REPORT TITLE:
Technology Omnibus


DESCRIPTION:
Consolidates high tech agencies under a special advisor for
technology development; creates tax credits for technology
training or job creation and investment in technology business;
establishes HI internet exchange; and establishes UH work force
development training program.

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
                                                        
THE SENATE                              S.B. NO.           1583
TWENTIETH LEGISLATURE, 1999                                
STATE OF HAWAII                                            
                                                             
________________________________________________________________
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                   A  BILL  FOR  AN  ACT

RELATING TO TECHNOLOGY.


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

 1                              PART I.
 
 2      SECTION 1.  The legislature finds that Hawaii is one of the
 
 3 most geographically isolated communities on earth, and for many
 
 4 years, our economic opportunities were limited by this isolation.
 
 5 Recent advances in telecommunications, information technology,
 
 6 and the explosive growth of the internet, however, present
 
 7 significant new opportunities for the State to develop and
 
 8 diversify its economy, opening the global market to Hawaii
 
 9 businesses.
 
10      Fiber optic cables, connecting Hawaii with the mainland
 
11 United States and Asia, and new communications satellites have
 
12 dramatically increased both the volume of information sent and
 
13 the range of transmittal.  While transmission capacity increases,
 
14 costs continue to fall.  Today, internet commerce represents a
 
15 small fraction of all business transacted, but industry watchers
 
16 estimate that within the next seven years, half of all business
 
17 and consumer purchases will be done by computer.  In this new
 
18 era, connection is everything.
 
19      The legislature further finds that Hawaii's opportunities
 
20 also represent new challenges.  Businesses -- particularly the
 

 
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 1 small, start-ups associated with high technology -- no longer
 
 2 need to factor in Hawaii's geographic isolation, but must still
 
 3 consider the cost of doing business in the State.  They also face
 
 4 a confusing, often overlapping group of state agencies that
 
 5 provide support for technology-related business.  Providing
 
 6 targeted assistance to these businesses, as well as a clear focus
 
 7 of responsibility within state government for aggressive
 
 8 development and support will better serve the burgeoning
 
 9 technology industry.
 
10      The legislature also finds that education will be forever
 
11 changed as businesses and workers alike demand new skills and
 
12 rapid-response delivery of these skills.  Our schools must move
 
13 beyond the traditional book and classroom delivery and embrace a
 
14 technologically connected model for learning.  In 1998, the
 
15 legislature appropriated funds to provide high-speed internet
 
16 access to the university and all state agencies, including
 
17 schools.  As a result, establishing schools and libraries as
 
18 community access points can be accelerated.
 
19      If Hawaii is to become a state known for leading its people
 
20 effectively into the twenty-first century, the legislature
 
21 believes progress and change must begin immediately.  The purpose
 
22 of this Act is to support the growth and development of high
 
23 technology industries in Hawaii by:
 

 
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 1      (1)  Consolidating the State's high technology agencies,
 
 2           divisions, and offices under the coordination and
 
 3           direction of a special advisor for technology
 
 4           development and creating a governor's special advisory
 
 5           council for technology development to assist the
 
 6           advisor;
 
 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)  Offering a tax incentive for investment in new high
 
11           technology businesses;
 
12      (4)  Establishing the Hawaii internet exchange to serve as a
 
13           catalyst for the development of internet-focused
 
14           businesses;
 
15      (5)  Focusing work force development programs to ensure a
 
16           pool of technology professionals; and
 
17      (6)  Accelerating high speed access to the internet for the
 
18           University of Hawaii and the public schools.
 
19                             PART II.
 
20      SECTION 2.  Over the years, the legislature has created a
 
21 number of state agencies charged with promoting the development
 
22 of a variety of technological industries.  While these agencies
 
23 provide valuable services, they lack focus and in some cases
 

 
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 1 their original missions have changed considerably.  Consolidation
 
 2 of these agencies under a single entity will provide a more
 
 3 focused effort in attracting high technology businesses to
 
 4 Hawaii.
 
 5      SECTION 3.  The Hawaii Revised Statutes is amended by adding
 
 6 two new sections to be appropriately designated and to read as
 
 7 follows:
 
 8      "§   -     Special advisor for technology development.  (a)
 
 9 There is established within the office of the governor a special
 
10 advisor for technology development to be appointed by the
 
11 governor as provided in section 26-34.
 
