Senate Standing Committee on Economic Development and Tourism

Aloha and welcome to a hearing with the Senate Committee on Economic Development and Tourism. Today is Thursday, January 30th, 2025 at 1:00pm and we are in Conference Room 229. This hearing is being streamed live on YouTube.

In an unlikely event that we must abruptly end this hearing due to technical difficulties or due to power outages due to the weather today, we're going to try and reconvene as soon as we're able to. In the event we are not able to reconvene today, a new notice will be posted on the Hawaii Legislature website.

The Committee will reconvene for any outstanding business which would occur on Tuesday, February 4th, 2025 at 1:01pm in Conference Room 229. This Committee hearing is 90 minutes and we will allow for a time slot, I mean, there will be a one minute time limit for all testifiers. So we have 10 bills on agenda today.

So, let's go ahead and start off with SP125 relating to state enterprise zones. First up, DBED.

Hello, I'm Chair Vice Chair Committee Members Dennis Lynn with the Department of Business, Economic Development and Tourism. DBED stands this written testimony often comments.

Thank you. Next up, Dotax Gary Suganuma.

Yes, hi. Garrett's incarnate Department of Taxation. Members, we've submitted testimony and we stand on that.

Thank you. Next up, Tom Yamachika our Tax foundation on Zoom.

Thank you Chair. Committee Members Tom Yamachika from Tax foundation of Hawaii. We just submitted technical comments. We have no recommendations for changes on the Bill.

Thank you. Next up, Hawaii Food Industry Association Lauren Zuro on Zoom. They're not available on Zoom Chair. Okay, in support. Next up, Hoi Farm Bureau Brian Miyamoto.

Hello Chair Vice Chair Members of the Committee Brian Miyamoto. The Hoi Farm Bureau will stand on a written testimony in support.

Thank you. And last testifier, Hunter Evelyn testifying for Farmers Union in support. Anybody else wishing to testify? Seeing none. Members any questions? Senator Kim?

I'm not sure who to address this to? Who would be, who would be handling this, the enterprise zone? Do you guys? Yeah. Okay.

So according to what I'm reading from the taxation testimony is that by extending the requirement of qualified business to increase its annual number of full time employees by at least 15% through years nine rather than than the seven years currently required. So it's at 15% now?

Thee, I'm sorry, I don't understand that.

Tax is saying on their testimony first page, second paragraph, Section 1, Senate Bill125, amendment Section 29B-9HRS relating to state enterprise zone, by extending the requirement of the qualified business to increase its average annual number of full time employees by at least 15% per year through nine years rather than the seven years currently required. Is that correct?

You know, I don't know. I need to go back and check that figures from the Department of Taxation because all we concentrated on was the increase in the number of years of the extension, not the number of jobs.

But isn't that the whole thing, that we would get jobs by giving these tax breaks?

Right. It is a job producing project.

So I'm concerned about that 15%. What is it now and is it going to increase? What is it going to increase to?

The 15% is actually each year, they need to increase by 15%. So each year of the additional years they're going to have to increase by 15%.

I see, so if I'm, Is there a minimum that they have to have a one? One. Okay. So if I am in this enterprise zone and I have one employee, so I'm gonna have to through nine years rather than seven years. For nine years I have to keep increasing every year by 15%? Yes.

Oh, okay. This is Mark Richie, he's the program manager.

Okay, let me make this statement. When you folks come up and are in favor, you better understand the measure. Okay, because if you're supporting something and you don't understand the measure, then I have some concerns.

So, for the way this particular Bill reads, it would be an extension of the seventh year. In the seventh year, whatever that job total is, they would extend that for another two years. So it'd be the same target through the last three years. And for the tax credit, it's only 20% reimbursable.

And that tax credit would go each of the three years, it'll last from seven to nine.

Okay, so I'm still confused. So, years one through six is what?

Years one through six, it depends. There's two types of companies that when you enroll you were classified as, one is an existing company, meaning that the enterprise that you already had your business and the enterprise zone was designated underneath you.

Those hiring requirements where you have those 15%, I can give you the schedule, are a little bit more onerous. All the other companies come into what's called new companies. Mean you establish the company after the zone was already there and that is just a 10% increase,

and then you hold it the whole seven years or this would be nine years. And then we don't do part time people, so if you have one person, you still gotta have a second person.

So, when you give your annual report to us each year we want to see two employees on there, in order for DBID to certify that that company met the requirements of the program and that they could take the tax credit.

So this, I'm so confused, so this 15% is only for the, not the new people coming, the people that were already there.

That would be for existing companies. They sort of took, they took just one part of that. You need to come in under an existing company or you come in under a new company. The vast majority come in under new companies.

So how many existing companies do you have?

152 in the program. In the program, but it's probably less than 10 that actually come in under existing. Just because the program's been around for so long, you literally have to see an establishment date from the enrollment where it says, okay, we were established in 1985 or 1990 or something.

A chart as to how many existing ones you have and how many new ones come in. And the total amount is 162.

152.

Okay, you don't have to give that to now. You can send to that into the Committee. But. So, the existing ones is the 15%, not the new ones.

Right. The other ones come in under 10%. I can actually. Well, I'll get the words right in our annual report. I'll give you the actual wording.

And it's 10% every year.

No, it's not compounded. It's 10% and hold it. So if you have one person, then we want to go to 2, or 1 through 9. You still have to add a whole person full time. But then if it were 10, it would be one person, 15.

Then we add two people rounding up, and then you hold it for those years.

Okay, so. So if I was come in today with one person.

Right.

And then I'd have to increase it by 10%. Correct. So one more person. I have to have one more person. Right. And then that one person would be for 10 years, two people in my company.

That's correct. You could qualify for. For the benefits.

And so for this one, 15%.

That's for an existing company.

So existing company has.

They start out at 15%. The first three years it would add one more person, but then they have to increase it again once they get into year four. And I can give you a table and stuff.

