Honolulu, Hawaii



RE:    H.B. No. 1587

       H.D. 1

       S.D. 1




Honorable Ronald D. Kouchi

President of the Senate

Twenty-Ninth State Legislature

Regular Session of 2017

State of Hawaii




     Your Committee on Transportation and Energy, to which was referred H.B. No. 1587, H.D. 1, entitled:




begs leave to report as follows:


     The purpose and intent of this measure is to replace the state vehicle weight tax with a tax based on the assessed value of the vehicle.


     Your Committee received testimony in support of this measure from the Department of Transportation.  Your Committee received testimony in opposition to this measure from the Hawaii Transportation Association and Hawaii Auto Dealers Association.  Your Committee received comments on this measure from the Department of Customer Services of the City and County of Honolulu and Tax Foundation of Hawaii.


     Your Committee finds that the vehicle weight tax has historically been used for road construction and repairs and is the major source of funding for the state highway fund.  The Department of Transportation testified that changing from a vehicle weight tax to an ad valorem tax may negatively impact the Department's highway revenue bonds ratings.  The fiscal impact of this measure is unclear and an ad valorem tax may be more complex to administer and may be a less stable source of funding because the taxable value of a vehicle will decline over time due to depreciation.


     Your Committee has amended this measure by:


     (1)  Deleting its contents and inserting provisions to raise motor vehicle fuel taxes by unspecified amounts;


     (2)  Inserting an effective date of July 1, 2017; and


     (3)  Making technical, nonsubstantive amendments for the purposes of clarity and consistency.


     As affirmed by the record of votes of the members of your Committee on Transportation and Energy that is attached to this report, your Committee is in accord with the intent and purpose of H.B. No. 1587, H.D. 1, as amended herein, and recommends that it pass Second Reading in the form attached hereto as H.B. No. 1587, H.D. 1, S.D. 1, and be referred to your Committee on Ways and Means.


Respectfully submitted on behalf of the members of the Committee on Transportation and Energy,