SB3265 SD2

PART I

SECTION 1. Chapter 201, Hawaii Revised Statutes, is amended by adding a new section to part IX to be appropriately designated and to read as follows:

"§201- Hawaii film advisory council; established. (a) There is established within the department for administrative purposes only the Hawaii film advisory council. The Hawaii film advisory council shall consist of up to thirteen members who shall be appointed by the governor in the manner prescribed in section 26-34, except as otherwise provided in this section, and shall be composed of:

(1) One member from each county's film office;

(2) One member from the Hawaii state film office;

(3) Seven members representing the Hawaii film and entertainment board, film industry labor unions, studio production representatives, higher education in film, entrepreneurial sector in film, workforce development, Native Hawaiian culture, Pacific islands culture, and a New Zealand film industry organization; and

(4) The director of business, economic development, and tourism or the director's designee who shall serve as an ex officio, voting member of the council.

(b) Each member identified in subsection (a) shall have experience in the industry they represent in one or more of the following fields:

(1) Film and television production;

(2) Film commission management;

(3) Investment and tax credits;

(4) Production finance and accounting;

(5) Post-production;

(6) Entertainment industry labor union and guild leadership;

(7) Hawaii production organization and nonprofit production organization;

(8) Workforce and skills development training organization; or

(9) Commercial real estate and development.

(c) The purpose of the Hawaii film advisory council shall be to advise, make recommendations, and provide industry insights to increase business development, workforce, jobs, and infrastructure in the film industry statewide. The Hawaii film advisory council shall provide the department with input on setting strategic priorities to accelerate the growth of the film industry.

(d) The Hawaii film advisory council shall appoint a chairperson, and other leadership positions as deemed necessary, from amongst its members.

(e) The Hawaii film advisory council shall make recommendations to the department on the appointment of a film industry development liaison, who shall be exempt from chapter 76."

SECTION 2. Chapter 237, Hawaii Revised Statutes, is amended by adding a new section to be appropriately designated and to read as follows:

"§237- Exemption for certified development of film studio facilities. (a) Notwithstanding any provision of law to the contrary, and upon receipt of the certification required by subsection (b), there shall be exempted from, and excluded from the measure of, the taxes imposed by this chapter, the gross proceeds of a qualified person arising from the planning, design, construction, or retrofitting of film studio infrastructure in the State.

(b) Application for the exemption provided by this section shall first be made to the department of business, economic development, and tourism, who shall certify that the qualified person meets the requirements of this section.

(c) The department of taxation and the department of business, economic development, and tourism may adopt rules pursuant to chapter 91 for the purpose of this section.

(d) This section shall not apply to gross proceeds received after December 31, 2034.

(e) For purposes of this section:

"Film studio infrastructure" means:

(1) New or retrofit construction of structures in the State to accommodate soundstages for the production needs of the film industry;

(2) Permanent space primarily used for production, including:

(A) Actors, on‑screen personnel, producers, directors, writers, and related support staff spaces;

(B) Catering and laundry facilities; and

(3) Facilities that are used for production purposes that may include:

(A) Set design, build, construction, and painting;

(B) Costume fabrication and related areas for construction;

(D) Office accommodations for all production personnel and departments;

(E) Prop, picture car, and other vehicle parking, and related storage;

(F) Sustainable alternative energy source, where applicable;

(G) Facilities equipped with private network fiber connectivity; and

(H) Security facilities and infrastructure.

"Qualified person" means an individual, partnership, joint venture, corporation, association, limited liability partnership, limited liability company, business, trust, or any organized group of persons or legal entities, or any combination thereof, that possesses all professional or vocational licenses necessary to do business in the State in conjunction with the planning, design, construction, or retrofitting of film studio infrastructure."

SECTION 3. Section 235-17, Hawaii Revised Statutes, is amended as follows:

1. By amending subsection (h) to read:

"(h) Every taxpayer claiming a tax credit under this section for a qualified production shall, no later than ninety days following the end of each taxable year in which qualified production costs were expended, submit a written, sworn statement to the department of business, economic development, and tourism that identifies:

(1) All qualified production costs as provided by subsection (a), if any, incurred in the previous taxable year;

(2) The amount of tax credits claimed pursuant to this section, if any, in the previous taxable year; and

(3) The number of total hires versus the number of local hires by category and by county.