When they get to year four, they. Have to increase it, then they bump it up again. And then they hold it for the next nine years.

Yes, I think for the next. Yes, but I'll give you a Table that shows that the two comparisons of existing or new companies.

What's the benefit to having it go from 7 to 9. Because what happens after the ninth year?

Then they graduate and then they're not eligible to enroll in the program again.

Oh, okay. So right now they graduated seven.

Correct. With the exception of manufacturers and ag companies, they can do a three year extension. So they have two up to 10 years, but they have to apply for it, for the three year extension.

Okay, thank you.

Okay, so what has been you guys experience with the two tax credits.

In terms of is it an effective program in creating jobs? The mission, mission is to create jobs and stimulate certain types of business activities; ag, manufacturing, wholesaling, in economically challenged areas of the state or the those are enterprise zones which the counties designate and then the Governor approves.

So in those enterprise zones, what, what are more of the businesses? Right.

Agriculture, manufacturing and wholesaling. And those are the three big.

Can you give us some breakdown of the enterprise zones?

Sure, we have that in our annual report and we'll make that available to you. There are, you know, at last report, 1,116 jobs were either created or maintained at a cost to the State of about $1,200,000. So, it is very effective in creating jobs that disadvantaged disenfranchisers.

From year to year, it works out about anywhere from like 1200 to maybe 2000 on a per job basis in terms of foregone tax revenue. And that's a little bit of a backbone thing because we don't have access to DOE tax records of these companies, although they do get our reports and so they know who's been certified and not certified.

Can you also give the chair an idea of the average business, how many employees they have?

I can actually, that's in our annual report, I have it right here.

So if they only have to increase it one time by 10% and say I have a company of one and now I just have to have two, so for nine years I'm only going to have to have two and then I'm not increasing it by.

Right for the small company. That that's true. We do have a lot of like larger companies though and that like 10% naming like 20 employees or something, and if any time or when they do their end of year report with us, they fall under that, then they don't get that certification.

Or we say you cannot take the tax benefits this year, but you're still in the program. It's just you have to wait till next year and you got to get back to that target that you get when you enroll in the program.

Thank you. No tax. So are there many businesses that claiming this credit and how much on average is claimed a year?

That I don't know. I don't have the financial information yet today. I know they're working on trying to get that all.

Can you get that to us.

Thank you.

Yes.

Okay, moving on. Next up, Senate Bill 129. Okay, you know what I'm gonna take? I'm gonna move out of order and bring Senate Bill 729 since we have enterprise zones on that one as well. Yeah. So I'm gonna move to Senate Bill 729. Okay. And it's relating to enterprise. First up, Director Tokyoka. Thank you.

Next up, the alliance for Collaboration. Jim Crisafulli in support. Next up, Rodrigo Romo in support and Keoni Shizuma in opposition. Anybody else wishing to testify?

Hello Chair. Vice Chair Josh Wisch with Holomua collaborative with testimony and support. It might have arrived late so my apologies for that but I can also get it over to you again I'll stand on our testimony and support.

The main thing I'll note is one of the main reasons that we have been supporting this is in talking with a number of especially smaller local businesses they've noted that for generally participating in the program as is a local manufacturer has to have over 50% of their sales in wholesaling and increasingly there are a number of small manufacturers who are going directly to retail especially with the advent of Internet sales.

We did get your testimony. Next, anybody else wish to testify? Farm Hawaii Farm Bureau Brian.

And so this would allow some of those local small manufacturers to also receive the benefits of the enterprise zone. Thanks very much.

Good afternoon Chair Vice Chair Members of the Committee, Brian Miyamoto here on behalf of the Hawaii Farm Bureau. Our apologies Chair, we. I thought we submitted our testimony. We will submit. If the Committee doesn't have our written. Testimony we can have. Oh, okay. We're obviously in support of this.

We're trying to increase our value added production as you may have heard and you can see from our testimony, we believe that agriculture related businesses are 50% of the businesses in enterprise zone program. And the discussion with the last bill we do support the extension and with the extension for farming it's hard to increase our employees.

So the Legislature had approved increase in revenue in sales at 2% per year. So we believe that would apply for the extension up to 12 years. If the Legislature does consider that again, it's a great program. Mostly in the rural areas. The easy the zones are really supportive of agriculture and agriculture development.

There's a lot of momentum for value added using local agricultural crops. So we are in support of this and we'd like to see increased agricultural production using agriculture or value added production using agricultural. Local agriculture crops to help grow our industry. So thank you for the opportunity to testify.

Thank you. Okay, I gotta go back. I was reading SB 581 on the testifiers. Let me go down the rest of this. So, Hawaii Farm Bureau. Next up, Melly James and Brittany testifying for Mana Up in support. Michael Kane testifying for Hawaii Community foundation in support . Title guarantee with Mike Peach in support. Jason Fujimoto in support.

John Josh Feldman, all in support. So did I miss anybody else?

Not as far as part of tax. You have a.

Oh, yes we do. Comments. Okay, thank you. Any questions?

Yeah, fine. Girl. So currently without this measure, you cannot do value added.

Brian Miyamoto, Hawaii Farm Bureau. Thank you for the question, Senator. We. We can do value added. This will just help encourage, we believe, more value added within the enterprise zone, the zones.

How is that? Explain that.

Because of the benefits of being in the zone. The tax credits, the exemption from. GET all the incentives. I believe even counties have permitting. The different counties have different incentives. So again, we're trying to encourage more business.

We're trying to encourage economic activity, especially for agriculture in mostly the rural areas which we believe the zones are located in.

So you can't have it now. But you need this. Why again? I mean, it's in the. We're not increasing the zone. Right?

We're not increasing the zones. It's just another allowable activity within the zones. If you're doing the business in the zones. And again, I believe the zones were created to stimulate economic activity, stimulate more business in these areas.

You can do it now.

