House Standing Committee on Finance

Okay. The House Committee on finance will come to order. Today we have two agendas. Our first agenda we have several appropriations for public employment costs and some other direct to fin bills. So first up we have House Bill 1026 HD1. Vice Chair.

First up to testify we have Department of Budget and Finance.

Chair, Members of the Committee with your indulgence can I testify on the House Bill 1026 through House Bill 1039?

These are all Administration collective collective bargaining bills. We urge that it be moved forward for appropriate amendments. Thank you.

Proceed.

Thank you. Next we have University of Hawaii system.

Good afternoon Chair, Vice Chair, Members of the Committee. University of Hawaii stands in support of. This measure and as well as 1027, 1028, 1029, 1030, 1033, 1034, 1035 and 1036. Thank you.

Thank you. Next up, UPW.

Chair, Vice Chair, Members of the Committee. Kamakana Kaimuloa. I'm a law government affairs manager for United Public Workers. You have a written testimony strong support of this Bill. What we did not note in our testimony is that in part three of the Bill it includes bargaining units 1 and 10.

Last year the Legislature had appropriated the funding needed for a negotiated settlement between the judiciary and the union. As a result, we're not needed in that section, but happy to answer any questions you may have. Thank you.

Thank you. Next up, Hawaii Government Employees Association.

Good afternoon. Chair, Vice Chair, Members. Nui Sebast here with HGEA. We'll send our testimony in strong support of this measure. Mahalo.

Thank you. Members, we also have Hawaii Health Systems Corporation in support and one individual in opposition. Is there anybody else wishing to testify? Seeing none, Members, questions?

Okay, thank you. We're moving on to House Bi ll 1027 HD one, Vice Chair. Yeah, I mean we can. Okay. Any questions on this measure? Okay, thank you. We'll move on to the next Bill. House Bill 1028 HD1.

Okay. Same. Same organizations. Also Hawaii Health Systems Corporation in support. A number of individual opposition and one with comments. Members, any? Oh, anyone else wishing to testify? Seeing none. Members, questions.

Okay, thank you. Members, we're going to move on to the next bill. House bill 1029 HD1. Vice Chair.

Same organizations in support, including also Hawaii Health Systems Corporation and one individual in opposition. Anyone else wishing to testify? Seeing none. Members, questions.

Okay, moving on. House Bill 1030 HD1. Vice Chair.

Knowing the departments who previously said in support, Hawaii Health Systems Corporation in support one individual in opposition. Anybody else wishing to testify? Seeing none. Members, questions.

Okay. House Bill 1031, HD1. Vice Chair.

Budget and finance in support. We also have Hawaii State Teachers Association in support. One individual in opposition. Anybody else in the room wishing to testify? Seeing none. Members, questions.

Okay, thank you. Moving on to House Bill 1032. HD1 Vice Chair.

Budget and Finance and HCA in support. One individual in opposition. Anybody else in the room wishing to testify? Seeing none Members questions.

Okay.

Okay. Moving on. House Bill 1033, HD1 Vice Chair.

We have University of Hawaii Professional Assembly.

Good afternoon. Chair, Vice Chair, Member of the Committee, Sarah Beamer for UHPA. We sign under written testimony and support. Thank you. Thank you.

Also budget and finance and support. University of Hawaii Systems in support and one individual in opposition. Anybody else in the room wishing to testify? Seeing none Members questions.

Okay, moving on to House Bill 1034. HD1 Vice Chair.

Noting budget and finance UH and HGA in support. One individual in opposition. Anybody else wishing to testify? Seeing none Members questions.

Okay, thank you. Moving on to House Bill 1035.

HD1 Vice Chair noting budget, finance UH and HGA in support as well as Hawaii Health Systems Corporation. Anybody else in the room wishing to testify? Seeing none Members questions.

Okay, moving on. House Bill 1036. HD1 Vice Chair.

Noting budget, finance UH, UPW and Hue Health Systems Corporation in support. One individual in opposition. Anybody else wishing to testify? Seeing non Members questions.

Okay, moving on. House Bill 1038.

HD1 Vice Chair noting budget and finance's support. We also received support from Hawaii Firefighters Association in support and one individual in opposition. Anybody else wishing to testify? Seeing none Members questions.

Okay, thank you. Moving on to House Bill 1039. HD1 Vice Chair.

Thank you. Noting Budget and Finance and HGA and support, as well as Hawaii Systems Corporation. Also one individual in opposition. Anybody else wishing to testify? Seeing none Members questions.