If the qualified production costs of a taxpayer exceed $1,000,000 in a taxable year, the written, sworn statement shall be accompanied by an independent third party certification, performed by a qualified certified public accountant, that verifies all representations made for the purpose of claiming the credit under this section. The certification shall be prepared and submitted in accordance with standards and procedures prescribed by the department of business, economic development, and tourism and the department of taxation. This information may be reported from the department of business, economic development, and tourism to the legislature pursuant to subsection (i)(4)."

2. By amending subsections (n) and (o) to read:

"(n) The total amount of tax credits allowed under this section in any particular year shall be [~~$50,000,000;~~] $ ; however, if the total amount of credits applied for in any particular year exceeds the aggregate amount of credits allowed for that year under this section, the excess shall be treated as having been applied for in the subsequent year and shall be claimed in the subsequent year; provided that no excess shall be allowed to be claimed after December 31, [~~2032.~~] 2038.

(o) For the purposes of this section:

"Commercial":

(1) Means an advertising message that is filmed using film, videotape, or digital media, for dissemination via television broadcast or theatrical distribution;

(2) Includes a series of advertising messages if all parts are produced at the same time over the course of six consecutive weeks; and

(3) Does not include an advertising message with Internet‑only distribution.

"Digital media" means production methods and platforms directly related to the creation of cinematic imagery and content, specifically using digital means, including but not limited to digital cameras, digital sound equipment, and computers, to be delivered via film, videotape, interactive game platform, or other digital distribution media.

"Post-production" means production activities and services conducted after principal photography is completed, including but not limited to editing, film and video transfers, duplication, transcoding, dubbing, subtitling, credits, closed captioning, audio production, special effects (visual and sound), graphics, and animation.

"Production" means a series of activities that are directly related to the creation of visual and cinematic imagery to be delivered via film, videotape, or digital media and to be sold, distributed, or displayed as entertainment or the advertisement of products for mass public consumption, including but not limited to scripting, casting, set design and construction, transportation, videography, photography, sound recording, interactive game design, and post-production.

"Qualified production":

(1) Means a production, with expenditures in the State, for the total or partial production of a feature‑length motion picture, short film, made‑for‑television movie, commercial, music video, interactive game, television (inclusive of broadcast and streaming platforms) series pilot, single season (up to twenty‑two episodes[)] for broadcast television; and up to eight episodes for an ongoing series for streaming platforms) of a [~~television~~] series [~~regularly~~] filmed in the State [~~(if~~]. If the number of episodes per single season for a broadcast series exceeds twenty-two[,] episodes and if a streaming series exceeds eight episodes, additional episodes for the same season shall constitute a separate qualified production[),]. A "qualified production" also includes a television or streaming platform special, single [~~television~~] episode that is not part of a television or streaming platform series regularly filmed or based in the State, national magazine show, [or] and national talk show. For the purposes of subsections (d) and (l), each of the aforementioned qualified production categories shall constitute separate, individual qualified productions; and

(2) Does not include:

(A) News;

(B) Public affairs programs;

(D) Televised sporting events or activities;

(E) Productions that solicit funds;

(F) Productions produced primarily for industrial, corporate, institutional, or other private purposes; and

(G) Productions that include any material or performance prohibited by chapter 712.

"Qualified production costs" means the costs incurred by a qualified production within the State that are subject to the general excise tax under chapter 237 at the highest rate of tax or income tax under this chapter if the costs are not subject to general excise tax and that have not been financed by any investments for which a credit was or will be claimed pursuant to section 235-110.9. Qualified production costs include but are not limited to:

(1) Costs incurred during preproduction such as location scouting and related services;

(2) Costs of set construction and operations, purchases or rentals of wardrobe, props, accessories, food, office supplies, transportation, equipment, and related services;

(3) Wages or salaries of cast, crew, and musicians;

(4) Costs of photography, sound synchronization, lighting, and related services;

