CONFERENCE COMMITTEE REP. NO.186

Honolulu, Hawaii

, 2005

RE: H.B. No. 1309

H.D. 2

S.D. 2

C.D. 1

 

 

Honorable Calvin K.Y. Say

Speaker, House of Representatives

Twenty-Third State Legislature

Regular Session of 2005

State of Hawaii

Honorable Robert Bunda

President of the Senate

Twenty-Third State Legislature

Regular Session of 2005

State of Hawaii

Sir:

Your Committee on Conference on the disagreeing vote of the House of Representatives to the amendments proposed by the Senate in H.B. No. 1309, H.D. 2, S.D. 2, entitled:

"A BILL FOR AN ACT RELATING TO TAXATION,"

having met, and after full and free discussion, has agreed to recommend and does recommend to the respective Houses the final passage of this bill in an amended form.

The purpose of this bill is to improve public transportation by allowing the counties to, temporarily, levy a limited county surcharge on state general excise and use taxes to fund operating or capital costs for public transportation systems. Among other things, this measure:

(1) Requires counties that choose to establish a county surcharge to do so by ordinance adopted after a duly noticed public hearing;

(2) Requires that, to initiate the surcharge, a county must adopt an enabling ordinance by December 31, 2005;

(3) Requires that, prior to the state Director of Taxation assessing, levying, and collecting any surcharge adopted by a county, the authorizing county must first notify the Governor, who in turn must direct the state Director of Taxation to begin assessing, levying, and collecting the surcharge;

(4) Establishes that, in addition to the ordinance adoption and other requirements, no surcharge adopted by a county with a population of greater than five hundred thousand shall become effective unless federal moneys have been committed to the mass transit project to be funded by the surcharge;

(5) Restricts the use of surcharge proceeds in counties with a population greater than five hundred thousand to only fixed rail rapid transit system projects and expenses associated with Americans with Disabilities Act of 1990 compliance;

(6) Establishes a county surcharge on state tax credit to offset the tax burden incurred by taxpayers who reside in a county that adopts a surcharge;

(7) Requires that the county surcharge on state tax credits be paid with a portion of the revenues generated by the surcharge;

(8) Prohibits the counties from setting the county surcharge at a rate greater than one-half per cent of:

(A) The value of property taxable under the use tax;

(B) All gross proceeds and gross income taxable under the general excise tax;

(9) Establishes that no surcharge shall take effect prior to January 1, 2007;

(10) Requires the proceeds of the surcharge to be paid over to the counties on an annual basis; and

(11) Allows rental car dealers to pass on the surcharge to lessees.

Your Committee on Conference finds that population growth and increased development have resulted in a substantial increase in the number of vehicles using our roadways which will result in greater traffic congestion over the next decade. With increased traffic congestion comes an expected increase in lost revenues, lost productivity, and lost time spent with families which is currently being experienced.

Although Oahu currently experiences the greatest traffic problems, traffic congestion is no longer a single county issue and is quickly becoming an issue of statewide concern. Hawaii County, Maui County, and Kauai County are all experiencing traffic congestion, the likes of which have never before been seen on these islands. These counties also need to have the ability to address their traffic needs and concerns, which this measure seeks to address.

However, your Committee on Conference is also cognizant of the financial impact the imposition of a county surcharge will have on resident taxpayers. Nevertheless, your Committee on Conference feels that providing the counties with necessary authority to finance their mass transit needs while respecting each county's diverse transportation requirements is a prudent approach to resolving Hawaii's traffic problems.

Your Committee on Conference also notes that the most visited and practical approach to resolving Oahu's current traffic problems is to establish a fixed rail line. It is the intent of your Committee on Conference that the funds realized by a county surcharge on state tax initiated by the City and County of Honolulu be used first for the establishment of a fixed rail mass transit system.

After careful consideration, your Committee on Conference has amended this measure by:

(1) Deleting the requirement that, prior to the state Director of Taxation assessing, levying, and collecting any surcharge adopted by a county, the authorizing county must first notify the Governor, who in turn must direct the state Director of Taxation to begin assessing, levying, and collecting the surcharge;

 

(2) Requiring that the authorizing county notify the state Director of Taxation within ten days after adopting a surcharge on state tax ordinance;

(3) Deleting the provision establishing a county surcharge on state tax credit to offset the tax burden incurred by taxpayers who reside in a county that adopts a surcharge;

(4) Deleting requirements that the county surcharge on state tax credits be paid with a portion of the revenues generated by the surcharge;

(5) Clarifying that the use of surcharge proceeds in counties with a population greater than 500,000 shall be restricted to a locally preferred alternative for a mass transit project and expenses associated with Americans with Disabilities Act of 1990 compliance;

(6) Clarifying that the surcharge on state use tax is applicable to property and services to conform language to the current use tax law;

(7) Inserting a provision allowing for the deduction of ten percent of the gross proceeds of a respective county's surcharge on state tax to reimburse the State for costs of assessment, collection, and disposition of the county surcharge on state tax incurred by the State;

(8) Requiring that the proceeds of the surcharge be paid over to the counties on a quarterly rather than an annual basis;

(9) Changing the effective date to upon its approval;

(10) Inserting language stipulating that:

(A) If none of the counties of the State adopt an ordinance to levy a county surcharge on state tax by December 31, 2005, this Act shall be repealed;

(B) If any county does not adopt an ordinance to levy a county surcharge on state tax by December 31, 2005, it shall be prohibited from adopting such an ordinance pursuant to this Act, unless otherwise authorized by the Legislature through a separate legislative act;

(C) If an ordinance to levy a county surcharge on state tax is adopted by December 31, 2005:

(i) The ordinance shall be repealed on December 31, 2022;

(ii) This Act shall be repealed on December 31, 2022; and

(iii) Section 437D-8.4, Hawaii Revised Statutes, shall be reenacted in the form in which it read on the day prior to the effective date of this Act.

and

(11) Making technical, nonsubstantive amendments for clarity, consistency, and style.

As affirmed by the record of votes of the managers of your Committee on Conference that is attached to this report, your Committee on Conference is in accord with the intent and purpose of H.B. No. 1309, H.D. 2, S.D. 2, as amended herein, and recommends that it pass Final Reading in the form attached hereto as H.B. No. 1309, H.D. 2, S.D. 2, C.D. 1.

Respectfully submitted on behalf of the managers:

ON THE PART OF THE SENATE

ON THE PART OF THE HOUSE

____________________________

BRIAN T. TANIGUCHI, Chair

____________________________

JOSEPH M. SOUKI, Co-Chair

____________________________

DAVID Y. IGE, Co-Chair

____________________________

DWIGHT TAKAMINE, Co-Chair

____________________________

LORRAINE R. INOUYE, Co-Chair