You can. So it would only be those businesses that are in the zones that be able to take advantage of it. But my understanding is you cannot. The value added is not an authorized activity. Right. So it's. They're adding that in or the drafters of this bill is adding that as an allowable.

So this will allow you. If you only do value added right now, companies that do it, in addition to what they're doing can do it, but just a value added company cannot that what you're saying?

I don't believe the value added is an allowable activity within the zone. Agriculture processing. Agriculture production in the enterprise zone. Programs are allowed now. That's what's in there. This is now adding that value added processing as an additional activity.

Yeah, quick.

Because I heard the Electric going out shortly, is it?

I don't have to properly introduce myself. Mark Ritchie, I'm the branch chief handling enterprise zones. This actually has to do with retail and value added would probably come under manufacturing. So those companies can join the enterprise zone program. They might not get. There's one benefit they might not get is agricultural production.

If they can't meet the hiring requirements the ledge about 10 years ago, if they have 2% increase in revenue over the previous year, then they can also be certified, whereas the manufacturer doesn't get that, but they get all the other benefits. So value added would come in under a manufacturer, right.

Under retail sales. And it would have to take place within the enterprise zone.

Right. This just adds because right now when this was written, this was pre Internet, pre everybody did wholesale. So really what's only for the tax credit and the GET exemption is wholesale sales because that's the way people used to operate now.

And I think what maybe sparked this bill is we have a lot of companies that go directly to retail. They're manufacturers, but they're selling directly into retail. And so this program doesn't really help them. And then when you read the form, in the dotax form it explicitly it's 756. The enterprise don't perform.

It basically it's only wholesale sales. And so this would allow them to incorporate their retail sales.

It'd be helpful when you post your testimony to show us what exactly because not all of us are up on. No understand it's subject. Okay. Enterprise zones. We know it's good. We know it's got jobs. But a lot of times the details aren't always clear.

So let me ask you this other question. What would it look like if we put to put Senate Bill 125 and 729 together?

That would be perfectly all right.

You could do that. It all relates to enterprise zones. I think it's the same subject.

Okay, thank you. Okay, back on Track, Senate Bill 129 relating to labeling requirements. First up, Department of Ag.

Afternoon, Chair, Vice Chair, Members of the Committee. I'm Measurement Standards Branch, Department of Ag. We'll stand on our testimony offering comments on testimony.

Thank you. Next up, dnr. Thank you. Next up, Attorney General Christopher Travis Moon. Travis Moon, Christopher Young.

Good afternoon. Deputy Attorney General Travis Moon. We provided comments in our written testimony regarding a supremacy clause issue. I'm available for any questions. Thank you.

Thank you. Next up, Eric Kima testifying for Hawaii Long Line Association.

Yeah, I want to chair my share here. Members Executive Director of The Hawaiian Association just stand on live in testimony and for questions. But we are in support. I'll just say I think 100% of Hawaii's fishing communities get support.

Thank you. Next up, Stephanie Sakamoto. Fishing kills at Mike Sakamoto. Thank you. Next up, Edwin Watamura. So, yeah, I get. I keep planning support for the record. Anybody else in here wanting to testify on the behalf of the measure? Okay. Seeing that anybody has any questions, a.

Question for the ag.

You're still on ag, Please. I'm here.

Hi, Travis. Okay, so I am reading your testimony about the Supremacy Clause. Can you explain to us more detail? I'm sure the public out there doesn't know what that means.

So the Supremacy Clause, it has to do with a preemption issue. So in Hawaii, well, we. We follow both the U.S. constitution and the state constitution.

So ultimately, the federal law, if they regulate a certain field or if Congress says that they intend to have their regulations occupy a field such as labeling, then the federal law Trumps state law, and state law is preempted from acting in that area.

So here we have federal law that talks about labeling, country of origin, labeling requirements for fish. But there is a carve out in the federal regulation for processed fish. So that's why our recommendation is to remove language about country of origin labeling for raw ahi and focus on processed ahi.

And a definition of what we think processed ahi should be based on. That federal exception is also included in our testimony.

Okay, thank you. Those of you in support of this, how does that change if we say process instead of raw?

Okay, so, dear Eric, I'll let you guys speak.

Yeah, thanks. Eric King. I'm Executive Director of the Hawaii Lawnline Association. I believe change in or additional definition to include process ahi would be.

Okay, well, they want you to take out raw, so it would be only processed. Processed, yeah.

And I think what we have to avoid is there's, you know, the ahi that is being defined here is yellowfin and big eye tuna. You know, yellowfin is canned. You see that on the store's shelves. So I think we have to exempt canned tuna, but include a definition of processed ahi to include poke sashimi sushi products.

And I just want to note other states have done this as well, extended country of origin for seafood beyond federal. So the Supremacy Clause, I think, has been addressed by other states and not an issue.

So we have to make sure that the language in here follows. Okay, thank you.

Thank you, Department of Ag. So, you know, I got you guys testimony late at 1040 something this morning. And you guys see any problems with this new labeling requirements for ahi? If this Bill is passed.

There may be problems with us enforcing it. It's not our Kuleana at this time. It's nothing that we've ever done in the past. We do packaged products with statement of identity, net weight and locations of distributors or manufacturers that make the package products.

But this is more of a labeling issue that would go on to a product that's being sold in a supermarket. That may be signage under food safety guidelines and whatnot that other agencies may already be checking.

So on the food safety guideline, do you guys do the enforcement for that?

We do not.

Who does that?

It's probably doh. Food and Safety.

Do you guys have any federal funds that come down to do enforcement?

I don't know. I don't know that. I would have to ask our superiors to find out.

I think that's kind of important knowing that you guys have a division of Department of Egg of Agriculture and Aquaculture. I would like to know if you guys do, can you find that out again as well as going forward.