(5) Costs of editing, visual effects, music, other post‑production, and related services;

(6) Costs of fashion production and related services;

(7) Costs of music production and related services;

[~~(6)~~] (8) Rentals and fees for use of local facilities and locations, including rentals and fees for use of state and county facilities and locations that are not subject to general excise tax under chapter 237 or income tax under this chapter;

[~~(7)~~] (9) Rentals of vehicles and lodging for cast and crew;

[~~(8)~~] (10) Airfare for flights to or from Hawaii, and interisland flights;

[~~(9)~~] (11) Insurance and bonding;

[~~(10)~~] (12) Shipping of equipment and supplies to or from Hawaii, and interisland shipments; and

[~~(11)~~] (13) Other direct production costs specified by the department in consultation with the department of business, economic development, and tourism;

provided that any government-imposed fines, penalties, or interest that are incurred by a qualified production within the State shall not be "qualified production costs". "Qualified production costs" does not include any costs funded by any grant, forgivable loan, or other amounts not included in gross income for purposes of this chapter.

"Streaming platform" means an online provider of media content that delivers the content via internet connection to the subscriber's computer, television or mobile device through a paid subscription."

SECTION 4. Act 88, Session Laws of Hawaii 2006, as amended by section 3 of Act 89, Session Laws of Hawaii 2013, as amended by section 3 of Act 143, Session Laws of Hawaii 2017, as amended by section 4 of Act 217, Session Laws of Hawaii 2022 is amended by amending section 4 to read as follows:

"SECTION 4. This Act shall take effect on July 1, 2006; provided that:

(1) Section 2 of this Act shall apply to qualified production costs incurred on or after July 1, 2006, and before January 1, [~~2033;~~] 2039; and

(2) This Act shall be repealed on January 1, [~~2033,~~] 2039, and section 235-17, Hawaii Revised Statutes, shall be reenacted in the form in which it read on the day before the effective date of this Act."

SECTION 5. Act 143, Session Laws of Hawaii 2017, is amended by amending section 6 to read as follows:

"SECTION 6. [No later than January 1, 2018, and each January 1 thereafter, each film production that has production expenditures of $1,000,000 or more and is claiming a tax credit pursuant to section 235-17, Hawaii Revised Statutes, shall obtain an independent third party certification of qualified production costs eligible for the motion picture, digital media, and film production income tax credit in the form of a tax opinion, as required under section 235-17(h), Hawaii Revised Statutes, submitted to the department of business, economic development, and tourism.] Repealed."

SECTION 6. The department of business, economic development, and tourism shall establish one full-time equivalent (1.0 FTE) permanent film industry development liaison position to oversee development of the film industry, which shall be exempt from chapter 76, Hawaii Revised Statutes.

PART II

SECTION 7. Section 76-16, Hawaii Revised Statutes, is amended by amending subsection (b) to read as follows:

"(b) The civil service to which this chapter applies shall comprise all positions in the State now existing or hereafter established and embrace all personal services performed for the State, except the following:

(1) Commissioned and enlisted personnel of the Hawaii National Guard as such, and positions in the Hawaii National Guard that are required by state or federal laws or regulations or orders of the National Guard to be filled from those commissioned or enlisted personnel;

(2) Positions filled by persons employed by contract where the director of human resources development has certified that the service is special or unique or is essential to the public interest and that, because of circumstances surrounding its fulfillment, personnel to perform the service cannot be obtained through normal civil service recruitment procedures. Any [~~such~~] contract may be for any period not exceeding one year;

(3) Positions that must be filled without delay to comply with a court order or decree if the director determines that recruitment through normal recruitment civil service procedures would result in delay or noncompliance, such as the Felix-Cayetano consent decree;

(4) Positions filled by the legislature or by either house or any committee thereof;

(5) Employees in the office of the governor and office of the lieutenant governor, and household employees at Washington Place;

(6) Positions filled by popular vote;

(7) Department heads, officers, and members of any board, commission, or other state agency whose appointments are made by the governor or are required by law to be confirmed by the senate;

(8) Judges, referees, receivers, masters, jurors, notaries public, land court examiners, court commissioners, and attorneys appointed by a state court for a special temporary service;

