STAND. COM. REP. NO. 1745

Honolulu, Hawaii

RE: H.B. No. 1363

H.D. 3

S.D. 2

Honorable Ronald D. Kouchi

President of the Senate

Thirty-Second State Legislature

Regular Session of 2023

State of Hawaii

Sir:

Your Committee on Ways and Means, to which was referred H.B. No. 1363, H.D. 3, S.D. 1, entitled:

"A BILL FOR AN ACT RELATING TO TAXATION,"

begs leave to report as follows:

The purpose and intent of this measure is to amend the county surcharge on state tax.

Specifically, this measure:

(1) Extends the period within which a county may adopt a surcharge on state tax, under certain conditions, from March 31, 2019, to December 31, 2023;

(2) Authorizes, in certain instances, the use of county surcharge revenues for housing infrastructure; and

(3) Temporarily authorizes counties that have previously adopted a surcharge on state tax to amend the uses of the surcharge.

Your Committee received written comments in support of this measure from the Hawaii Housing Finance and Development Corporation, Office of Planning and Sustainable Development, Office of the Mayor of the County of Maui, a member of the Maui County Council, Hawaii Association of REALTORS, Land Use Research Foundation of Hawaii, and Maui Metropolitan Planning Organization.

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

Your Committee finds that the development of housing is of critical importance to the State. Your Committee also finds that the high cost of developing infrastructure to support housing is often transferred by private developers to homebuyers. Your Committee further finds that this measure is intended to implement a policy shift with regard to the development of housing by making the counties, rather than private developers, responsible for the location, planning, and development of infrastructure to support housing. Your Committee believes that authorizing a county to use revenues from the county surcharge on state tax for housing infrastructure would provide the funding necessary to effect this change in policy.

Your Committee has amended this measure by:

(1) Clarifying the dates upon which the Director of Taxation will begin to levy, assess, and collect a newly‑established county surcharge on state tax; and

(2) Making technical nonsubstantive amendments for purposes of clarity, consistency, and style.

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 H.B. No. 1363, H.D. 3, S.D. 1, as amended herein, and recommends that it pass Third Reading in the form attached hereto as H.B. No. 1363, H.D. 3, S.D. 2.

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

________________________________

DONOVAN M. DELA CRUZ, Chair