293, Session Laws of Hawaii 2001, established the drought mitigating water storage facility income tax credit. However, unless legislation is passed to amend the tax credit, the tax credit will not be available for 2006. The legislature finds that it is important to continue this incentive program to encourage farmers and ranchers to install drought mitigation facilities to prepare for drought periods. The legislature also finds that the amount of the tax credit should be increased to encourage more farmers and ranchers to take advantage of this incentive.

The purpose of this Act is to promote the construction of drought mitigating water storage facilities by:

(1) Extending the date after which the tax credit is no longer available from December 31, 2005 to December 31, 2008; and

(2) Including the cost of new equipment related to the construction or repair of ancillary structures as a cost that qualifies for the tax credit.

SECTION 2. Section 235-110.92, Hawaii Revised Statutes, is amended by amending subsections (e) and (f) to read as follows:

"(e) The credit allowed under this section shall be available for taxable years beginning after December 31, 2000, and shall not be available for taxable years beginning after December 31, [2005.] 2008.

(f) As used in this section:

"Ancillary structures" means attachments, instruments, structures, and other devices, including irrigation retrofits (i.e. replacing sprinkler systems with drip systems), water meters, distribution lines (i.e. replacing open ditches or leaky systems), weather stations, and reservoir linings that can be demonstrated to conserve or increase water use efficiency in agricultural operations.

"Eligible taxpayer" means a taxpayer who:

(1) Is a farmer or rancher; and

(2) Is not claimed or is not otherwise eligible to be claimed as a dependent by another taxpayer for Hawaii state income tax purposes.

"Net income tax liability" means net income tax liability reduced by all other credits allowed under this chapter.

"Qualified water storage facility" means a water storage facility that is part of a conservation plan approved by the local soil and water conservation district.

"Qualifying costs" means any cost incurred and paid by the taxpayer after December 31, 2000, for the new construction of a qualified water storage facility or the repair or reconstruction of an existing qualified water storage facility, including the costs of new equipment related to the construction or repair of the new or existing qualified water storage facility[,] and ancillary structures, but does not include amounts received through grant or subsidy from any federal or state government."

SECTION 3. Statutory material to be repealed is bracketed and stricken. New statutory material is underscored.

SECTION 4. This Act shall take effect on July 1, 2010.