HB 1442: RELATING TO OFFICE OF ENTREPRENEURSHIP.

A BILL FOR AN ACT

RELATING TO OFFICE OF ENTREPRENEURSHIP.

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

     SECTION 1.  The legislature finds that entrepreneurship is vital to the State's economic innovation.  Recent data evaluated an uptick in the rate of entrepreneurship.  In 2020, 4.1 out of every one thousand adults became entrepreneurs in a given month.  However, high fees, complicated requirements, and delayed permitting create barriers to starting a new business in the State.

     According to the 2019 Bureau of Labor Statistics study, fifty per cent of Hawaii businesses close within the first six years.  Over twenty-five per cent of businesses in Hawaii failed in their first year.  This is the highest first-year failure rate in the nation.

     The purpose of this Act is to establish the office of entrepreneurship and authorize the use of the Hawaii film and creative industries development special fund to fund a program in partnership with the office that creates opportunities in film, media, electronic sports, and creative industries for new businesses.

     SECTION 2.  The Hawaii Revised Statutes is amended by adding a new chapter to be appropriately designated and to read as follows:

"Chapter

Office of entrepreneurship

     §   -1  Definitions.  For the purpose of this chapter:

     "Business" means any corporation, partnership, company, cooperative, sole proprietorship, or other legal entity organized or operating for pecuniary or nonpecuniary gain.

     "Director" means the director of the office of entrepreneurship.

     "Entrepreneur" means a person who initiates and assumes the financial risk of a business.

     "Office" means the office of entrepreneurship created by section   -2.

     "State agency" means an agency, bureau, board, commission, department, division, or any other unit of the executive department of the state government.

     §   -2  Office of entrepreneurship; director; general functions, duties, and powers.  (a)  There is established an office of entrepreneurship that shall be temporarily placed within the office of the governor; provided that on July 1, 2027, the office shall be permanently established within the department of business, economic development, and tourism for administrative purposes only.

     (b)  The head of the office shall be known as the director of the office of entrepreneurship.  The director shall:

     (1)  Be nominated by the governor and, by and with the advice and consent of the senate, appointed by the governor without regard to chapter 76;

     (2)  Have professional training in the field of business, marketing, community economic development, or other relevant fields, preferably holding an academic degree in one of the fields listed above;

     (3)  Have experience in programs or services related to business, marketing, community economic development, or other relevant fields;

     (4)  Have recent experience in a supervisory, consultative, or administrative position;

     (5)  Be paid a salary set by the governor;

     (6)  Be included in any benefit program generally applicable to the officers and employees of the State; and

     (7)  Report to the director of business, economic development, and tourism and not be required to report directly to any other principal executive department.

     (c)  The director shall be responsible for:

     (1)  Serving as the principal officer in state government responsible for the performance, development, and control of programs, policies, and activities under the jurisdiction of the office;

     (2)  Supervising and directing the performance of the director's subordinates in various activities, including planning, evaluation, and coordination of office programs;

     (3)  Administering funds allocated for the office and applying for, receiving, and disbursing grants and donations from all sources for office programs and services;

     (4)  Assessing the policies and practices of other agencies impacting economic development and conducting advocacy efforts for entrepreneurship;

     (5)  Advising agencies on new legislation, programs, and policy initiatives relating to entrepreneurship;

     (6)  Employing and retaining staff as may be necessary for the purposes of this section; and

     (7)  Contracting for services that may be necessary for the purposes of this section, including through master contracts, memoranda of understanding, and memoranda of agreement with other state agencies receiving federal and state funds for programs and services for entrepreneurship, and purchase of service agreements with appropriate agencies.

     §   -3  Responsibilities.  (a)  The office shall:

     (1)  Work to strengthen policies and programs supporting the growth of entrepreneurship in the State, including but not limited to growth across demographic segments and geographic areas;

     (2)  Work with stakeholders and organizations supporting entrepreneurship to enhance the learning and skills of, provide technical support to, and expand access to resources for entrepreneurs across the State;

     (3)  Serve as a point of contact to assist businesses that have been in operation for no more than five years in their interactions with state agencies and, where appropriate, refer businesses to other state or local agencies that provide assistance to businesses;

     (4)  Encourage five per cent of the total number of state contracts to be awarded to businesses that have been in operation for no more than five years and whose principal place of business is in this State;

     (5)  Serve as a liaison to provide resources to help entrepreneurs navigate regulatory requirements; and

     (6)  Advocate for entrepreneurs in the legislative and administrative rule-making process.