How you guys, you know, because what this is trying to address is buy local, not to have, you know, import to be now mixed with, you know, local products. As you guys elaborate to in your division of the Department of Agriculture. You guys have made a huge push on supporting local.

So if you don't think that the regulation and enforcement should be with you guys, then where do you believe that should be?

Well, that was just specific for the measurement standards branch because we deal with commerce issues and making sure that a transaction is equitable for a business as well as the consumer, checking gas pumps, scales, things like that, and taxi meters. So it's mainly devices that I deal with.

I think it would have been better to have had the chair here. Another division within the Department of Ag is warranted to handle the enforcement part of it.

I'll relay the information and we'll find out, get information if we get federal funds and see if there's another agency within our Department.

Please do. Thank you.

You're welcome. Thank you.

Any other questions? So, none. Moving on to Senate Bill 581 related to economic development. First up, testifying for a technology development corporation, Matt Kobayashi. Thank you. Next up, Jim Cristoffoli does a fine for alliance for Collaboration and Exploration of Space and Support. Rodrigo Romo, individual and support, and Kyoni Shizuma in opposition. Anybody else wishing to testify?

Seeing none. Members, any questions? Okay.

Do we have any idea what the cost might be.

Debate, please. Debate.

The dollar amount in the back is blank. What. What do we think this is going to cost for?

I'm sorry, what Bill are we on? Yeah, I. That we don't know because it's not a Bill from Db.

Yeah, yeah. Kobe Habshee, can you tell us anybody who might have an idea?

Hello.

What was the question?

There's a blank amount in this Bill and it says your purpose of the act is to establish aerospace and aeronautic development program within the Department of Business, Economic and Tourism. So I would think you guys would have some idea because it's going to go into your Department what that might cost.

I can speak for htdc. I was the previous aerospace coordinator and I'm the program development manager for htdc. As such, we've been on the ground and talking to companies and looking at programs that can come here. My discussions with dvet, they didn't want to put a number there yet.

I feel that it feels ready for a program designation. But as far as from hcdc, we could use more support to kind of push our aerospace initiatives.

Okay, but this Bill is specific, right? Appropriate General Fund blank amount necessary for fiscal year for the establishment of the Aerospace Aeronautics Development program. So you're telling me we're not ready to do that?

I think from HDC's point, I feel we could do that, I think.

But you don't even know how much it's going to cost.

I have put together some numbers for HDDC side, but this is really DBEd's call.

But who initiated.

Senator Kim, this is my Bill.

Which you must have got from somebody, right?

Yeah. When this office was established and the gentleman in charge was Jim Cristofouli at the time they had a budget of $400,000 a year. It was for his salary, he had an assistant and then it was for like programs. He put on conferences and that sort of thing.

But it was a $400,1 and a half person office at the time.

Okay, what. What does this do? Anticipates being. What kind of office does it anticipate? Same thing. 1.5.

Start small and shoot for the stars.

Okay, can you come back up? Can you guys come back? So originally it was in folks office.

It was in DBED at the Department. Yes.

It was in DBA. Yes. And then no longer exists.

It no longer exists at that time it was terminated, I believe about six years ago.

Why was that?

That was because they felt it had. You know, I can't recall, but I think it had run its course that they felt that the aerospace industry was not something they had wanted to continue. Our Director and I think our Administration at the time, which I believe was.

Do you recall I wasn't here.

You weren't here. I would think it was during probably.

Richard Lim and now it's changed or it's still the same.

You know, we haven't had the discussion. This Bill comes as a surprise to me as to it being, you know, something that is trying to be established in dbed. It has not been brought up with our Administration for discussion.

So would it be more likely to be with University of Hawaii astronomy program?

I would think if they do have a program that would be appropriate, it would be better to be in a place that is already predisposed to doing this kind of work.

It seems like it's kind of trying.

To fit it back into t belly. Yes.

Okay, thank you.

So I'm sorry, Dennis come back and. Well, because I noticed like the Director did on support with. He supports the intent. So has the Department received any inquiries from people interested in developing the aerospace related business?

I. I don't know if the Director himself or our Administration for my office.

No, I can add to that. I'm talking to a number of companies right now that are interested in coming and doing demonstrations that could lead to commercial operations here with good reason. And the stratospheric platform side that was here testing out in Maui and Lanai.

Actually, because I know even the Big Island Salt Point was also a potential site as well.

We're still in. There's still high interest from Rocket Lab. There's another company called Phoenix Space that does non traditional satellite launch. They have DoD backing for hypersonic testing, but they don't have backing right now. They're working with their congressional delegation to get commercial operations for satellite launch.

There's a number of companies and I'd like to also kind of differentiate between astronomy and aerospace. Astronomy is very strong. The aerospace industry is focused on other things, launch, payload operations. And I believe we can really develop that market here.

I know Senator Sparrow led the charge years and years.

Yes, he was very much involved and.

It hasn't come to fruition. And back then we talked about companies and so forth. So I think we need something more concrete as to what's the potential and. How likely it is because there's strong interest.

And with Space Force really expanding their footprint here, our work with Maui has really got an uptick in the past year. The potential programs are they're not 510 years, they're two to four or five years and I think if we got a little bit more support, we could really kind of hit it hard and be successful.

You got to give us some numbers.

I can get you some numbers, but I'd have to clear that with dbad.

I think the potential is there and it's always been an area that our Department has supported in the past. As to whether it belongs in dbed, that is another question. But it is a very important area that we've always had some involvement in.

Thank you.

So, Mr. Kobayashi, I mean the fact that you are in the position you're in is because this is not a new effort. We've been trying for two years to re establish the Office of Aerospace which the IGay Administration and the Director at that time of DBIT decided to just go and dissolve this entire entity.

So it's not a new unthought of process. This is the third year we've been trying to re establish this office. Correct. And because we weren't successful in the two previous tries, we put a position in for you because that's the best we could do. We couldn't establish office, so we established a position. Which is yourself. Correct.

