Report Title:

Economic Development; Project EAST

Description:

Establishes the Hawaii 3Ts school technology laboratories fund and related tax credit for the expansion of project EAST (environmental and spatial technology) initiative in Hawaii's public schools. (SD1)

HOUSE OF REPRESENTATIVES

H.B. NO.

2661

TWENTY-SECOND LEGISLATURE, 2004

H.D. 1

STATE OF HAWAII

S.D. 1


 

A BILL FOR AN ACT

 

relating to economic development.

 

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

SECTION 1. The legislature finds that technology-based jobs are high paying and important in helping to expand and diversify Hawaii's economy. Hawaii has recently made a concerted effort to attract high technology companies to Hawaii by enacting Act 221, Session Laws of Hawaii 2001, which provides a tax credit to qualifying high technology companies. In addition to these initiatives, Hawaii needs to develop a highly skilled and trained workforce to attract these high technology companies and jobs to Hawaii.

The project EAST (environmental and spatial technology) initiative started as a pilot program in the Maui district high schools during the summer of 2000 and later moved to Hawaii county and then a middle school on Kauai. Project EAST holds great potential for assisting Hawaii's public schools in developing important critical thinking, problem solving, and analytical skills in Hawaii's young people which are necessary to these individuals to succeed in high technology based jobs. Project EAST integrates cutting edge technology, such as computer assisted drafting, geographic information systems, global positioning systems, as well as computer graphic applications, such as soft image, into the educational curriculum. The goal of this initiative is to prepare students for the information technology age by providing a comprehensive project-based and student-centered learning program where the students are responsible for their own learning.

The project EAST initiative is a public-private partnership developed by business leaders and educators that has enabled technology-challenged schools to compete nationally and succeed. More important, this program enables students to develop crucial skills necessary for them to succeed in life while making the educational experience relevant and educational outcomes measurable.

Act 309, Session Laws of Hawaii 2001, established a dual approach program for Hawaii's public schools to meet a formidable backlog of repair and maintenance – a tax credit for contributions of badly needed in-kind services and a fund established outside the state treasury under Helping Hands Hawaii. Hawaii 3Rs has been highly successful in building a strong network of public and private sector coalitions and identifying additional funding and other resources for the benefit of public school facilities.

The purpose of this Act is to support these successful private-public initiatives by establishing a comparable two-fold program – the Hawaii 3Ts school technology laboratories fund and a contingent tax credit for contributions of in-kind services for the continuation and expansion of the project EAST initiative or similar programs on all islands.

SECTION 2. Chapter 235, Hawaii Revised Statutes, is amended by adding a new section to be appropriately designated and to read as follows:

"§235-    Credit for school technology laboratories. (a) There shall be allowed to each taxpayer licensed under chapter    ,    , or    , who is subject to the tax imposed by this chapter, and does not owe the State delinquent taxes, penalties, or interest, a credit for contributions of in-kind services for the establishment and maintenance of technology laboratories in public schools provided by the licensed taxpayer in Hawaii. The credit shall be deductible from the taxpayer's net income tax liability, if any, imposed by this chapter for the taxable year in which the credit is properly claimed.

(b) The amount of the credit determined under this section for the taxable year shall be equal to ten per cent of the value of contributions of in-kind services to the Hawaii 3Ts school technology laboratories fund for that taxable year; provided that the aggregate value of the contributions of in-kind services claimed by a taxpayer shall not exceed $          .

(c) For purposes of this section:

"Public schools" has the same meaning as defined in section 302A-101.

"School technology laboratory" means a multi-station computer lab that offers students a variety of different types and hardware and software.

"Value of contributions of in-kind services" means the fair market value of uncompensated services or labor as determined and certified by the department of business, economic development, and tourism.

(d) The credit allowed under this section shall be claimed against net income tax liability for the taxable year. A tax credit under this section which exceeds the taxpayer's income tax liability may be used as a credit against the taxpayer's income tax liability in subsequent years until exhausted.

