Report Title:

GET Exemptions; State and County; Central Services

 

Description:

Provides GET exemptions for state and county purchases of goods or services, raises the central services fee to 7%, eliminates central services exemptions, and reduces county distributions of the TAT equal to the savings from the proposed GET exemption.

HOUSE OF REPRESENTATIVES

H.B. NO.

1831

TWENTY-FIRST LEGISLATURE, 2002

 

STATE OF HAWAII

 


 

A BILL FOR AN ACT

 

relating to government spending.

 

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

SECTION 1. The legislature finds that the tragic events of September 11, 2001 have had lasting economic repercussions in Hawaii. Dismal state revenue projections and expected budget shortfalls dictate prudent legislative cost-cutting measures as well as new creative ways to reduce state spending.

One way to reduce state spending involves the payment of the general excise tax by sellers of goods and services to the State and counties, which is ultimately passed-on and paid by the State and counties. As applied to the State, these tax payments would appear to be circular and of no economic consequence, since general excise tax collections are generally deposited back into the state treasury. But if the payments are made in relation to, and calculated into the total cost of state capital improvement projects, the payments necessarily increase the cost of not only the project itself, but also the cost of financing the project and the resulting debt service.

The purpose of this Act is to reduce state spending by exempting the State and counties from the general excise tax for purchases of goods and services. The Act also provides other means of reducing state spending.

SECTION 2. Chapter 237, Hawaii Revised Statutes, is amended by adding a new section to be appropriately designated and to read as follows:

"237- Exemption for sale of goods and services to the State and counties. (a) Notwithstanding any other law to the contrary, there shall be exempted from, and excluded from the measure of, the taxes imposed by this chapter all of the value or gross proceeds arising from the sale of goods or services provided to the State or the counties.

(b) The director of taxation shall calculate the amount of taxes that would have been paid by each county, but for subsection (a) and report these amounts to the state director of finance under section 237D-6.5."

SECTION 3. Section 36-27, Hawaii Revised Statutes, is amended to read as follows:

"36-27 Transfers from special funds for central service expenses. [Except as provided in this section, and notwithstanding] Notwithstanding any other law to the contrary, from time to time, the director of finance, for the purpose of defraying the prorated estimate of central service expenses of government in relation to all special funds, [except the:

(1) Special out-of-school time instructional program fund under section 302A-1310;

(2) School cafeteria special funds of the department of education;

(3) Special funds of the University of Hawaii;

(4) State educational facilities improvement special fund;

(5) Convention center capital and operations special fund under section 206X-10.5;

(6) Special funds established by section 206E-6;

(7) Housing loan program revenue bond special fund;

(8) Housing project bond special fund;

(9) Aloha Tower fund created by section 206J-17;

(10) Domestic violence prevention special fund under section 321-1.3;

(11) Spouse and child abuse special account under section 346-7.5;

(12) Spouse and child abuse special account under section 601-3.6;

(13) Funds of the employees' retirement system created by section 88-109;

(14) Unemployment compensation fund established under section 383-121;

(15) Hawaii hurricane relief fund established under chapter 431P;

(16) Hawaii health systems corporation special funds;

(17) Boiler and elevator safety revolving fund established under section 397-5.5;

(18) Tourism special fund established under section 201B-11;

(19) Department of commerce and consumer affairs' special funds;

(20) Compliance resolution fund established under section 26-9;

(21) Universal service fund established under chapter 269;

(22) Integrated tax information management systems special fund under section 231-3.2;

(23) Insurance regulation fund under section 431:2-215;

(24) Hawaii tobacco settlement special fund under section 328L-2;

(25) Emergency budget and reserve fund under section 328L-3;

(26) Probation services special fund under section 706-649;

(27) High technology special fund under section 206M-15.5;

(28) Public schools special fees and charges fund under section 302A-1130(f);

(29) Cigarette tax stamp enforcement special fund established by section 28-14;