(9) One bailiff for the chief justice of the supreme court who shall have the powers and duties of a court officer and bailiff under section 606-14; one secretary or clerk for each justice of the supreme court, each judge of the intermediate appellate court, and each judge of the circuit court; one secretary for the judicial council; one deputy administrative director of the courts; three law clerks for the chief justice of the supreme court, two law clerks for each associate justice of the supreme court and each judge of the intermediate appellate court, one law clerk for each judge of the circuit court, two additional law clerks for the civil administrative judge of the circuit court of the first circuit, two additional law clerks for the criminal administrative judge of the circuit court of the first circuit, one additional law clerk for the senior judge of the family court of the first circuit, two additional law clerks for the civil motions judge of the circuit court of the first circuit, two additional law clerks for the criminal motions judge of the circuit court of the first circuit, and two law clerks for the administrative judge of the district court of the first circuit; and one private secretary for the administrative director of the courts, the deputy administrative director of the courts, each department head, each deputy or first assistant, and each additional deputy, or assistant deputy, or assistant defined in paragraph (16);

(10) First deputy and deputy attorneys general, the administrative services manager of the department of the attorney general, one secretary for the administrative services manager, an administrator and any support staff for the criminal and juvenile justice resources coordination functions, and law clerks;

(11) (A) Teachers, principals, vice-principals, complex area superintendents, deputy and assistant superintendents, other certificated personnel, no more than twenty noncertificated administrative, professional, and technical personnel not engaged in instructional work;

(B) Effective July 1, 2003, teaching assistants, educational assistants, bilingual/bicultural school-home assistants, school psychologists, psychological examiners, speech pathologists, athletic health care trainers, alternative school work study assistants, alternative school educational/supportive services specialists, alternative school project coordinators, and communications aides in the department of education;

(D) Members of the faculty of the University of Hawaii, including research workers, extension agents, personnel engaged in instructional work, and administrative, professional, and technical personnel of the university;

(12) Employees engaged in special, research, or demonstration projects approved by the governor;

(13) (A) Positions filled by inmates, patients of state institutions, persons with severe physical or mental disabilities participating in the work experience training programs;

(B) Positions filled with students in accordance with guidelines for established state employment programs; and

(C) Positions that provide work experience training or temporary public service employment that are filled by persons entering the workforce or persons transitioning into other careers under programs such as the federal Workforce Investment Act of 1998, as amended, or the Senior Community Service Employment Program of the Employment and Training Administration of the United States Department of Labor, or under other similar state programs;

(14) A custodian or guide at Iolani Palace, the Royal Mausoleum, and Hulihee Palace;

(15) Positions filled by persons employed on a fee, contract, or piecework basis, who may lawfully perform their duties concurrently with their private business or profession or other private employment and whose duties require only a portion of their time, if it is impracticable to ascertain or anticipate the portion of time to be devoted to the service of the State;

(16) Positions of first deputies or first assistants of each department head appointed under or in the manner provided in section 6, article V, of the Hawaii State Constitution; three additional deputies or assistants either in charge of the highways, harbors, and airports divisions or other functions within the department of transportation as may be assigned by the director of transportation, with the approval of the governor; one additional deputy in the department of human services either in charge of welfare or other functions within the department as may be assigned by the director of human services; four additional deputies in the department of health, each in charge of one of the following: behavioral health, environmental health, hospitals, and health resources administration, including other functions within the department as may be assigned by the director of health, with the approval of the governor; two additional deputies in charge of the law enforcement programs, administration, or other functions within the department of law enforcement as may be assigned by the director of law enforcement, with the approval of the governor; three additional deputies each in charge of the correctional institutions, rehabilitation services and programs, and administration or other functions within the department of corrections and rehabilitation as may be assigned by the director or corrections and rehabilitation, with the approval of the governor; an administrative assistant to the state librarian; and an administrative assistant to the superintendent of education;

(17) Positions specifically exempted from this part by any other law; provided that:

(A) Any exemption created after July 1, 2014, shall expire three years after its enactment unless affirmatively extended by an act of the legislature; and