(e) All claims for tax credits under this section, including any amended claims, shall be filed on or before the end of the twelfth month following the close of the taxable year for which the credits may be claimed. Failure to comply with the foregoing provision shall constitute a waiver of the right to claim the credit.

(f) The department of business, economic development, and tourism shall maintain records of the names of taxpayers eligible for the credit and the total value of in-kind services contributed for the establishment and maintenance of technology laboratories in public schools for the taxable year. All contributions shall be verified by the department of business, economic development, and tourism. The department of business, economic development, and tourism shall total all contributions that the department certifies. Upon each determination, the department of business, economic development, and tourism shall issue a certificate to the taxpayer certifying:

(1) The amount of the contribution;

(2) That the taxpayer is licensed under chapter 444, 460J, or 464; and

(3) That the taxpayer has obtained a current and valid certificate signed by the director of taxation, showing that the taxpayer does not owe the State any delinquent taxes, penalties or interest.

The taxpayer shall file the certificate from the department of business, economic development, and tourism with the taxpayer's tax return with the department of taxation. When the total amount of certified contributions reaches $          , the department of business, economic development, and tourism shall immediately discontinue certifying contributions and notify the department of taxation. In no instance shall the total amount of certified contributions of in-kind services exceed $           for each taxable year.

(g) The State shall provide not more than $           in tax credits for contributions of in-kind services in Hawaii for the establishment and maintenance of technology laboratories in public schools.

(h) The director of taxation shall prepare any forms that may be necessary to allow a credit to be claimed under this section."

SECTION 3. Chapter 302A, Hawaii Revised Statutes, is amended by adding a new section to be appropriately designated and to read as follows:

"§302A-   Hawaii 3Ts school technology laboratories fund. (a) There is established the Hawaii 3Ts school technology laboratories fund (hereinafter, "fund") as a separate fund of             , a Hawaii nonprofit organization. Moneys received from the state, county, or federal government, private contributions of cash or other property, and the income and capital gains earned by the fund shall constitute its assets.

(b)            shall expend moneys in the form of either grants to organizations or contracts with private vendors from the fund for the establishment and maintenance of technology laboratories in public schools in Hawaii in accordance with this section.

(c) The fund may receive contributions, grants, endowments, or gifts in cash or otherwise from all sources, including corporations or other businesses, foundations, government, individuals, and other interested parties. The legislature intends that the public and private sectors work together as partners in securing contributions for the fund, and that           , through its project, Hawaii 3Ts, assist the public and private sectors in reviewing and investigating all potential funding sources. The State may appropriate moneys to the fund; provided that any appropriations made by the State are not intended to supplant the funding of any existing public school programs for the establishment and maintenance of school technology laboratories.

(d)            shall appoint the members of the Hawaii 3Ts school technology laboratories board, which shall be responsible for:

(1) Soliciting and otherwise raising funds for the fund;

(2) Establishing criteria for the expenditure of funds;

(3) Reviewing grant proposals utilizing criteria established by           ; and

(4) Making recommendations for grants and other specific expenditures.

Members of the advisory board shall be stakeholders in Hawaii's public education and workforce development entities, including students and parents, teachers and principals, business and community leaders, representatives from the county economic development boards, and representatives from the department of education, the department of business, economic development, and tourism, and the department of accounting and general services, who shall be represented on the advisory board.

(e) The aggregate principal sum deposited in the fund, and any income and capital gains earned by the fund but not expended for administration, shall be invested in accordance with the provisions of            in a manner intended to maximize the rate of return on investment of the fund.

(f) There may be an endowment component of the fund.

(g) The use of any state moneys may be restricted by the legislation appropriating these moneys to the fund.

(h)            is authorized to expend the principal from the fund for the purposes of the fund.

(i) Any organization submitting a proposal to            for fund moneys shall meet all of the following standards at the time of applications:

(1) Be a for-profit organization duly registered under the laws of the State, or be a nonprofit organization determined by the Internal Revenue Service to be exempt from the federal income tax, or be an agency of the State or a county;

(2) In the case of a nonprofit organization, have a governing board whose members have no material conflict of interest and serve without compensation;

(3) In the case of an applicant that is not a state or county government agency, have bylaws or policies that describe the manner in which business is conducted and policies that relate to the management of potential conflict of interest situations;

(4) Have experience with the project or in the program area for which the proposal is being made; and

(5) Be licensed and accredited, as applicable, in accordance with the requirements of federal, state, and county governments.