(30) Cigarette tax stamp administrative special fund established by section 245-41.5; and

(31) Tobacco enforcement special fund established by section 28-15;]

shall deduct [five] seven per cent of all receipts of all other special funds, which deduction shall be transferred to the general fund of the State and become general realizations of the State. All officers of the State and other persons having power to allocate or disburse any special funds shall cooperate with the director in effecting these transfers. To determine the proper revenue base upon which the central service assessment is to be calculated, the director shall adopt rules pursuant to chapter 91 for the purpose of suspending or limiting the application of the central service assessment of any fund. No later than twenty days prior to the convening of each regular session of the legislature, the director shall report all central service assessments made during the preceding fiscal year."

SECTION 4. Section 36-30, Hawaii Revised Statutes, is amended by amending subsection (a) to read as follows:

"(a) Each special fund[, except the:

(1) Transportation use special fund established by section 261D-1;

(2) Special out-of-school time instructional program fund under section 302A-1310;

(3) School cafeteria special funds of the department of education;

(4) Special funds of the University of Hawaii;

(5) State educational facilities improvement special fund;

(6) Special funds established by section 206E-6;

(7) Aloha Tower fund created by section 206J-17;

(8) Domestic violence prevention special fund under section 321-1.3;

(9) Spouse and child abuse special account under section 346-7.5;

(10) Spouse and child abuse special account under section 601-3.6;

(11) Funds of the employees' retirement system created by section 88-109;

(12) Unemployment compensation fund established under section 383-121;

(13) Hawaii hurricane relief fund established under chapter 431P;

(14) Convention center capital and operations special fund established under section 206X-10.5;

(15) Hawaii health systems corporation special funds;

(16) Tourism special fund established under section 201B-11;

(17) Compliance resolution fund established under section 26-9;

(18) Universal service fund established under chapter 269;

(19) Integrated tax information management systems special fund under section 231-3.2;

(20) Insurance regulation fund under section 431:2-215;

(21) Hawaii tobacco settlement special fund under section 328L-2;

(22) Emergency and budget reserve fund under section 328L-3;

(23) Probation services special fund under section 706-649;

(24) High technology special fund under section 206M-15.5;

(25) Public schools special fees and charges fund under section 302A-1130(f);

(26) Cigarette tax stamp enforcement special fund established by section 28-14;

(27) Cigarette tax stamp administrative special fund established by section 245-41.5; and

(28) Tobacco enforcement special fund established by section 28-15;]

shall be responsible for its pro rata share of the administrative expenses incurred by the department responsible for the operations supported by the special fund concerned."

SECTION 5. Section 237D-6.5, Hawaii Revised Statutes, is amended by amending subsection (b) to read as follows:

"(b) Beginning on January 1, 1999[[],[]] revenues collected under this chapter shall be distributed as follows:

(1) 17.3 per cent of the revenues collected under this chapter shall be deposited into the convention center capital and operations special fund established under section 206X-10.5;

(2) 37.9 per cent of the revenues collected under this chapter shall be deposited into the tourism special fund established under section 201B-11;

(3) 44.8 per cent of the revenues collected under this chapter shall be transferred as follows: Kauai county shall receive 14.5 per cent, Hawaii county shall receive 18.6 per cent, city and county of Honolulu shall receive 44.1 per cent, and Maui county shall receive 22.8 per cent.

All transient accommodations taxes shall be paid into the state treasury each month within ten days after collection, and shall be kept by the state director of finance in special accounts for distribution as provided in this subsection[.]; provided that the distribution to each county shall be reduced by the corresponding amount reported by the director of taxation under section 237- ."

SECTION 6. Statutory material to be repealed is bracketed and stricken. New statutory material is underscored.

SECTION 7. This Act shall take effect on July 1, 2002; provided that section 4 shall take effect on July 1, 2003.

INTRODUCED BY:

_____________________________