STAND. COM. REP. NO. 2724

Honolulu, Hawaii

RE: S.B. No. 2360

S.D. 1

Honorable Ronald D. Kouchi

President of the Senate

Thirty-Third State Legislature

Regular Session of 2026

State of Hawaii

Sir:

Your Committee on Ways and Means, to which was referred S.B. No. 2360, S.D. 1, entitled:

"A BILL FOR AN ACT RELATING TO STATE ENTERPRISE ZONES,"

begs leave to report as follows:

The purpose and intent of this measure is to expand the State's Enterprise Zones Program to provide targeted support for Hawaii's developing industries.

Specifically, this measure:

(1) Expands eligible business activity within an enterprise zone to include:

(A) The sale of certain tangible personal property manufactured and sold at retail in an enterprise zone;

(B) The production of value-added agricultural products; and

(C) The provision of certain professional services by health care professionals; and

(2) Increases the eligibility period for the state business tax credit and general excise tax exemption for qualified businesses within the State's Enterprise Zones.

Your Committee received written comments in support of this measure from the Department of Business, Economic Development, and Tourism; Agribusiness Development Corporation; Business Development and Support Division of the Department of Business, Economic Development and Tourism; County of Hawaii Department of Research and Development; Retail Merchants of Hawaii; Hawaii Food Industry Association; Holomua Collaborative; Mana Up; aio; Title Guaranty of Hawaii; Maui Chamber of Commerce; Hawaii Farm Bureau; Chamber of Commerce Hawaii; and one individual.

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

Your Committee finds that expanding and modernizing the State's Enterprise Zones Program will help to diversify Hawaii's economy by supporting emerging manufacturing and agricultural industries. Your Committee further finds that extending eligibility periods for the state business tax credit will help to reduce the tax burden of companies that invest heavily in equipment, facilities, and workforce training before reaching full production scale.

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. 2360, S.D. 1, and recommends that it pass 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