(j) All proposals submitted to            for fund moneys shall be approved by the department of business, economic development, and tourism for consistency in meeting design and materials standards for public schools.

(k) Organizations or agencies to which fund moneys are awarded shall agree to comply with the following conditions before receiving the award:

(1) Employ or have under contract persons qualified to engage in the activity to be funded;

(2) Comply with applicable federal, state, and county laws; and

(3) Comply with any other requirements prescribed by            to ensure adherence by the recipient of the award with applicable federal, state, and county laws and with the purposes of this section.

(l) Chapter 103D shall not apply to organizations or agencies that apply for grants or contracts under this section; provided that            shall be held accountable for the use of the funds under a contract with the department of business, economic development, and tourism.

(m) Any contracts awarded by            shall be made under as much competition as practical to execute its purposes.

(n) The fund shall be audited annually by an independent auditor. The results of each annual audit shall be submitted to the department of business, economic development, and tourism not later than thirty days from the date receives the audit results. In addition,            shall retain for a period of three years, and permit the department of accounting and general services, the department of education, the department of business, economic development, and tourism, state legislators, and the auditor, or their duly authorized representatives, to inspect and have access to, any documents, papers, books, records, and other evidence that is pertinent to the fund.

(o) The fund shall not be placed in the state treasury, and the State shall not administer the fund, nor shall the State be liable for the operation or solvency of the fund,           , or Hawaii 3Ts.

(p) For every dollar of state moneys granted by the fund to the project, there shall be a minimum of $1 in value matched by            from private, federal, county, or community sources.

(q) For purposes of this section, "school technology laboratory" means a multi-station computer laboratory that offers students a variety of different types of hardware and software applications."

SECTION 4. The director of business, economic development, and tourism shall submit an annual report to the legislature of the progress of the Hawaii 3Ts school technology laboratories fund no later than twenty days prior to the convening of each regular session.

SECTION 5. There is appropriated out of the general revenues of the State of Hawaii the sum of $          , or so much thereof as may be necessary for fiscal year 2004-2005, as a grant-in-aid pursuant to chapter 42F, Hawaii Revised Statutes, to            for the Hawaii 3Ts school technology laboratories fund.

The sum appropriated shall be expended by the department of business, economic development, and tourism for the purposes of this Act.

SECTION 6. The director of business, economic development, and tourism may employ the coordinator, who shall be exempt from chapter 76, Hawaii Revised Statutes, as necessary to effectuate the purposes of this Act. The coordinator shall serve at the pleasure of the director of business, economic development, and tourism.

SECTION 7. There is appropriated out of the general revenues of the State of Hawaii the sum of $          , or so much thereof as may be necessary for fiscal year 2004-2005, for a position in the department of business, economic development, and tourism to coordinate public and private efforts to establish and maintain technology laboratories in public schools.

The sum appropriated shall be expended by the department of business, economic development, and tourism for the purposes of this Act.

SECTION 8. If any provisions of this Act, or the application thereof to any person or circumstance is held invalid, the invalidity does not affect other provisions or applications of the Act which can be given effect without the invalid provision or application, and to this end the provisions of this Act are severable.

SECTION 9. It is the intent of this Act not to jeopardize the receipt of any federal aid nor to impair the obligation of the State or any agency thereof to the holders of any bond issued by the State or by any such agency, and to the extent, and only to the extent, necessary to effectuate this intent, the governor may modify the strict provisions of this Act, but shall promptly report any such modification with reasons therefor to the legislature at its next session thereafter for review by the legislature.

SECTION 10. New statutory material is underscored.

SECTION 11. This Act shall take effect on July 1, 2004; provided that section 2 shall apply to taxable years beginning after December 31, 2004.