So this is not something that should be a surprise to dvet.

Yes. Okay. Just want to get that clarified with regard to the University of Hawaii. The University of Hawaii already has Pisces. Right. We pulled Pisces out and sent that to uh, Hilo to do all the research. That is an opportunity out there. But your focus and this office's focus would be on job creation and economic development.

No.

We highlighted the opportunities with Space Force's recent establishment of a regional headquarters in Maui, the launch facilities here, the fact that we're the closest state to the circum on the equator of the Earth. So we're primed for satellite launching. You have drone programs that can be chased by this office. So there is great value and potential.

It's not just all make believe, but unless we have a strategic plan and people like yourself and support staff at some level of resources, we're never going to realize the potential airspace in the state. Correct.

I agree 100%.

Thank you. Thank you. Okay, any other questions? Okay, next up, Sentate Bill 981 relating to the Department of Business, Economic Development and Tourism. First up, D.

Yeah. DB stands in its written testimony supporting the intent of this bill.

Okay, next up, Lauren Zurbo or Hawaii Food Industry Association onto. All right. They are available on Zoom. Okay, Anybody else wishing to testify? See? None. Any questions? Yeah, Dennis.

I'm sorry. I testified in support because Eugene Tian is here, who actually is the author of the testimony.

Okay, go ahead. You want to say anything? I'm concerned about the cost.

Yeah. Dennis can take care of everything. Yeah. I'm Eugene Tian, the economic research administrator. We are asking for 200,000. The reason is that for business survey it's very difficult. It costs a lot more for a resident survey is the return rate is about 30% for business is 5 to 8%.

We targeted about 1,500 businesses completed the survey. So that requires we're sending out about 20,000 to 30,000 questionnaire. So each questionnaire costs about $100. So that's how I budget it.

So that's how many you have to send out?

Yeah, we send out about 20,000 to 30,000 and then we return the completed. The Target is about 1500 completely zero.

So you send out 20 to 30,000 and you only get 1500.

Yeah. The responding rate is very low for business we have to follow up three times at least.

Why is that? Why is it so hard for businesses to respond? You would think it would be better for companies would be more responsible and respond.

You would think. But I think, you know, on a lot of surveys, unless you offer an incentive to respond by providing a $5 bill or something like that, you say.

That you know, if you don't respond, your taxes are going to go up.

Well, that would be an incentive. Yes, that's right. Or you will be audited.

Yeah. I mean you got to think of creative ways to get them to respond. Because to spend all that money and only get 1500 back, it's crazy.

And this one, we don't have a commission for the film, for example, for the tax credit for the research activity. Yeah, we have a prerequisite they have to complete in order to get a credit. But this one is volunteer. We have no any control.

Can we find something to connect it to? I'm sure we can. We're the government.

Right. I'm in the research division and I think we have been. It's always our dilemma. And the certain survey. We don't have a constitution. The state cannot even do is a federal business. And even the state survey, I don't think we have a constitution to final.

Okay. So is it in your estimation that these kinds of surveys that we asked for maybe not be not realistic? It won't give us a really a good idea. Because if there's that many businesses out there and we're sending it out to 20 to 30,000 only getting 1500 is that a good sample.

Yeah. From the statistical point of view, the sample of more than 4,000 that would be representative. But this because we are thinking about survey by industry and highway because the minimum wage will impact two industries heavily. One is the food industry and the second is retail.

And then you have about 30% of the workers paid at minimum wage.

So are you targeting more of those businesses in this than more? Well, I hope that in the future when you guys testify on this stuff to tell us whether or not it's cost effective because, you know, we love to say let's do a study or let's do a survey. Legislators love that.

So we need you guys to say, you know, maybe it's not worth the funding. So in your division, do you have a budget to do surveys or do.

Yeah, we don't have budget to do this one.

Which ones do you have budget for?

We have a budget for tourism survey. The tourism research is under my division. Yeah, we have budget only for tourism service.

I wonder if other departments like unemployment or any other hr, they have budget. Okay, thank you.

Thank you. Any other questions? Seeing none. Let's move on to Senate Bill 983 relating to small business loans. First up, DBID.

Yes, DBID stands in its written testimony supporting the intent of this measure.

Thank you. Second up, Josh Joshua Wish from Holomo Collaborative Chair, Vice Chair, Committee Members, thanks very much.

I'll largely stand in support of our testimony in the Bill. Just noting that the reason for this. Is to try and try to help create new startup businesses in the state. While we do have programs that are. Designed to help existing small businesses, we. Don'T really have any right now that. Are designed to help create new ones.

And so this is an attempt to help fill that gap.

Thank you very much. Next up, Lauren Zirbo, Hawaii Food Industry Association on zoom. Go ahead.

Good afternoon. Sorry I was late. We stand on our testimony. I'm Alexis Chapman for hfia.

We stand on our testimony in support and in regards to the previous Bill, if I may, we would be happy to work with the Department to help make sure that businesses in our industry have access to the survey and are aware of it's coming and of the importance of it.

So I hope that if they send it out again, they can reach out to us and we'd be happy to help them make sure that that gets into the right hands.

Are you guys writing that down? Thank you. I think they have my email address.

Thank you. Hawaii Shield Industry Association.

Next up, Chamber of Commerce, Tonga Opui.

Hi, good afternoon. Chair Good Afternoon, Vice Chair. The chamber stands in support, Tongo Okoy, my friend at Eggnog Development Government community relations.

Thank you. Next up, Mellie James and Brittany testifying from Mana up in support, Michael Kane in support for Hawaii Community foundation title guarantee. Also in support, Jason Fujimoto in support and Josh Feldman in support. Anybody else wishing to test the fundamental for this measure, see none. Members, any questions? Yes.

What is our track record as far as startups where we give them loans and then they aren't able to pay it back or we have to write it off?

