STAND. COM. REP. NO. 1422

                                 Honolulu, Hawaii
                                                   , 1999

                                 RE: S.B. No. 1583
                                     S.D. 2
                                     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 Economic Development and Business
Concerns, to which was referred S.B. No. 1583, S.D. 2, entitled: 

     "A BILL FOR AN ACT RELATING TO TECHNOLOGY,"

begs leave to report as follows:

     The purpose of this bill is to promote and support
development of high technology industries in Hawaii.  In
particular, this measure:

     (1)  Consolidates the State's high technology agencies,
          divisions, and offices under the coordination and
          direction of a special advisor for technology
          development and crates a governor's special advisory
          council for technology development to assist the
          advisor;

     (2)  Offers a tax incentive through a technology training or
          job creation tax credit to offset the cost of training,
          retraining, and related job creation costs;

     (3)  Offers a tax incentive for investment in new high
          technology businesses;

     (4)  Integrates information technology with Hawaii's tourism
          and marketing industry;

     (5)  Prohibits the imposition of taxes on Internet commerce;

 
 
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     (6)  Establishes the Hawaii Internet exchange to serve as a
          catalyst for the development of Internet-focused
          businesses;

     (7)  Provide work force development programs to ensure a
          pool of technology professionals; and

     (8)  Accelerates high speed access to the Internet for the
          University of Hawaii and the public schools, and
          establishing educational technology programs within
          public schools.

     Testimony in support of this measure was submitted by the
Department of Education, the University of Hawaii, the University
of Hawaii Professional Assembly, and the Estate of James
Campbell.  Testimony in support of the intent of this measure was
submitted by the Department of Business, Economic Development,
and Tourism, the Department of Labor and Industrial Relations,
and the High Technology Development Corporation.  The Department
of Taxation and the Tax Foundation of Hawaii submitted comments
on the measure.

     Your Committee has amended this measure as follows:

     (1)  Changing the repeal date of Section 3 from January 1,
          2005 to January 1, 1999;

     (2)  Eliminating the tax credit for technology training or
          job creation;

     (3)  Specifying that there shall be a tax credit equal to
          25% of the total investment for funds invested in
          qualified high technology businesses in this State; 

     (4)  Specifying that tax credits claimed in excess of
          payments due may be carried over as additional credits
          for a period not exceeding ten years;

     (5)  Eliminating language establishing the Hawaii internet
          exchange and the priority guidelines for promoting
          development of the information industry;

     (6)  Appropriating funds to establish a University of Hawaii
          teleconferencing center in an appropriate location in
          California's "Silicon Valley" to provide  outreach
          classes and telecommunications capability to that area;


 
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     (7)  Establishing a system-wide information technology and
          services special fund, permitting the University of
          Hawaii office of technology transfer to expend up to
          $2,000,000 of the fund in any fiscal year;

     (8)  Eliminating the language requiring the board of
          trustees of the Employees' Retirement System to invest
          funds in qualified high technology businesses;

     (9)  Requiring the Department of Education to establish free
          electronic mail accounts for students attending public
          or private schools and who are in the ninth grade or
          above; 

     (10) Providing that an unspecified number of E Academies
          shall be established, and deleting reference to the
          specific number of 12 to 14 such programs;

     (11) Adding language promoting development of a high
          technology industry in the State by issuing special
          purpose revenue bonds not to exceed a total of
          $100,000,000 in one or more series to assist the Ohana
          Foundation and/or one or more of its not-for-profit
          affiliates in financing or refinancing costs related to
          the development of a high technology park in Kakaako;
          and

     (12) Making technical and nonsubstantive changes for the
          purposes of clarity and style.

     As affirmed by the record of votes of the members of your
Committee on Economic Development and Business Concerns that is
attached to this report, your Committee is in accord with the
intent and purpose of S.B. No. 1583, S.D. 2, as amended herein,
and recommends that it pass Second Reading in the form attached
hereto as S.B. No. 1583, S.D. 2, H.D. 1, and be referred to the
Committee on Finance.

                                   Respectfully submitted on
                                   behalf of the members of the
                                   Committee on Economic
                                   Development and Business
                                   Concerns,



                                   ______________________________
                                   ROBERT N. HERKES, Chair