STAND. COM. REP. NO.2719

Honolulu, Hawaii

, 2002

RE: S.B. No. 2985

S.D. 2

 

 

Honorable Robert Bunda

President of the Senate

Twenty-First State Legislature

Regular Session of 2002

State of Hawaii

Sir:

Your Committee on Ways and Means, to which was referred S.B. No. 2985, S.D. 1, entitled:

"A BILL FOR AN ACT RELATING TO QUALIFIED IMPROVEMENT TAX CREDIT,"

begs leave to report as follows:

The purpose of this measure is to create an income tax credit for costs related to qualified capital improvements made by a taxpayer who owns a federal qualified health center.

Your Committee finds that the financial condition of Hawaii's non-profit health care facilities has been negatively impacted by the downturn in the State's economy. More specifically, many health centers have experienced a reduction in revenues, while concomitantly facing an increased demand for health care services from a growing financially distressed population. Your Committee further finds that this income tax credit will target capital improvements made to facilities that serve the most depressed communities in the State, through the requirement that they serve low income populations with a high incidence of medical problems and limited service providers.

To qualify for the income tax credit under this measure, the qualified improvement costs must be $300,000 or more in one year. However, if improvement costs in a year are under $300,000, a credit can still be claimed if improvement costs over a three-year period total $1,000,000 or more. For example, over a three-taxable-year period the improvement costs might be $250,000 for the first taxable year, $250,000 for the second taxable year, and $500,000 in the third taxable year, or $1,000,000 over a three-taxable-year period. The applicable credit percentage would be applied to the $1,000,000. If, however, the improvement costs are $300,000 for the first taxable year, $250,000 in the second taxable year, and $500,000 in the third taxable year, then the costs for which a credit was claimed for the first taxable year would be deducted from the costs for the three-taxable-year period.

Your Committee has amended the measure to specify that the improvement costs are incurred in taxable years after December 31, 2001, and that the credit claimed for improvement costs over a three-year period are for cumulative improvement costs. Your Committee also has made technical, non-substantive changes for the purposes of clarity and style.

As affirmed by the record of votes of the members of your Committee on Ways and Means that is attached to this report, your Committee is in accord with the intent and purpose of S.B. No. 2985, S.D. 1, as amended herein, and recommends that it pass Third Reading in the form attached hereto as S.B. No. 2985, S.D. 2.

Respectfully submitted on behalf of the members of the Committee on Ways and Means,

____________________________

BRIAN T. TANIGUCHI, Chair