     §   -4  Annual report.  At least twenty days prior to the convening of each regular session of the legislature beginning with the regular session of 2027, the office shall submit to the legislature a report that includes, at minimum:

     (1)  The number and total dollar amount of state contracts awarded to businesses that have been in operation for no more than five years, including but not limited to a breakdown by demographic segments and geographical areas throughout the State;

     (2)  The percentage of state contracts awarded to businesses that have been in operation for no more than five years compared to the total number of contracts awarded;

     (3)  The number of businesses owned by women, minorities, or veterans that have been in operation for no more than five years and have been awarded a state contract;

     (4)  The percentage of the total dollar amount of state contracts awarded to businesses that have been in operation for no more than five years compared to the total dollar amount of contracts awarded;

     (5)  The types of businesses awarded a state contract;

     (6)  Recommendations on improving access to state contracts for businesses that have been in operation for no more than five years, including but not limited to those businesses in statistically underrepresented demographic segments and geographic areas of Hawaii;

     (7)  Recommendations on improving entrepreneurship in the State, including but not limited to identifying regional challenges to entrepreneurship; and

     (8)  Any additional information deemed necessary by the office to provide an accurate depiction of the condition of entrepreneurship in Hawaii."

     SECTION 3.  Section 201-113, Hawaii Revised Statutes, is amended by amending subsection (b) to read as follows:

     "(b)  The fund shall be used by the department to provide for:

     (1)  A program to provide seed capital for film, media, electronic sports, and creative industries intellectual property development projects for export, as determined by the department;

     (2)  Programs that expand the skills of the Stateʹs resident workforce in the film, media, and creative industries;

     (3)  Marketing programs that attract business opportunities in the film, media, and creative industries in the State; [and]

     (4)  A program in partnership with the office of entrepreneurship that creates opportunities in film, media, electronic sports, and creative industries for businesses that have been in operation for no more than five years; and

    [(4)] (5)  Repair, maintenance, and related costs of the department's management of public facilities that support media and entertainment workforce and business development."

     SECTION 4.  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 2025-2026 and the same sum or so much thereof as may be necessary for fiscal year 2026-2027 for the purpose of establishing the office of entrepreneurship.

     The sums appropriated shall be expended by the office of the governor for the purposes of this Act.

     SECTION 5.  Statutory material to be repealed is bracketed and stricken.  New statutory material is underscored.

     SECTION 6.  This Act shall take effect on July 1, 3000.

Report Title:

Office of Entrepreneurship; Businesses; Hawaii Film and Creative Industries Development Special Fund; Appropriation

Description:

Establishes the Office of Entrepreneurship.  Authorizes the use of the Hawaii Film and Creative Industries Development Special Fund to fund a program in partnership with the Office that creates opportunities in film, media, electronic sports, and creative industries for new businesses.  Appropriates funds.  Effective 7/1/3000.  (HD1)

The summary description of legislation appearing on this page is for informational purposes only and is not legislation or evidence of legislative intent.

A BILL FOR AN ACT

relating to Office of Entrepreneurship.

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

     SECTION 1.  The legislature finds that entrepreneurship is vital to the State's economic innovation.  Recent data evaluated an uptick in the rate of entrepreneurship.  In 2020, 4.1 out of every one thousand adults became entrepreneurs in a given month.  However, high fees, complicated requirements, and delayed permitting create barriers to starting a new business in the State.

     According to the 2019 Bureau of Labor Statistics study, fifty per cent of Hawaii businesses close within the first six years.  Over twenty-five per cent of businesses in Hawaii failed in their first year.  This is the highest first-year failure rate in the nation.  The purpose of this Act is to establish the office of entrepreneurship and authorize the use of the Hawaii film and creative industries development special fund for a partnership program with the office.

     SECTION 2.  The Hawaii Revised Statutes is amended by adding a new chapter to be appropriately designated and to read as follows:

"Chapter

Office of entrepreneurship

     § -   Definitions.  For the purpose of this chapter:

     “Business” means any corporation, partnership, company, cooperative, sole proprietorship or other legal entity organized or operating for pecuniary or nonpecuniary gain.