12      (b)  The duties of the special advisor shall include, but
 
13 not be limited to:
 
14      (1)  Developing, coordinating, and implementing short- and
 
15           long-range state policies and directions to enhance the
 
16           development of high technology industries in Hawaii;
 
17      (2)  Coordinating all state high technology agencies while
 
18           developing a plan for reorganization or consolidation
 
19           of these agencies in the interests of greater
 
20           efficiency and cost effectiveness;
 
21      (3)  Advising the private sector in the development of high
 
22           technology activities and resources, and providing
 
23           technical or other assistance to private industry upon
 

 
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 1           request;
 
 2      (4)  Creating, disseminating, and updating a listing of all
 
 3           high technology assistance programs in the State and
 
 4           where they can be reached;
 
 5      (5)  Pursuing appropriate public-private sector business
 
 6           partnerships;
 
 7      (6)  Coordinating the State's promotion and marketing of the
 
 8           high technology industry, including a review of current
 
 9           marketing efforts;
 
10      (7)  Arranging for the conduct of research through
 
11           contractual services with the University of Hawaii or
 
12           any agency or other qualified persons;
 
13      (8)  Encouraging the development of educational, training,
 
14           and career programs in high technology industries; and
 
15      (9)  Performing other necessary or desirable functions to
 
16           facilitate the intent of this section.
 
17      (c)  In carrying out the duties of this section, the special
 
18 advisor for technology development may utilize the services of
 
19 the State's high technology agencies, including those of the
 
20 University of Hawaii, as appropriate.
 
21      §   -     Governor's special advisory council for technology
 
22 development; establishment; appointment, number, and term of
 
23 members; duties.  (a)  There is established within the office of
 

 
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 1 the governor, for administrative purposes, an advisory council to
 
 2 be known as the governor's special advisory council for
 
 3 technology development, which shall review and make
 
 4 recommendations on matters relating to the marketing and
 
 5 promotion of Hawaii as a location for high technology companies.
 
 6 The council shall be composed of         members appointed in
 
 7 accordance with section 26-34, and shall include representatives
 
 8 of the high technology industry, business leaders, educators,
 
 9 government leaders, and legislators.
 
10      (b)  The members shall be appointed by the governor for four
 
11 years, except that the terms of the members first appointed shall
 
12 be for two and four years, respectively, as designated by the
 
13 governor at the time of appointment.  The council shall elect a
 
14 chairperson from among its members.
 
15      (c)  In appointing members, the governor shall select
 
16 persons who have knowledge of the high technology industry, the
 
17 educational needs of the industry, or in the marketing and
 
18 promotion of high technology industries.  The members of the
 
19 council shall serve without compensation but shall be reimbursed
 
20 for expenses, including travel expenses, necessary for the
 
21 performance of their duties.
 
22      (d)  The council shall assist the special advisor for
 
23 technology development in developing and coordinating the
 

 
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 1 marketing and promotion of the high technology industry in
 
 2 Hawaii."
 
 3      SECTION 4.  There is appropriated out of the general
 
 4 revenues of the State of Hawaii the sum of $       , or so much
 
 5 thereof as may be necessary for fiscal year 1999-2000, and the
 
 6 same sum, or so much thereof as may be necessary, for fiscal year
 
 7 2000-2001, for the special advisor for technology development and
 
 8 the governor's special advisory council for technology
 
 9 development.  The sums appropriated shall be expended by the
 
10 office of the governor for the purposes of section 3.
 
11                             PART III.
 
12      SECTION 5.  While the advantages of Hawaii's proximity to
 
13 Pacific and Asian markets are a lure for technology business in
 
14 Hawaii, the costs of doing business are high.  Opportunities must
 
15 be created for high technology companies through tax credits, tax
 
16 exemptions, and by proving additional investment capital through
 
17 targeted assistance to technology start-ups.
 
