REPORT TITLE:
Information-based Industries


DESCRIPTION:
Mandates integration of tourism marketing plans with existing and
potential information and communication technology networks and
services.  Creates a technology training or job creation tax
credit.  Establishes Hawaii Internet Exchange (HIE) in OTTED and
includes the development of an internet exchange in state
economic priority guidelines.  Includes in state planning
priority guidelines for education, an increase in the
availability of telecommunication equipment for the exchange of
information and internet access.  Establishes an accelerated
information technology education and training program within the
UH.  Authorizes GO bonds to establish fiber optic connection to
internet for UH and DOE.

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
                                            377         
HOUSE OF REPRESENTATIVES                H.B. NO.           
TWENTIETH LEGISLATURE, 1999                                
STATE OF HAWAII                                            
                                                             
________________________________________________________________
________________________________________________________________


                   A  BILL  FOR  AN  ACT

RELATING TO ECONOMIC DEVELOPMENT.


BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF HAWAII:

 1                              PART I
 
 2      SECTION 1.  The legislature finds that advances in
 
 3 telecommunications, information technology, and the explosive
 
 4 growth of the global internet have created a significant
 
 5 opportunity for the State to expand and diversify its economy
 
 6 through the development of an information industry designed to
 
 7 promote the exchange of electronic information.
 
 8      It has been predicted that within seven years, one half of
 
 9 business and consumer purchases will be made by computer, and
 
10 those conducting business, pursuing education, and finding
 
11 entertainment will all require access to internet connections.
 
12 Hawaii is in a position to take advantage of this growing market.
 
13 The State already possesses an impressive fiber optic and
 
14 satellite communication infrastructure for electronic information
 
15 transmission that connects Hawaii with the mainland and Japan,
 
16 and which may allow for reduced costs due to increased
 
17 transmission capacity.  In addition, Hawaii's mid-Pacific
 
18 physical location has been transformed by the new information and
 
19 communications technologies from a liability into an asset.  
 

 
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 1 Hawaii's location between time zones gives the state an "edge" in
 
 2 U.S.-Asia/Pacific transactions.  This combined with Hawaii's
 
 3 multi-lingual workforce gives the State the real potential to
 
 4 become a call center for U.S. companies expanding into Asia.
 
 5 Finally, Hawaii possesses unique and internationally recognized
 
 6 information resources in areas such as astronomy, biotechnology,
 
 7 volcanology, seismology, oceanography, as well as in the State's
 
 8 own native Hawaiian history and culture.
 
 9      The legislature finds that although Hawaii has substantial
 
10 potential as an information and telecommunications center, active
 
11 government involvement is needed if that potential is to be fully
 
12 realized.  Hawaii must build a workforce educated and trained in
 
13 the area of information technology, that is sufficient for the
 
14 needs of, and to attract the new information and communications
 
15 technology businesses.  The State must also nurture a business
 
16 climate that is attractive to these businesses.  In addition,
 
17 Hawaii must more closely link itself to the communications web by
 
18 establishing a presence on the internet, upgrading the access of
 
19 University of Hawaii students and researchers to the internet,
 
20 and integrating and developing the objectives and marketing
 
21 strategies of its tourist industry in concert with the area of
 
22 telecommunications and information.
 

 
 
 
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 1      The purpose of this Act is to foster the growth of
 
 2 knowledge-based industries in Hawaii by:
 
 3      (1)  Requiring tourism market plans to target information
 
 4           industries and be integrated with existing and
 
 5           potential communications and information networks and
 
 6           services;
 
 7      (2)  Offering a tax incentive through a technology training
 
 8           or job creation tax credit to offset the cost of
 
 9           training, retraining, and related job creation costs;
 
10      (3)  Establishing the Hawaii internet exchange to serve as a
 
11           catalyst for the development of internet-focused
 
12           businesses;
 
13      (4)  Providing for high speed access to the internet for the
 
14           University of Hawaii and the public schools; and
 
15      (5)  Accelerating work force development programs to create
 
16           a pool of information technology professionals.
 