     “Entrepreneur” means a person who initiates and assumes the financial risk of a business.

     “Office of entrepreneurship” means the office of entrepreneurship created by section B of this act.

     “State agency” means an agency, bureau, board, commission, department, division or any other unit of the executive department of the state government.

     § -   Office of entrepreneurship; director; general functions, duties, and powers.  (a)  There is established an office of entrepreneurship that shall be temporarily placed within the office of the governor; provided that on July 1, 2027, the office of entrepreneurship shall be permanently established within the department of business, economic development, and tourism for administrative purposes only. 

     (b)  The head of the office of entrepreneurship shall be known as the director of the office of entrepreneurship, hereinafter referred as director.  The director shall:

     (1)  Be nominated by the governor and, by and with the advice and consent of the senate, appointed by the governor without regard to chapter 76;

     (2)  Have professional training in the field of business, marketing, community economic development, or other relevant fields, preferably holding an academic degree in one of the fields listed above;

     (3)  Have experience in programs or services related to business, marketing, community economic development, or other relevant fields;

     (4)  Have recent experience in a supervisory, consultative, or administrative position;

     (5)  Be paid a salary set by the governor;

     (6)  Be included in any benefit program generally applicable to the officers and employees of the State; and

     (7)  Report to the director of business, economic development, and tourism and not be required to report directly to any other principal executive department.

     (c)  The director shall be responsible for:

     (1)  Serving as the principal officer in state government responsible for the performance, development, and control of programs, policies, and activities under the jurisdiction of the office;

     (2)  Supervising and directing the performance of the director's subordinates in various activities, including planning, evaluation, and coordination of office programs;

     (3)  Administering funds allocated for the office and applying for, receiving, and disbursing grants and donations from all sources for office programs and services;

     (4)  Assessing the policies and practices of other agencies impacting economic development and conducting advocacy efforts for entrepreneurship;

     (5)  Advising agencies on new legislation, programs, and policy initiatives relating to entrepreneurship;

     (6)  Employing and retaining staff as may be necessary for the purposes of this section; and

     (7)  Contracting for services that may be necessary for the purposes of this section, including through master contracts, memoranda of understanding, and memoranda of agreement with other state agencies receiving federal and state funds for programs and services for entrepreneurship, and purchase of service agreements with appropriate agencies.

     § -   Responsibilities.  (a)  The office of entrepreneurship shall:

     (1)  Work to strengthen policies and programs supporting the growth of entrepreneurship in the State, including, without limitation, across demographic segments and geographic areas;

     (2)  Work with stakeholders and organizations supporting entrepreneurship to enhance the learning and skills of, provide technical support to and expand access to resources for entrepreneurs across the State;

     (3)  Serve as a point of contact to assist businesses that have been in operation for not more than five years in their interactions with state agencies and, where appropriate, refer businesses to other state or local agencies that provide assistance to businesses; and

     (4)  Encourage five per cent of the total number of state contracts to be awarded to businesses that have been in operation for not more than five years and whose principal place of business is in this State;

     (5)  Serve as a liaison to provide resources to help entrepreneurs navigate regulatory requirements; and

     (6)  Advocate entrepreneurs in the legislative and administrative rule-making process.

     § -   Annual report.  (a)  At least twenty days prior to the convening of each regular session of the legislature beginning two years after the creation of the Office of entrepreneurship, and annually thereafter, the Office of entrepreneurship shall submit to the legislature a report that includes, without limitation:

     (1)  The number and total dollar amount of state contracts awarded to businesses that have been in operation for not more than five years, including, without limitation, a breakdown by demographic segments and geographical areas throughout the State;

     (2)  The percentage of the number of state contracts awarded to businesses that have been in operation for not more than five years compared to the total number of contracts awarded;

     (3)  The number of businesses owned by women, minorities or veterans that have been in operation for not more than five years and have been awarded a state contract;

     (4)  The percentage of the total dollar amount of state contracts awarded to businesses that have been in operation for not more than five years compared to the total dollar amount of contracts awarded;

     (5)  The types of businesses awarded a state contract;

     (6)  Recommendations on improving access to state contracts for businesses that have been in operation for not more than five years, including, without limitation, those businesses in statistically underrepresented demographic segments and geographic areas of Hawaii;

     (7)  Recommendations on improving overall entrepreneurship in this State including, without limitation, identifying regional challenges to entrepreneurship; and

     (8)  Any additional information deemed necessary by the Office of Economic Development to provide an accurate depiction of the condition of entrepreneurship in Hawaii."