Well, we currently have a loan program which we got through a federal grant from the EDA and supplemented by some of our CP CBD funds. And the delinquency ratio on that is zero. There are no delinquents. And how many loans do we have?

We currently have 17 active loans. Just 17 with their CBD program.

All startups?

No, none of us are startups. No, they're. So they're existing companies, they're small, very small businesses and they do have a commercial turndown. So these are high risk loans. But. But these are not startups giving a business plan for a loan.

Okay, so these loans is for business expansion.

Yes. So this Bill is for startups, however. So it's a different category of businesses that this Bill is looking at, but we feel it leads on the continuum of growth for the companies. If we do the startup loan program, we could move into the CBD expansion program. You know, at least there is a expansion.

This Bill. I thought you said it was for startups. Yeah, this Bill is for startups.

This Bill is for startups. Currently a startup program. It is for small businesses.

Okay. Do we have any kind of idea on startup companies? How many of them default or that we don't?

Because. Well, you know, in General, I would think a lot of startup companies.

I. Think it's required to write admin rules for this. I think we put a lot of thought into that to try to De risk it somewhat. I mean, these would still be high risk loans, but you would want the borrower to have skin in the game, to have a really good business plan.

You probably put a Committee together that would really evaluate. It'd be very competitive how we gave the money out because we want to use taxpayer dollars wisely and actually have viable companies starting up and growing and then being able to tap into our other sort of business growth program.

It's just that I heard some nightmares about, you know, when during COVID and we had all that money for those businesses and people Were applying and watching program, court program. And the girl said, yeah, she had a business. And the judge asked her and she said, zero, yeah, my employee is my boyfriend. And you got $10,000.

What kind of. What kind of business is it? It wasn't really a business. I know that's different from a loan, but.

That's right. I think that the admin roles and just the Administration of the program, we'd have really a lot of thought in it. Have very capable people just because this is extremely high risk and we don't just want to blow taxpayer dollars.

Yeah. Trust you guys. Thank you.

So, you know, I remember this loan program they had that basically they would. Of course, you guys would require the down and everything else on. On equity or.

Zero, that was our old Hawaii capital loan program. Yeah, that was sunsetted over.

How did that go?

That had a lot of default. Yeah, there was quite a bit of default. It was a lender of last resort also. So we're going to take a look at that and then tweak it.

Okay, wait, let's start running something. Okay. Anybody, Any other questions?

Thank you.

Yeah. Okay. Okay, moving on to the next one. Senate Bill 989.

We're just going to run through.

Okay. Bill 99 relating to economic development. First up, HTDC, Wayne, Illinois. Okay, next up, Lauren Zurgo on Zoom.

Good afternoon again, Alexis Chapman for HFIA. We stand on our testimony.

Thank you. Next up, Congo for Chamber of Commerce. Okay, we have a lot of testimony support for this Bill. Anybody else in the room wishing to testify? Seeing none.

Recess. Okay, recess. Okay, we're back, finishing up.

We're on Senate Bill 989. Any questions for the Committee? Seeing none. Senate Bill, we're moving on to Senate Bill 992 relating to Hawaii Technology Development Corporation. I'm sorry.

[Inaudible]

Good afternoon, Chair. Wayne Inouye, Hawaii Technology Development Corporation. And we stand on our testimony.

Okay, next up, Lauren Zirbel for Hawaii Food Industry Association on Zoom.

Good afternoon again, Chair, Vice Chair. I'm Alexis Chapman for HFIA. We stand on our testimony in support of this as well. Thank you.

Okay, next up, Tonga Hopoi for testifying for Chamber of Commerce on Zoom. In support. Brian Miyamoto, Hawaii Farm Bureau.

Thank you. The Hawaii Farm Bureau will stand on its written testimony in support.

Thank you. Next up, Brandon Dumitz in support. We got about 20 other people in support of this Bill. Is there anybody else in the room wishing to testify? Chamber of Commerce.

Hi, Tonga Hopoi. Good afternoon, Chair, Vice Chair, Members of the Committee. Tonga Hopoi standing in support. Any questions?

Perfect. You need. You. You went running up the stairs. You need some oxygen.

Like, you know what, let's stop this.

Okay. Anybody else wishing to testify on this measure? Any questions from the Committee?

Yeah.

Thank you.

I see all this money in this Bill. Can you explain what the. What we're using the money? I see. 2 million for small business innovative research program.

Yes. Yes. Hi, Senator. Yes, just to clarify. Thank you for the question. So this has been a reoccurring support from the state legislators to help our small businesses in technology and manufacturing. The way that the funds are divided is 2 million for manufacturing. So it's the manufacturing assist, Manufacturing Assistance Program.

So that supports local manufacturing with the ability to purchase equipment, training, integrate innovation and also do an assessment for expansion.

So who does the training?

So the training is done by our program, Innovate Hawaii. We are part of a national network through NIST MEP to provide national training based on advanced technologies. Through a contractor and through ourselves.

So we're all, three-fourths of our team are manufacturing engineers that we provide training. There are certain areas in advanced manufacturing that we're not really skilled up to be. So we use national contractors to bring in from out of state to really help us.

So this $2 million, [inaudible].

So this is the Manufacturing Assistance Program grant. And we I think the Grant started in 2018.

So since 2018 you get it every year.

We've been very fortunate to receive appropriations from the legislators. Sometimes it's a million, sometimes it's 2 million depending on the budget. But we've been very fortunate to to get at least a little bit of funds to help support our local manufacturer.

So can you give us a list and show us exactly who was helped?

Yeah, we can do that. We can show that. And we are working with Dr. Tian in the Reed office to answer some of your questions about data and survey. Right now we are in the process of revamping our economic impact survey which we get these numbers and we can definitely share that with you as well.

So is it the same companies that get helped and trained every year?

No, our goal is to not fund the same companies. Obviously again, there are companies that always come back. But we do give priorities for first time companies and we also give companies during the last couple of years to Maui companies that were experiencing some hardships. So we were giving priorities to those types of companies.