17                              PART II
 
18      SECTION 2.  The purpose of this part is to foster the
 
19 development of knowledge-based industries by integrating those
 
20 industries with Hawaii's economy in a way that enhances and
 
21 strengthens the tourism industry.
 
22      SECTION 3.  Section 201-97, Hawaii Revised Statutes, is
 
23 amended to read as follows:
 

 
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 1      "�201-97  Integration and development of the tourism
 
 2 industry.  The office shall be responsible for planning for the
 
 3 integrated and coordinated development and expansion of the
 
 4 tourism industry of the State.  The office shall investigate and
 
 5 recommend to appropriate governmental officers, agencies,
 
 6 legislative committees, and private groups ways and means of
 
 7 coordinating promotional activities on behalf of tourism with the
 
 8 development of recreational and other facilities, and with
 
 9 existing and potential information and communications technology
 
10 networks and services in the State, for improved tourism
 
11 development.  The office shall also review the expenditure of
 
12 governmental funds for tourism-related activities and shall
 
13 prepare an annual report on the expenditures, together with any
 
14 recommendations the office may have.  The annual report shall be
 
15 submitted to the legislature as part of the annual report
 
16 required under section 201-98."
 
17      SECTION 4.  Section 201B-6, Hawaii Revised Statutes, is
 
18 amended by amending subsection (a) to read as follows:
 
19      "(a)  The authority shall be responsible for developing a
 
20 strategic tourism marketing plan, which shall be updated every
 
21 three years[, that] and includes the following:
 

 
 
 
 
 
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 1      (1)  Identification and evaluation of current and future
 
 2           tourism needs for the different regions of the State;
 
 3      (2)  Goals and objectives in accordance with identified
 
 4           needs;
 
 5      (3)  Statewide promotional efforts and programs;
 
 6      (4)  Targeted markets;
 
 7      (5)  Efforts to enter into brand marketing projects that
 
 8           make effective use of cooperative advertising programs;
 
 9      (6)  Measures of effectiveness for the authority's
 
10           promotional programs; and
 
11      (7)  Coordination of marketing plans of all destination
 
12           marketing organizations receiving state funding prior
 
13           to finalization of the authority's marketing plan.
 
14      The authority shall develop and include in its marketing
 
15 plan goals and objectives for marketing the State to the
 
16 techno-tourism niche as well as for integrating marketing
 
17 objectives with existing and potential state telecommunication
 
18 and information resources in the public and private sectors."
 
19                             PART III
 
20      SECTION 5.  The purpose of this part is to accelerate job
 
21 creation through targeted assistance to technology start-ups.
 

 
 
 
 
 
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 1      SECTION 6.  Chapter 235, Hawaii Revised Statutes, is amended
 
 2 by adding a new section to be appropriately designated and to
 
 3 read as follows:
 
 4      "�235-     Tax credit for technology training or job
 
 5 creation.  (a)  Each resident taxpayer in this State may claim a
 
 6 tax credit for technology training or job creation under this
 
 7 section.  The credit shall be for the cost of training the
 
 8 taxpayer or the taxpayer's employees to up-grade the taxpayer or
 
 9 taxpayer's employees' technology-related skills or for the
 
10 creation of technology-related jobs.  The credit shall be equal
 
11 to the cost of this training or creating those jobs but shall not
 
12 exceed $        .  The credit may be claimed against the
 
13 taxpayer's income tax liability for the taxable year.
 
14      (b)  The tax credits claimed by a resident taxpayer pursuant
 
15 to this section shall be deductible from the resident taxpayer's
 
16 individual income tax liability, if any, for the tax year in
 
17 which they are properly claimed.  If the tax credits claimed by a
 
18 resident taxpayer exceed the amount of income tax payment due
 
19 from the resident taxpayer, the excess of credits over payments
 
20 due shall be refunded to the resident taxpayer; provided that tax
 
21 credits properly claimed by a resident individual who has no
 
22 income tax liability shall be paid to the resident individual;
 

 
 
 
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 1 and provided further that no refunds or payment on account of the
 
 2 tax credits allowed by this section shall be made for amounts
 
 3 less than $1.
 