18      SECTION 6.  Chapter 235, Hawaii Revised Statutes, is amended
 
19 by adding a new section to be appropriately designated and to
 
20 read as follows:
 
21      "§235-     Tax credit for technology training or job
 
22 creation.  (a)  Each resident taxpayer in this State may claim a
 
23 tax credit for technology training or job creation under this
 

 
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 1 section.  The credit shall be for the cost of training the
 
 2 taxpayer or the taxpayer's employees to up-grade the taxpayer or
 
 3 taxpayer's employees technology related skills or for the
 
 4 creation of technology related jobs.  The credit shall be equal
 
 5 to the cost of this training or creating those jobs but shall not
 
 6 exceed $        .  The credit may be claimed against the
 
 7 taxpayer's income tax liability for the taxable year.
 
 8      (b)  The tax credits claimed by a resident taxpayer pursuant
 
 9 to this section shall be deductible from the resident taxpayer's
 
10 individual income tax liability, if any, for the tax year in
 
11 which they are properly claimed.  If the tax credits claimed by a
 
12 resident taxpayer exceed the amount of income tax payment due
 
13 from the resident taxpayer, the excess of credits over payments
 
14 due shall be refunded to the resident taxpayer; provided that tax
 
15 credits properly claimed by a resident individual who has no
 
16 income tax liability shall be paid to the resident individual;
 
17 and provided further that no refunds or payment on account of the
 
18 tax credits allowed by this section shall be made for amounts
 
19 less than $1.
 
20      (c)  All claims for tax credits under this section,
 
21 including any amended claims, must be filed on or before the end
 
22 of the twelfth month following the close of the taxable year for
 
23 which the credits may be claimed.  Failure to comply with the
 

 
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 1 foregoing provision shall constitute a waiver of the right to
 
 2 claim the credit.
 
 3      (d)  As used in this section:
 
 4      "Technology" means emerging industries that are technology-
 
 5 intensive, including but not limited to electronics,
 
 6 biotechnology, or computer systems."
 
 7      SECTION 7.  Chapter 241, Hawaii Revised Statutes, is amended
 
 8 by adding a new section to be appropriately designated and to
 
 9 read as follows:
 
10      "§241-     Tax credit for funds invested in new technology
 
11 industries.  (a)  Any bank, building and loan association,
 
12 development company, financial corporation, financial services
 
13 loan company, trust company, mortgage loan company, financial
 
14 holding company, small business investment company, or subsidiary
 
15 may claim a tax credit for funds invested in new technology
 
16 industries under this section.  The credit shall be equal to     
 
17 per cent of the total investment in a new technology business,
 
18 but shall not exceed $        .
 
19      (b)  The tax credits claimed pursuant to this section shall
 
20 be deductible from the bank, building and loan association,
 
21 development company, financial corporation, financial services
 
22 loan company, trust company, mortgage loan company, financial
 
23 holding company, small business investment company, or
 

 
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 1 subsidiary's tax liability, if any, for the tax year in which
 
 2 they are properly claimed.  If the tax credits claimed by a bank,
 
 3 building and loan association, development company, financial
 
 4 corporation, financial services loan company, trust company,
 
 5 mortgage loan company, financial holding company, small business
 
 6 investment company, or subsidiary exceed the amount of income tax
 
 7 payment due, the excess of credits over payments due shall be
 
 8 refunded; provided that no refunds or payment on account of the
 
 9 tax credits allowed by this section shall be made for amounts
 
10 less than $1.
 
11      (c)  All claims for tax credits under this section,
 
12 including any amended claims, must be filed on or before the end
 
13 of the twelfth month following the close of the taxable year for
 
14 which the credits may be claimed.  Failure to comply with the
 
15 foregoing provision shall constitute a waiver of the right to
 
16 claim the credit.
 
17      (d)  As used in this section:
 
18      "Technology" means emerging industries that are technology-
 
19 intensive, including but not limited to electronics,
 
20 biotechnology, or computer systems."
 
