STAND. COM. REP. NO. 408

                                 Honolulu, Hawaii
                                                   , 1999

                                 RE: H.B. No. 367
                                     H.D. 1




Honorable Calvin K.Y. Say
Speaker, House of Representatives
Twentieth State Legislature
Regular Session of 1999
State of Hawaii

Sir:

     Your Committee on Water and Land Use, to which was referred
H.B. No. 367 entitled: 

     "A BILL FOR AN ACT RELATING TO WATER CONSERVATION,"

begs leave to report as follows:

     Your Committee on Water and Land Use, to which was referred
H.B. No. 367 entitled: 

     "A BILL FOR AN ACT RELATING TO WATER CONSERVATION,"

begs leave to report as follows:

     The purpose of this bill is to encourage water conservation
by establishing an income tax credit for water conservation
equipment.  

     Your Committee received testimony as follows:

     1.   Maui County Council, Maui County Department of Water
          Supply, Central Maui Soil and Water Conservation
          District, Maui County Farm Bureau, Ulupalakua Ranch,
          Hawaii Farm Bureau Federation, in support; 

     2.   Department of Taxation, Tax Foundation of Hawaii, in
          opposition; and

     3.   Commission on Water Resource Management, County of
          Kauai Department of Water, and two University of Hawaii
          professors, offering comment.  

     Your Committee finds that water is one of Hawaii's most
precious resources and that increased water storage would be in

 
                                 STAND. COM. REP. NO. 408
                                 Page 2

 
greater accord with the intent of the bill, to reduce the threat
of drought in vulnerable agricultural areas.  

     Your Committee revised the bill by:  

     1.   Removing the provisions for a water conservation
          credit; 

     2.   Providing for an agricultural water storage credit
          against income tax liability, for an unspecified
          percentage of the cost of the improvement, not to
          exceed 50 percent of the taxpayer's liability, which
          may be carried forward ten years; 

     3.   Requiring that the improvement be certified by the
          county water department as necessary for drought
          mitigation; and 

     4.   Making technical, non-substantive changes for the
          purposes of style and clarity.  

     As affirmed by the record of votes of the members of your
Committee on Water and Land Use that is attached to this report,
your Committee is in accord with the intent and purpose of H.B.
No. 367, as amended herein, and recommends that it pass Second
Reading in the form attached hereto as H.B. No. 367, H.D. 1, and
be referred to the Committee on Finance.

                                   Respectfully submitted on
                                   behalf of the members of the
                                   Committee on Water and Land
                                   Use,



                                   ______________________________
                                   Romy M. Cachola, Chair