 4      (c)  All claims for tax credits under this section,
 
 5 including any amended claims, must be filed on or before the end
 
 6 of the twelfth month following the close of the taxable year for
 
 7 which the credits may be claimed.  Failure to comply with the
 
 8 foregoing provision shall constitute a waiver of the right to
 
 9 claim the credit.
 
10      (d)  As used in this section "technology" means emerging
 
11 industries that are technology-intensive, including but not
 
12 limited to electronics, biotechnology, or computer systems."
 
13                              PART IV
 
14      SECTION 7.  The purpose of this part is to establish an
 
15 internet exchange that will allow Hawaii's businesses to
 
16 establish a global presence.
 
17      SECTION 8.  Chapter 304, Hawaii Revised Statutes, is amended
 
18 by adding a new section to part II, subpart L, to be
 
19 appropriately designated and to read as follows:
 
20      "�304-      Hawaii internet exchange; established.  There is
 
21 established within the office of technology transfer and economic
 
22 development, an internet exchange that shall be known as the
 

 
 
 
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 1 Hawaii internet exchange.  The Hawaii internet exchange shall
 
 2 serve as a switching and peering point for internet service
 
 3 providers."
 
 4      SECTION 9.  Section 226-103, Hawaii Revised Statutes, is
 
 5 amended by amending subsection (g) to read as follows:
 
 6      "(g)  Priority guidelines to promote the development of the
 
 7 information industry: 
 
 8      (1)  Establish an information network that will serve as the
 
 9           catalyst for establishing a viable information industry
 
10           in Hawaii[.];
 
11      (2)  Encourage the development of services such as financial
 
12           data processing, a products and services exchange,
 
13           foreign language translations, telemarketing,
 
14           teleconferencing, a twenty-four-hour international
 
15           stock exchange, international banking, [and] a Pacific
 
16           Rim management center[.], and an internet exchange;
 
17      (3)  Encourage the development of small businesses in the
 
18           information field such as software development, the
 
19           development of new information systems and peripherals,
 
20           data conversion and data entry services, and home or
 
21           cottage services such as computer programming,
 
22           secretarial, and accounting services[.];
 

 
 
 
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 1      (4)  Encourage the development or expansion of educational
 
 2           and training opportunities for residents in the
 
 3           information and telecommunications fields[.];
 
 4      (5)  Encourage research activities, including legal research
 
 5           in the information and telecommunications fields[.];
 
 6           and
 
 7      (6)  Support promotional activities to market Hawaii's
 
 8           information industry services."
 
 9      SECTION 10.  There is appropriated out of the general
 
10 revenues of the State of Hawaii the sum of $            or so
 
11 much thereof as may be necessary for fiscal year 1999-2000 to
 
12 purchase the information technology equipment and support
 
13 services necessary for the establishment of the Hawaii internet
 
14 exchange within the University of Hawaii, office of technology
 
15 transfer and economic development.
 
16      The sum appropriated shall be expended by the University of
 
17 Hawaii for the purposes of this part.
 
18                              PART V
 
19      SECTION 11.  The legislature finds that Hawaii's students
 
20 will require high-speed access to the internet.  Hawaii, because
 
21 of its remote geographic location, pays a significant cost for
 
22 high-speed access.  A university on the continental United States
 

 
 
 
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 1 pays $20,000 per year for high speed access to the internet
 
 2 whereas the same access would cost $2,500,000 per year for the
 
 3 University of Hawaii.  Hawaii's students must have equal access
 
 4 to the internet to ensure global competitiveness.
 
 5      The purpose of this part is to provide for high-speed access
 
 6 to the internet for the University of Hawaii and the public
 
 7 schools.
 