21                             PART IV.
 
22      SECTION 8.  Economic development opportunities are changing.
 
23 The playing field is now the world and not the next state or
 

 
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 1 country.  The internet is the catalyst and the enabling
 
 2 infrastructure is technology and telecommunications.  The
 
 3 legislature finds that an internet exchange will be a key element
 
 4 that allows Hawaii's businesses to establish a global presence.
 
 5      SECTION 9.  Chapter 304, Hawaii Revised Statutes, is amended
 
 6 by adding a new section to part II, subpart L, to be
 
 7 appropriately designated and to read as follows:
 
 8      "§304-      Hawaii internet exchange; established.  There is
 
 9 established within the office of technology transfer and economic
 
10 development, an internet exchange that shall be known as the
 
11 Hawaii internet exchange.  The Hawaii internet exchange shall
 
12 serve as a switching and peering point for internet service
 
13 providers."
 
14      SECTION 10.  Section 226-103, Hawaii Revised Statutes, is
 
15 amended by amending subsection (g) to read as follows:
 
16      "(g)  Priority guidelines to promote the development of the
 
17 information industry: 
 
18      (1)  Establish an information network that will serve as the
 
19           catalyst for establishing a viable information industry
 
20           in Hawaii.
 
21      (2)  Encourage the development of services such as financial
 
22           data processing, a products and services exchange,
 
23           foreign language translations, telemarketing,
 

 
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 1           teleconferencing, a twenty-four-hour international
 
 2           stock exchange, international banking, [and] a Pacific
 
 3           Rim management center[.], and an internet exchange.
 
 4      (3)  Encourage the development of small businesses in the
 
 5           information field such as software development, the
 
 6           development of new information systems and peripherals,
 
 7           data conversion and data entry services, and home or
 
 8           cottage services such as computer programming,
 
 9           secretarial, and accounting services.
 
10      (4)  Encourage the development or expansion of educational
 
11           and training opportunities for residents in the
 
12           information and telecommunications fields.
 
13      (5)  Encourage research activities, including legal research
 
14           in the information and telecommunications fields.
 
15      (6)  Support promotional activities to market Hawaii's
 
16           information industry services."
 
17      SECTION 11.  There is appropriated out of the general
 
18 revenues of the State of Hawaii the sum of $         , or so much
 
19 thereof as may be necessary, for fiscal year 1999-2000, and the
 
20 same sum, or so much thereof as may be necessary, for fiscal year
 
21 2000-2001, to purchase the information technology equipment and
 
22 support services necessary for the establishment of the Hawaii
 
23 internet exchange within the University of Hawaii, office of
 

 
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 1 technology transfer and economic development.  The sums
 
 2 appropriated shall be expended by the University of Hawaii for
 
 3 the purposes of section 9.
 
 4                              PART V.
 
 5      SECTION 12.  While Hawaii's economy struggles with low
 
 6 economic growth for the eighth consecutive year, jobs in the
 
 7 information industry continue to grow.  Industry watchers
 
 8 estimate that there are 190,000 jobs in the high-tech industry
 
 9 that are currently unfilled, and the shortage is not expected to
 
10 resolve itself anytime soon.  By the year 2005, more than 750,000
 
11 additional high-tech jobs are expected to be created.  It has
 
12 been estimated that Hawaii will have 5,000 technical jobs by the
 
13 year 2000 that will go unfilled by the local employment pool.
 
14      SECTION 13.  Chapter 304, Hawaii Revised Statutes, is
 
15 amended by adding a new section to part II, subpart L, to be
 
16 appropriately designated and to read as follows:
 
17      "§304-      Technology work force development training
 
18 program.  (a)  There is established a technology work force
 
19 training program hereinafter referred to as the training program.
 
20 The training program shall be placed within the University of
 
21 Hawaii for administrative purposes as provided for in section
 
22 26-35.  The training program shall provide accelerated technology
 
23 education and training on the post-high-school to graduate
 

 
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 1 levels, and shall include public, private, and for-profit
 
 2 educational institutions.  In the design and delivery of
 
 3 programs, the training program may cooperate or contract with
 
 4 other public, private, and for-profit institutions.
 
