Report Title:

Economic Development Programs; Cost-Benefit Analysis


Requires the Legislative Analyst to submit an annual report on the performance and impact of economic development programs receiving state funds; makes an appropriation for the Legislative Analyst. (SD1)


S.B. NO.



S.D. 1









SECTION 1. The Hawaii Revised Statutes is amended by adding a new chapter to be appropriately designated and to read as follows:


Economic development accountability act

-1 Findings and purpose. (a) The legislature finds that although the State of Hawaii has provided financial assistance through direct appropriations, grants, and subsidies for economic development programs over the last decade, the economy has not expanded nor improved to the degree expected as a result of these efforts. Further, the legislature finds that while government actions can stimulate the economy, ongoing government grants and subsidies may not be the best use of limited government resources. Additionally, the legislature needs to be informed about economic development programs where financial assistance has resulted in sustained economic gains and growth in order to target financial resources into these programs.

Thus, the purpose of this Act is to require the legislative analyst to conduct an annual cost-benefit analysis of economic development initiatives funded by the State and to submit to the legislature an annual report on the performance of these initiatives and their impact on our economy.

-2 Definitions. For the purposes of this section:

"Economic development program" means a government program established pursuant to state law or a non-government program receiving state funds, the primary purpose of which is to stimulate, sustain, or expand Hawaii's economic base.

"Grant" means direct financial assistance provided by a state government entity.

"State fund" means the State's general fund, any special fund, any loan fund, any revolving fund, any trust fund, or any account into which are deposited any moneys inured to the State.

"Subsidy" means indirect financial assistance provided through credits, exceptions, or exemptions from state taxes.

-3 Grants and subsidies; reporting to the legislative analyst. (a) Any state government entity that awards a grant to an economic development program shall provide to the legislative analyst no later than October 1 of each fiscal year, a listing of all programs receiving such grants. The listing shall include the name of the economic development program receiving the grant, the amount of the grant award, the fiscal year in which the grant was made, and the primary purposes for which the grant was awarded, including any specific state economic development law or policy that the grant is supporting.

(b) The department of taxation shall provide to the legislative analyst no later than June 30 of each fiscal year, a listing of all economic development programs claiming a subsidy pursuant to this section. The report shall contain the name of the economic development program, the amount of the subsidy claimed, the taxable year for which the claim is being made, and the specific state law authorizing the subsidy.

-4 Analysis of economic development programs; annual report. (a) The legislative analyst, pursuant to section 21F-7, shall conduct an annual cost-benefit analysis of economic development programs to determine their performance and impact on Hawaii's economy. In performing this analysis, the legislative analyst shall:

(1) Consider the amounts of the grant or subsidy provided and the amounts expended;

(2) Perform a cost-benefit analysis of tax credits, exemptions, and other benefits that may be utilized by participants of the economic development program;

(3) Consider the amounts of tax or other revenues generated by the program and received by any state fund; and

(4) Consider the employment created, including total numbers of individuals employed by job classification, range of salaries or wages paid, and whether jobs are full-time, part-time, or temporary.

(b) The legislative analyst, no later than twenty days prior to the convening of each regular session, shall submit to the legislature an annual report including findings and recommendations about the economic development programs included in the cost-benefit analysis. The report shall include the:

(1) Name of each program receiving state funds;

(2) Time period for which funding was provided;

(3) Dollar amount of each appropriation, grant, or subsidy; and

(4) Resulting benefits to the State's economy."

SECTION 2. There is appropriated out of the general revenues of the State of Hawaii the sum of $          , or so much thereof as may be necessary for fiscal year 2003-2004, for the office of legislative analyst to conduct a cost-benefit analysis of the impact of economic development programs receiving state funds from the 1991-1993 fiscal biennium through the 2001-2003 fiscal biennium.

The sum appropriated shall be expended by the office of the legislative analyst for the purposes of this Act.

SECTION 3. This Act shall take effect upon its approval.