 8      SECTION 12.  Section 226-107, Hawaii Revised Statutes, is
 
 9 amended to read as follows:
 
10      "�226-107  Quality education.  Priority guidelines to
 
11 promote quality education:
 
12      (1)  Pursue effective programs which reflect the varied
 
13           district, school, and student needs to strengthen basic
 
14           skills achievement[.];
 
15      (2)  Continue emphasis on general education "core"
 
16           requirements to provide common background to students
 
17           and essential support to other university programs.
 
18      (3)  Initiate efforts to improve the quality of education by
 
19           improving the capabilities of the education work
 
20           force[.];
 
21      (4)  Promote increased opportunities for greater autonomy
 
22           and flexibility of educational institutions in their
 
23           decisionmaking responsibilities[.];
 

 
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 1      (5)  Increase and improve the use of information technology
 
 2           in education [and encourage] by the availability of
 
 3           telecommunications equipment for:
 
 4           (A)  The electronic exchange of information;
 
 5           (B)  Statewide electronic mail; and
 
 6           (C)  Access to the internet.
 
 7      (6)  Encourage programs which increase the public's
 
 8           awareness and understanding of the impact of
 
 9           information technologies on our lives[.];
 
10     [(6)] (7)  Pursue the establishment of Hawaii's public and
 
11           private universities and colleges as research and
 
12           training centers of the Pacific[.];
 
13     [(7)] (8)  Develop resources and programs for early childhood
 
14           education[.];
 
15     [(8)] (9)  Explore alternatives for funding and delivery of
 
16           educational services to improve the overall quality of
 
17           education[.]; and
 
18     [(9)] (10)  Strengthen and expand educational programs and
 
19           services for students with special needs."
 
20      SECTION 13.  The director of finance is authorized to issue
 
21 general obligation bonds in the sum of $            or so much
 
22 thereof as may be necessary and the same sum or so much thereof
 

 
 
 
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 1 as may be necessary for fiscal year 1999-2000, is appropriated
 
 2 for fiscal year 2000-2001, to procure information technology
 
 3 equipment and the support services necessary to establish fiber
 
 4 optic connections to the internet for the University of Hawaii
 
 5 and the department of education; provided that the University of
 
 6 Hawaii shall seek to obtain matching federal funds.
 
 7                              PART VI
 
 8      SECTION 14.  The purpose of this part is to accelerate work
 
 9 force development programs to create a pool of information
 
10 technology professionals.
 
11      SECTION 15.  Chapter 304, Hawaii Revised Statutes, is
 
12 amended by adding a new section to part II, subpart L, to be
 
13 appropriately designated and to read as follows:
 
14      "�304-      Information industry work force development
 
15 program.  (a)  There is established an information and
 
16 telecommunications work force training program hereinafter
 
17 referred to as the "training program."  The training program
 
18 shall be placed within the University of Hawaii for
 
19 administrative purposes only.  The training program shall provide
 
20 accelerated information technology education and training on the
 
21 post-high school to graduate levels and shall include public,
 
22 private, and for-profit educational institutions. In the design
 

 
 
 
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 1 and delivery of programs, the training program may cooperate or
 
 2 contract with other public, private, and for-profit institutions.
 
 3      (b)  The administrator of the training program shall seek
 
 4 and encourage partnerships between members of the private
 
 5 information technology industry and the training program."
 
 6      SECTION 16.  There is appropriated out of the general
 
 7 revenues of the State of Hawaii the sum of $            or so
 
 8 much thereof as may be necessary, for fiscal year 1999-2000 to
 
 9 provide funds to educational institutions to establish an
 
10 information and telecommunications work force training program.  
 
11      The sum appropriated shall be expended by the University of
 
12 Hawaii for the purposes of this part.
 
13                             PART VII
 
14      SECTION 17.  Statutory material to be repealed is bracketed.
 
15 New statutory material is underscored.
 
16      SECTION 18.  This Act shall take effect upon its approval;
 
17 provided that:
 
18      (1)  Sections 10, 13, and 16 shall take effect on July 1,
 
19           1999; and
 
20      (2)  Section 6 shall apply to taxable years beginning after
 
21           December 31, 1998.
 
22 
 
23                           INTRODUCED BY:  _______________________