More recently, through the guidance of our board and through DBEDT, we are prioritizing applications that are addressing state priorities. So what that means is biosecurity, ag development, sustainability, certain critical priority areas for the Governor for the Legislator. And we are prioritizing those types of applications. So that.

So I noticed you have $2 million for accelerator and small business training programs. Is this overlap with the manufacturing?

No. So, no. So the 2 million for the Hawaii Small Business Innovation Research Program program, that is a.

Yeah, that is separate accelerator. And small business training program.

Yes. So the accelerator program is a separate 2 million fund that will support organizations that are implementing, they're supporting small businesses and accelerators to really help them for startups and getting them additional capital funds. So that is not something that HCDC is, that's not a specialty. Right.

So we rely on industry like blue startups, elemental mana up to really provide that expertise, to provide them the small business training, to provide them the access to people like venture capitalists to really get them into that next step and have them not be dependent on state funds.

And then the research.

So the SBR, that's another program which is the Hawaii Small Business Innovation Research Program, that is a fund that also has been with HDC since 2018 to support technology development. Right. So it's an application process that helps develop, that helps our local small businesses with technology enhancement.

And again, these companies for SBR, these are the ones that really has the high paying jobs, right. Their PhDs, their doctorates, they're really the, the driving force of our local tech economy because they are developing new technology with high pay jobs because they are getting federal funds. It's a match.

So every year you guys come in for this money?

That is correct.

So how long do you think this is gonna be, forever?

The phase two, phase three has been since 2018 if I'm not mistaken.

So is there an end in sight or no?

Well, we're hoping that, you know, again, at some point we can leverage other federal programs that we don't have to, you know, continue to come to you and request. But what this does is really, Senator, really help our technology companies. Obviously it does.

We do have some statistics and we are working with Dr. Tian and the Reed Division to really get the data for you. So you can see the impacts because we are as a state, one of the top leading states to do R&D research for the State of Hawaii per capita. Right.

I think in one of the graphs that we had in our annual report, it does show that Hawaii is really top notch as far as innovation and research. And we can share more details with you because again. Right. Even during COVID right.

These companies were the ones that were helping us, you know, with tests like our companies with Oceanet. Right. So we're very fortunate that we have these very intelligent companies that are really pushing the needle for technology and innovation development.

Thank you.

Thank you. Real quick, Wayne. Is there representation or should I say applications or those that came into HTDC from all islands or all islands?

All islands. Right. So we, you know, again, we were putting some priorities again during the Lahaina wildfire to prioritize the companies on Maui to make sure that they get the support they need. But we also put very high emphasis on neighbor islands, especially in rural areas, because they need the help the most.

And, you know, our goal is to be a statewide program, so really focusing on the rural areas and. And getting applications from other islands like Molokai as well. So.

And I showed up for one of them, so.

Yes, yes. So we are using the monies, you know, other federal monies to leverage this state money. So we're not. This money goes directly to the companies for support. Right. Thank you. Okay, thank you.

Seeing all the questions, moving on to Senate Bill 1003 relating to agricultural development. First up, ADC Wendy gated in support and in person. Next up, Hawaii Farm Bureau, Brian Miyamoto.

Thank you, Chair. Members of the Committee, Brian Miyamoto here on behalf of the Hawaii Farm Bureau. The Hawaii Farm Bureau is providing comments on this measure. Generally, we are supportive anytime that the state seeks to purchase ag land that may be in jeopardy of falling out of ag production. We just have really two points concerning this Bill.

Only the TMKs are listed, but some conversation.

We understand that it is land that's about 146 acres, acres in Kau that we believe is held in trust and that there's a desire to convert it into an ag park for the many farmers and producers in Kau versus having a single landowner possibly take it, purchase it, and maybe not keep it in agriculture or not do real farming in this parcel.

But we just want to make sure that if the state's going to purchase it, to name the adc, that there is water resources, there are the infrastructure that's going to be needed for the agricultural park. So those are considerations that need to be had.

And then also we are proponents of expanding ADC's inventory to not just Hawaii island, which this does, and not just Kau, but other areas of Hawaii island and also Maui county to include Maui Island and Molokai. ADC is a state agency, but they are primarily on Kauai and Oahu.

So we'd like to see ADC with a broader reach with their unique powers to support agriculture production. Thank you for the opportunity to testify.

Thank you, Brian. Next up, Suzanne Shriner in support. Kau Coffee Growers in support. United Kau Farmers Cooperative in support. Testifying for Island Harvest also in support. As well as Eric Tanoy, Hawaii Florida Cultural Nursery and support. Lori Assan in support. Coveni Bar in support. Wayne Kawachi in support. And Austin Johansson in support.

Anybody else wishing to testify on this measure?

Yes, thank you. Chair Ralph Gaston from Rescue. I submitted testimony. I apologize. Wanted to offer my support in person if possible. We own land adjacent to this property. We know the other sesters land. We're on some of it that is on a separate TMK.

But having lived here for 14 years, moved here from the mainland, I really am in support of something that helps Ka'u maintain its integrity as an agricultural land and a place where farmers can get land that they can develop different crops and also be part of the. Community they've grown up in.

And I think opening this up a lot. I don't know that I have much else to say. I learned perspective as a local farmer. So thank you. Thank you.

Anybody else wishing to testify? Asking none. Any questions for the testifiers? Seeing none. Oh, yeah, sorry. Last one. Senate Bill 1035 relating to consumer protection. DCCA.

First of all, happy year of the Snake Office of Consumer Protection with comments on a Moriarty. We think it's important the conversation continue Drip pricing. I dare say everybody in this room has had the situation where they go to buy a product. Maybe it's a booking of a lodging.

And you go through the process and at the end you're looking at a price that's a lot different from where you started. This is one of a couple different measures trying to address this problem.

