Honolulu, Hawaii
                                                     , 1999

                                   RE:  S.B. No. 1222
                                        S.D. 1

Honorable Norman Mizuguchi
President of the Senate
Twentieth State Legislature
Regular Session of 1999
State of Hawaii


     Your Committee on Economic Development, to which was
referred S.B. No. 1222 entitled: 


begs leave to report as follows:
     The purpose of this measure is to provide a general excise
tax exemption for motion picture producers and contractors who
build a motion picture facility in Hawaii, and a corresponding
use tax exemption for the motion picture producers and
contractors who import materials, parts, tools, or equipment.

     Your Committee received testimony in support of this measure
from Bridge Capital, LLC.  The Department of Taxation testified
in opposition.  The Department of Business, Economic Development,
and Tourism and the Tax Foundation of Hawaii submitted comments.

     Your Committee finds that currently there is a shortage of
quality movie sound stages, recording studios, and other
facilities in Hawaii.  If available, these facilities could
support the rapid growth in the entertainment industry,
particularly in the Pacific Rim.

     Your Committee believes Hawaii has an opportunity to develop
an expanded role in the production side of the entertainment
industry and is in support of this measure.  Your Committee has
amended this measure by deleting reference to the production of
motion pictures as redundant to the current income tax credit for
that activity under section 235-17, Hawaii Revised Statutes.

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                                   STAND. COM. REP. NO. 72
                                   Page 2

Your Committee has further clarified the measure to apply to the
construction of entertainment industry production facilities as
reflected in the title of the new section, and corrected the
effective date.

     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. 1222, as amended herein, and recommends that it pass
Second Reading in the form attached hereto as S.B. No. 1222,
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

                                   LORRAINE R. INOUYE, Chair

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