STAND. COM. REP. NO. 2739

Honolulu, Hawaii

RE: S.B. No. 2059

S.D. 1

Honorable Ronald D. Kouchi

President of the Senate

Thirtieth State Legislature

Regular Session of 2020

State of Hawaii

Sir:

Your Committee on Ways and Means, to which was referred S.B. No. 2059 entitled:

"A BILL FOR AN ACT RELATING TO WELL ABANDONMENT,"

begs leave to report as follows:

The purpose and intent of this measure is to address abandoned wells.

More specifically, this measure:

(1) Establishes an income tax credit for taxpayers who are required to fill and seal abandoned wells on their real property; and

(2) Requires sellers of real property to disclose the existence of an abandoned well on the property.

Your Committee received testimony in support of this measure from the Department of Land and Natural Resources.

Your Committee received comments on this measure from the Department of Taxation and Tax Foundation of Hawaii.

Your Committee finds that section 174C-87, Hawaii Revised Statutes, requires owners of real property to fill and seal any abandoned wells on their property. This measure is intended to assist taxpayers in complying with this requirement.

Your Committee has amended this measure by:

(1) Clarifying the definition of the term "abandoned well";

(2) Clarifying costs that may not be used to claim the tax credit;

(3) Requiring sellers of real property to disclose the existence of all wells on the property, rather than only abandoned wells;

(4) Applying the tax credit to taxable years beginning after December 31, 2020; and

(5) Changing the effective date to July 1, 2050, to facilitate further discussion on the measure.

As affirmed by the record of votes of the members of your Committee on Ways and Means that is attached to this report, your Committee is in accord with the intent and purpose of S.B. No. 2059, as amended herein, and recommends that it pass Second Reading in the form attached hereto as S.B. No. 2059, S.D. 1, and be placed on the calendar for Third Reading.

Respectfully submitted on behalf of the members of the Committee on Ways and Means,

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DONOVAN M. DELA CRUZ, Chair