 5      (b)  The administrator of the training program shall seek
 
 6 and encourage partnerships between members of the private
 
 7 information technology industry and the training program, as may
 
 8 be appropriate to provide preemployment or employment training,
 
 9 or on-the-job training for local residents hired by businesses
 
10 relocating to Hawaii or expanding local operations.
 
11      (c)  The university shall establish and lead an inter-agency
 
12 task force to include representatives from the department of
 
13 business, economic development, and tourism, the department of
 
14 labor and industrial relations, and the county economic
 
15 development boards to advise on the program design, industry
 
16 recruitment, and training delivery activities of participating
 
17 entities."
 
18      SECTION 14.  There is appropriated out of the general
 
19 revenues of the State of Hawaii the sum of $           , or so
 
20 much thereof as may be necessary, for fiscal year 1999-2000, and
 
21 the same sum, or so much thereof as may be necessary, for fiscal
 
22 year 2000-2001, to provide funds to educational institutions to
 
23 establish an information and telecommunications training program.
 

 
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 1 The sums appropriated shall be expended by the University of
 
 2 Hawaii for the purposes of section 13.
 
 3                             PART VI.
 
 4      SECTION 15.  The legislature finds that Hawaii's students
 
 5 will require high-speed access to the internet.  Hawaii, because
 
 6 of its remote geographic location, pays a significant cost for
 
 7 high-speed access.  A university on the continental United States
 
 8 pays $20,000 per year for high speed access to the internet
 
 9 whereas the same access would cost $2,500,000 per year for the
 
10 University of Hawaii.  Hawaii's students must have equal access
 
11 to the internet to ensure global competitiveness.
 
12      SECTION 16.  Section 226-107, Hawaii Revised Statutes, is
 
13 amended to read as follows:
 
14      "§226-107  Quality education.  Priority guidelines to
 
15 promote quality education:
 
16      (1)  Pursue effective programs which reflect the varied
 
17           district, school, and student needs to strengthen basic
 
18           skills achievement.
 
19      (2)  Continue emphasis on general education "core"
 
20           requirements to provide common background to students
 
21           and essential support to other university programs.
 
22      (3)  Initiate efforts to improve the quality of education by
 
23           improving the capabilities of the education work force.
 

 
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 1      (4)  Promote increased opportunities for greater autonomy
 
 2           and flexibility of educational institutions in their
 
 3           decisionmaking responsibilities.
 
 4      (5)  Increase and improve the use of information technology
 
 5           in education [and encourage] by the availability of
 
 6           telecommunication equipment for:
 
 7           (A)  The electronic exchange of information;
 
 8           (B)  Statewide electronic mail; and
 
 9           (C)  Access to the internet.
 
10           Encourage programs which increase the public's
 
11           awareness and understanding of the impact of
 
12           information technologies on our lives.
 
13      (6)  Pursue the establishment of Hawaii's public and private
 
14           universities and colleges as research and training
 
15           centers of the Pacific.
 
16      (7)  Develop resources and programs for early childhood
 
17           education.
 
18      (8)  Explore alternatives for funding and delivery of
 
19           educational services to improve the overall quality of
 
20           education.
 
21      (9)  Strengthen and expand educational programs and services
 
22           for students with special needs."
 
23                             PART VII.
 

 
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 1      SECTION 17.  Statutory material to be repealed is bracketed.
 
 2 New statutory material is underscored.
 
 3      SECTION 18.  This Act shall take effect upon its approval;
 
 4 provided that sections 4, 11, and 14, take effect on July 1,
 
 5 1999; provided that section 6 shall apply to taxable years
 
 6 beginning after December 31, 1998; and provided further that
 
 7 section 7 shall apply to calendar year 1999 and for calendar
 
 8 years thereafter, or if a fiscal year taxpayer, section 7 shall
 
 9 apply to the fiscal year in which January 1, 1999, occurs and
 
10 fiscal years thereafter.
 
11 
 
12                           INTRODUCED BY:  _______________________