     SECTION 3.  Section 201-113, Hawaii Revised Statutes, is amended to read as follows:

     "§201-113  Hawaii film and creative industries development special fund.  (a)  There is established in the state treasury the Hawaii film and creative industries development special fund into which shall be deposited:

     (1)  Appropriations by the legislature;

     (2)  Donations and contributions made by private individuals or organizations for deposit into the fund;

     (3)  Grants provided by governmental agencies or any other source;

     (4)  Effective January 2, 2023, all revenues, fees, and charges from the processing of the motion picture, digital media, and film production income tax credit pursuant to section 235-17; and

     (5)  Effective July 1, 2022, all existing and future revenues, fees, and income received by the department from its management of public facilities that support media and entertainment workforce and business development, with the exception of the Hawaii film studio.

     (b)  The fund shall be used by the department to provide for:

     (1)  A program to provide seed capital for film, media, electronic sports, and creative industries intellectual property development projects for export, as determined by the department;

     (2)  Programs that expand the skills of the Stateʹs resident workforce in the film, media, and creative industries;

     (3)  Marketing programs that attract business opportunities in the film, media, and creative industries in the State; [and]

     (4)  A program in partnership with the office of entrepreneurship that creates opportunities in film, media, electronic sports, and creative industries for businesses that have been in operation for not more than five years; and

    [(4)] (5)  Repair, maintenance, and related costs of the department's management of public facilities that support media and entertainment workforce and business development."

     SECTION 4.  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 2025-2026 and the same sum or so much thereof as may be necessary for fiscal year 2026-2027 for the purpose of establishing the office of entrepreneurship.

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

     SECTION 5.  Statutory material to be repealed is bracketed and stricken.  New statutory material is underscored.

     SECTION 6.  This Act shall take effect on July 1, 2025.

Report Title:

Office of Entrepreneurship; Businesses; Appropriation

Description:

Establishes the office of entrepreneurship.  Authorizes the use of the Hawaii film and creative industries development special fund for a partnership program with the office.  Appropriates funds.

The summary description of legislation appearing on this page is for informational purposes only and is not legislation or evidence of legislative intent.

STAND. COM. REP. NO.  335

Honolulu, Hawaii

                , 2025

RE:   H.B. No. 1442

      H.D. 1

Honorable Nadine K. Nakamura

Speaker, House of Representatives

Thirty-Third State Legislature

Regular Session of 2025

State of Hawaii

Madame:

     Your Committee on Economic Development & Technology, to which was referred H.B. No. 1442 entitled:

"A BILL FOR AN ACT RELATING TO OFFICE OF ENTREPRENEURSHIP,"

begs leave to report as follows:

     The purpose of this measure is to:

     (1)  Establish the Office of Entrepreneurship; and

     (2)  Authorize the use of funds in the Hawaii Film and Creative Industries Development Special Fund to fund a program in partnership with the Office of Entrepreneurship that creates opportunities in film, media, electronic sports, and creative industries for new businesses.

     Your Committee received testimony in support of this measure from the Chamber of Commerce Hawaii and six individuals.  Your Committee received comments on this measure from the Department of Budget and Finance and Maui Chamber of Commerce.

     Your Committee finds that according to a 2019 Bureau of Labor Statistics study, fifty percent of Hawaii businesses close within the first six years of operation.  Your Committee further finds that Hawaii's entrepreneurs and new businesses need increased support from the State in order to help them be successful and stay in business.  This measure addresses this need by establishing the Office of Entrepreneurship to support the growth of entrepreneurship, assist new businesses in interacting with state agencies, help entrepreneurs navigate regulatory requirements, and advocate for entrepreneurs.

     Your Committee has amended this measure by:

     (1)  Changing the effective date to July 1, 3000, to encourage further discussion; and

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

     As affirmed by the record of votes of the members of your Committee on Economic Development & Technology that is attached to this report, your Committee is in accord with the intent and purpose of H.B. No. 1442, as amended herein, and recommends that it pass Second Reading in the form attached hereto as H.B. No. 1442, H.D. 1, and be referred to your Committee on Finance.

Respectfully submitted on behalf of the members of the Committee on Economic Development & Technology,