STAND. COM. REP. NO. 556

 

Honolulu, Hawaii

 

RE: S.B. No. 1081

S.D. 1

 

 

 

Honorable Ronald D. Kouchi

President of the Senate

Thirtieth State Legislature

Regular Session of 2019

State of Hawaii

 

Sir:

 

Your Committees on Housing and Energy, Economic Development, and Tourism, to which was referred S.B. No. 1081 entitled:

 

"A BILL FOR AN ACT RELATING TO INDIVIDUAL DEVELOPMENT ACCOUNTS,"

 

beg leave to report as follows:

 

The purpose and intent of this measure is to:

 

(1) Expand the qualified expenditures of individual development account funds to rental housing associated costs, transportation associated costs, costs related to the purchase or repair of a motor vehicle, and qualified business capitalization expenses for a small business;

 

(2) Expand the eligibility for state-funded individual development accounts to individuals with income up to 100 percent of the area median income;

 

(3) Clarify certain requirements for fiduciary organizations;

 

(4) Require the Department of Business, Economic Development, and Tourism to certify the tax credits for contributions;

 

(5) Establish requirements for fiduciary organizations to maintain state match funds for individual development accounts; and

 

(6) Reactivate the individual development account tax credit for taxable years 2020 through 2024.

 

Your Committees received testimony in support of this measure from the Hawaiian Community Assets, Hawaii Alliance for Community-Based Economic Development, Hawaii State Federal Credit Union, Oahu County Committee on Legislative Priorities of the Democratic Party of Hawaii, Hawaii HomeOwnership Center, and one individual. Your Committees received comments on this measure from the Department of Business, Economic Development, and Tourism; Department of Taxation; and Tax Foundation of Hawaii.

 

Your Committees find that individual development accounts are matched savings accounts that enable low- and moderate-income individuals to save, build assets, obtain stable housing, and ensure a financially secure future. Your Committees further find that individual development accounts assist low- and moderate-income individuals who are participating in financial education and use the savings for targeted purposes, such as housing, post‑secondary education, small business development, and transportation for work and school.

 

Your Committees also find that the individual development account tax credit ended in 2004. Your Committees believe that although the fiscal impacts of reinstating the tax credit are unknown, there is merit in reinstating this tax credit to help low- and moderate-income individuals become more financially secure and stable in the future.

 

Your Committees have amended this measure by:

 

(1) Changing the income cap of an individual development account holder from 100 percent of the area household median income to an unspecified percentage;

 

(2) Changing references of the Business Development and Support Division of the Department of Business, Economic Development, and Tourism to the Department of Human Services, thereby reinstating the Department of Human Services as the manager of fiduciary organizations' responsibilities and certifier of individual development account tax credits;

 

(3) Inserting an effective date of July 1, 2050, to encourage further discussion; and

 

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

 

Your Committees note that it is the intent of your Committees to integrate this measure with Senate Bill No. 1310, Regular Session of 2019, which is the individual housing accounts measure.

 

As affirmed by the records of votes of the members of your Committees on Housing and Energy, Economic Development, and Tourism that are attached to this report, your Committees are in accord with the intent and purpose of S.B. No. 1081, as amended herein, and recommend that it pass Second Reading in the form attached hereto as S.B. No. 1081, S.D. 1, and be referred to your Committee on Ways and Means.

 

Respectfully submitted on behalf of the members of the Committees on Housing and Energy, Economic Development, and Tourism,

 

________________________________

GLENN WAKAI, Chair

 

________________________________

STANLEY CHANG, Chair