(B) All of the positions defined by paragraph (9) shall be included in the position classification plan;

(18) Positions in the state foster grandparent program and positions for temporary employment of senior citizens in occupations in which there is a severe personnel shortage or in special projects;

(19) Household employees at the official residence of the president of the University of Hawaii;

(20) Employees in the department of education engaged in the supervision of students during meal periods in the distribution, collection, and counting of meal tickets, and in the cleaning of classrooms after school hours on a less than half-time basis;

(21) Employees hired under the tenant hire program of the Hawaii public housing authority; provided that not more than twenty-six per cent of the authority's workforce in any housing project maintained or operated by the authority shall be hired under the tenant hire program;

(22) Positions of the federally funded expanded food and nutrition program of the University of Hawaii that require the hiring of nutrition program assistants who live in the areas they serve;

(23) Positions filled by persons with severe disabilities who are certified by the state vocational rehabilitation office that they are able to perform safely the duties of the positions;

(24) The sheriff;

(25) A gender and other fairness coordinator hired by the judiciary;

(26) Positions in the Hawaii National Guard youth and adult education programs;

(27) In the state energy office in the department of business, economic development, and tourism, all energy program managers, energy program specialists, energy program assistants, and energy analysts;

(28) Administrative appeals hearing officers in the department of human services;

(29) In the Med-QUEST division of the department of human services, the division administrator, finance officer, health care services branch administrator, medical director, and clinical standards administrator;

(30) In the director's office of the department of human services, the enterprise officer, information security and privacy compliance officer, security and privacy compliance engineer, security and privacy compliance analyst, information technology implementation manager, assistant information technology implementation manager, resource manager, community/project development director, policy director, special assistant to the director, and limited English proficiency project manager/coordinator;

(31) The Alzheimer's disease and related dementia services coordinator in the executive office on aging;

(32) In the Hawaii emergency management agency, the executive officer, public information officer, civil defense administrative officer, branch chiefs, and emergency operations center state warning point personnel; provided that, for state warning point personnel, the director shall determine that recruitment through normal civil service recruitment procedures would result in delay or noncompliance;

(33) The executive director and seven full-time administrative positions of the school facilities authority;

(34) Positions in the Mauna Kea stewardship and oversight authority;

(35) In the office of homeland security of the department of law enforcement, the statewide interoperable communications coordinator; [~~and~~]

(36) In the social services division of the department of human services, the business technology analyst[.]; and

(37) In the creative industries division of the department of business, economic development, and tourism, the film industry development liaison.

The director shall determine the applicability of this section to specific positions.

Nothing in this section shall be deemed to affect the civil service status of any incumbent as it existed on July 1, 1955."

PART III

SECTION 8. In accordance with section 9 of article VII of the Hawaii State Constitution and sections 37-91 and 37-93, Hawaii Revised Statutes, the legislature has determined that the appropriations contained in Act 164, Regular Session of 2023, and this Act will cause the state general fund expenditure ceiling for fiscal year 2024-2025 to be exceeded by $ or per cent. This current declaration takes into account general fund appropriations authorized for fiscal year 2024-2025 in Act 164, Regular Session of 2023, and this Act only. The reasons for exceeding the general fund expenditure ceiling are that:

(1) The appropriation made in this Act is necessary to serve the public interest; and

(2) The appropriation made in this Act meets the needs addressed by this Act.

SECTION 9. There is appropriated out of the general revenues of the State of Hawaii the sum of $ or so much thereof as may be necessary for fiscal year 2024-2025 to establish one full-time equivalent (1.0 FTE) film industry development liaison position and associated administrative costs.

The sum appropriated shall be expended by the department of business, economic development, and tourism for the purposes of this Act.

SECTION 10. Statutory material to be repealed is bracketed and stricken. New statutory material is underscored.

SECTION 11. This Act shall take effect on July 1, 2050; provided that section 2 shall take effect on January 1, 2051; provided further that sections 3 through 5 shall apply to expenditures made after December 31, 2024.

THE SENATE	S.B. NO.	3265
THIRTY-SECOND LEGISLATURE, 2024		S.D. 2
STATE OF HAWAII