Honolulu, Hawaii



RE:    H.B. No. 735

       H.D. 2

       S.D. 1




Honorable Ronald D. Kouchi

President of the Senate

Twenty-Ninth State Legislature

Regular Session of 2017

State of Hawaii




     Your Committees on Transportation and Energy and Commerce, Consumer Protection, and Health, to which was referred H.B. No. 735, H.D. 2, entitled:




beg leave to report as follows:


     The purpose and intent of this measure is to allow rental car companies to collect from customers mandated government fees and amend the formula upon which those fees are assessed.


     Your Committees received testimony in support of this measure from the Department of Transportation, Chamber of Commerce Hawaii, Hawaii Lodging & Tourism Association, Hertz Global, Hilton Hawaii, Avis Budget Group, American Car Rental Association, Maui Hotel and Lodging Association, Avis Budget Group, Enterprise Holdings in Hawaii, and one individual.  Your Committees received testimony in opposition to this measure from the Office of Consumer Protection of the Department of Commerce and Consumer Affairs.  Your Committees received comments on this measure from the Department of Business, Economic Development, and Tourism.


     Your Committees find that while the rental car industry is vitally important to Hawaii, rental car customers, who are predominantly tourists, should be made fully aware of all of the mandatory government taxes that are assessed on each rental car.  According to testimony, thirty-eight states currently permit rental car companies to fully recover all government fees assessed on rental cars.


     Your Committees further finds that existing law permits rental car companies to recover from rental car customers certain mandatory government fees paid by the companies to make rental vehicles road-ready.  However, the prorated formula is calculated over a period of three hundred sixty-five days, which results in a significant portion of the fees going unrecovered.  Rental car companies incur a shortfall in collections under existing law, which hinders their ability to provide a selection of rental cars to customers.


     Your Committees recognize the concerns of several testifiers that the reporting requirements in this measure as currently drafted are overly broad.  In addition, your Committees note concerns that the one-year sunset date may be too short of a time frame for the Department of Business, Economic Development, and Tourism to determine the impact of this measure.


     Your Committees note that the Senate previously passed S.B. No. 657, S.D. 2 (Regular Session 2017), a substantially similar measure, which your Committees believe addresses several of the concerns raised.


     Accordingly, your Committees have amended this measure by deleting its contents and inserting the contents of S.B. No. 657, S.D. 2, a substantially similar measure, which:


     (1)  Amends the prorated amount, at an unspecified rate, of vehicle license and registration and weight taxes that rental car companies may pass on to lessees;


     (2)  Requires the motor vehicle rental industry to report to the Legislature prior to the convening of the Regular Session of 2019 on the impact to average vehicle license recovery fee charged to each customer on each motor vehicle rental, the profit margin of each motor vehicle rental, and the actual time in service of each motor vehicle rental;


     (3)  Defines "vehicle license recovery fee" for purposes of the report;


     (4)  Inserts an effective date of March 1, 2050, to encourage further discussion; and


     (5)  Makes technical, nonsubstantive amendments for the purposes of clarity and consistency.


     As affirmed by the records of votes of the members of your Committees on Transportation and Energy and Commerce, Consumer Protection, and Health that are attached to this report, your Committees are in accord with the intent and purpose of H.B. No. 735, H.D. 2, as amended herein, and recommend that it pass Second Reading in the form attached hereto as H.B. No. 735, H.D. 2, S.D. 1, and be referred to your Committee on Ways and Means.


Respectfully submitted on behalf of the members of the Committees on Transportation and Energy and Commerce, Consumer Protection, and Health,