And at the federal level, the feds just adopted a final rule that applies across the nation, which is scheduled to take effect May 10, addressing essentially the same things this bill is trying to do. The bills, the federal rule and the state rule on the state bill, this particular one, on the other hand, are almost identical.

There are a couple of differences and our office would like to try and get the bottom of that right now. What we want to ensure is that the consumer protections enacted by this state don't fall below the floor set at the federal level.

So we just want to try and get a better understanding of how these measures differ, how the final rule at the federal level and how this particular bill differ.

Okay, thank you.

Happy to answer questions.

Thank you. Anybody else wishing to testify? Oh, sorry. Michael Older also in support. Anybody else wishing to testify Saying none. Any questions?

Okay, question on this. But I just overall Question. It's very troubling every time you see something advertised on TV, on whatever, and then when you go there. Yeah. The price is always different. So, I mean, I know they said subject to area, but same thing with Subway. They give you all these coupons.

You go there, you can't use it. So do you have any kind of control over that? Sorry. Or free shipping? And then you go over there and.

Charge your shipping because you're outside of the U.S.

yeah.

Yeah. It affects all of us. These issues come up and our office has looked at it. I'm not totally prepared to answer those questions today. I can. I can try and get back to you on those questions. But.

The next day the thing changed. Like I think the contract never stays full.

Anyway, we're going to recess for decision making. Thank you. Hi.

We are back for decision making, starting with Senate Bill 125. After reviewing both Senate Bill 125 and Senate Bill 729, I'm going to take Senate Bill 729, insert the contents of that Bill into Senate Bill 125.

Also be incorporating amendments from DBATE to include also business businesses in the program as of July 1, 2025 and no retroactivity and defect the effective date to July 1, 2050. Any discussion? Seeing none.

Chair goes aye. Vice Chair votes yes. Senator's excuse. Senator Kim, Senator Awad's excuse. Chair, your recommendation is adopted. Thank you.

Next up, Senate Bill 129 relating to labeling requirements. It prohibits the sale of raw ahi and raw ahi products in retail establishments without a label that states the country where the ahi was landed. We are going to pass this with the following changes. One, on page two, line 19, insert after wahi.

Two, on page three, between lines 5 and 6, and insert the following process.

Ahi means a retail item derived from ahi that has undergone specific processing resulting in a change in the character of the ahi or that has been combined with at least one other substantive food component, except that the addition of a component that enhances or represents a further step in the preparation of the product for consumption will not in itself result in a processed food item and does not mean canned tuna.

Ahi poke means cubed, cut or sliced raahi mixed with other ingredients, including but not limited to seasonings and vegetables. We also defect the effective date to July 1, 2050 and the attorney General's comments can be more appropriately addressed by the Next Committee at CPN. Any discussion? Seeing none. Chair goes aye. Vice Chair votes yes. Senator Kim aye.

Senator Fukunaga and Oau Excuse Chair recommendations adopted. Thank you. Next up, Senate Bill 581 relating to economic development. We are going to pass with an SD1 technical and technical non substantive amendments for the purpose of clarity and consistency and defect the effective date to July 1, 2050. Any discussion seeing none. Chair goes aye. Vice Chair votes yes.

Senator Kim. Aye. Senator Fukunagan, AWA excuse Chair recommendation as adopted. Thank you. And then on Senate Bill 729. This Bill would be deferred indefinitely. Moving on to Senate Bill 981 relating to the Department of Business, Economic Development and Tourism.

We're passing this with an SD1 technical non substantive amendments for the purpose of clarity and consistency and defective and Defect. Effective date July 1, 2050. Recommendations is to let the Committee Let the Committee report note that 200,000 cost of the study as noted in their testimony. Any discussion? Seeing none. Chair goes aye.

Vice Chair goes yes. Senator Kim. Aye.

Senator Fukunaga and AWA excused Chair, your recommendation is adopted.

Thank you. Next up, Senate Bill 983 relating to small business loans. Passing with an SD1 by blanking all the appropriations amount but no deleted amount in Committee report and defect the effective date to July 1, 2050. Any discussion? Seeing none, Chair votes I Vice Chair votes yes.

Senator Kim, Senator Fukanaga AWA excuse Chair, your recommendation is adopted.

Thank you. Next up, Senate Bill 989 relating to economic development. We are going to blank the appropriations amount and defect the defective date to July 1, 2050. Any discussion seeing none. Chair votes Aye.

Vice Chair votes yes.

Senator Kim, Senator Fukunaga and AWA excuse Chair, your recommendation is adopted. Thank you. Moving on to Senate Bill 992 relating to the Hoy Technology Development Corporation. We are going to blank out appropriations amount and effective effective date to July 1, 2050 and note that the lead amount amounts will be in the Committee report. Any discussion Seeing none.

Chair vote aye. Vice Chair votes yes. Senator Kim. Senator Fukunaga, I will excuse your recommendation as well. Thank you. Moving on to Senate Bill 1003 relating to agricultural development. We are going to blank out the gold bond appropriation amount.

We're adding the requested change by ADC by including the name of the owner and effective date to July 1, 2050. Any discussion?

Seeing none. Chair goes aye. Vice Chair votes yes. Senator Kim. Aye.

Senator Fukunaga and AWA excuse chair and recommendations. Doctor.

Thank you. Moving on to Senate Bill 1035 relating to consumer protection. We are going to put an amendment. There is a discrepancy between page three, lines fifteen to seventeen and page four, lines nine to eleven. So insert accept the final amount of payment on page four after the phrase any other pricing informations.

Concerns were raised by DCCA and we can be and can be appropriately addressed by the Next Committee of CPA joint with Jdc. Any discussion? Seeing none. Chair votes Aye. Vice Chair votes yes.

Senator Kim Aye. Senator Fukunaga Nawa. Excuse. Chairs your recommendations adopted.

Thank you. And with that, we are adjourned.