Okay, thank you very much. Moving on to the most important one. House Bill 1439. HD1 Members question. I'm sorry. Go ahead. Vice Chair.

Sorry, which one?

We don't have anybody. 1039.

Oh, oh, sorry. Sorry. I heard wrong. Okay. Budget and finance AC in support. One individual in opposition. I'm sorry.

Yeah, go ahead.

Anyone else?

I'm sorry, we're supposed to move on to 1439. Okay. HD1. Yeah. 1439. Go ahead.

1439.

1439.

Okay, sorry. HP 1439. We have testimony and support from the Min LRB and the Auditor. One individual in opposition. Anybody else in the room wishing to testify? No one to ask questions.

Okay, thank you very much. Okay, Members, we're moving on to the next bill, House Bill 795. Vice Chair.

We have Department of Taxation and we also have Tax foundation of Hawaii on Zoom.

Good afternoon. Chair, Vice Chair, Members of the Committee, Tom Yamachika from DAX Foundation. We will send our written comments and be available for any questions. Thank you.

Thank you. Anybody else in Zoom or in the room wishing to testify? Non Members questions.

Okay, we're going to move on to House Bill 794. Vice Chair.

First up, we have the Department of the Attorney General.

Good afternoon. Deputy Attorney General Randall Nishiyama for the Department of the Attorney General. We've submitted our written comments and are available for your questions. Thank you.

Next we have Department of Budget and Finance. That's all the testimony we've received. Any Members in the room or on Zoom wishing to testify? If not Members questions?

I guess either one. Budget, Finance or AG. Either one of you can come up. I have a question. You can come up, Neil. Okay, so your testimony, you're asking us to take out that section one section in the bill because you just want to have it so that it's only the general obligation bond part.

Generally, this bond authorization bill, focus on GO and GOR appropriations only.

Okay. Is that a problem or is it just what you prefer?

While it fits within the bill's title, generally the bond bill is limited to general obligation bonds. So to avoid any confusion, we'd like the bill to represent Just Go Bonds.

Okay, I understand. Okay, thank you very much. Members, any further questions? Okay, we're going to move on to the next bill. House Bill 529 HD1. Vice Chair.

First up, we have Hawaii Housing Finance and Development Corporation.

Good afternoon, Chair, Vice Chair Dean Minakami, Hawaii Housing Finance and Development Corporation. We stand in our testimony and support. Okay, thank you.

That's all the written testimony we have. Anybody else in the room or on Zoom wishing to testify? Seeing none. Members, questions?

Okay, we're going to move on to House Bill 1145. Vice Chair.

First up, we have Department of Taxation.

Good afternoon. Kristin Sakamoto, Deputy Director of Taxation. The Department is in support of this Administration measure. This is our annual conformity bill. And we did note one piece of federal legislation that was notable, and that is the Federal Disaster Tax Relief Act of 2023. And I do have an updated revenue estimate. I apologize.

The numbers have been updated since we submitted our testimony. So if the Committee wishes to conform to that provision to the provisions of the Federal Disaster Tax Relief Act, we now estimate it will cost $13 million. I'm available if you have any questions. Thank you.

Thank You. Next up we have Tax Foundation of Hawaii.

Good afternoon, Chair, Vice Chair, Members of the Committee, Tom Yamachika, Tax Foundation of Hawaii. We will send our written comments and be available for questions.

Thank you. That's all the written testimony we've received. Anybody else in the room or on Zoom wishing to testify? Seeing none. Members, questions?

Okay, thank you. We'll move on to House Bill 1146. Vice Chair.

First up we have Department of Taxation.

Hi. Kristin Sakamoto, Deputy Director of Taxation. The Department supports this measure which relates to the pass through entity tax. This Bill would amend the law by requiring qualified Members to add back to their taxable income their share of PTE taxes paid.

So the original intent of the PTE tax law was meant to be revenue neutral, but as a result of, you know, we've had one year of the non refundable carryforwards and now we're entering our second year. We did notice that there is a revenue loss as a result of how it's structured.

So this would correct that to bring it back to the original intent of making it revenue neutral. Thank you.

Thank you. We also have Tax Foundation Hawaii on zoom.

Good afternoon, Chair, Vice Chair, Members of the Committee, Tom Yamachika from Tax foundation of Hawaii. We do not agree that there is a double benefit for the reasons specified in our testimony.

We also note kind of quizzically that in the Department of Taxation's testimony, they're projecting a revenue gain of about 30 million per year and that does not seem to be consistent with the Department statement that this is revenue to the bill, we'll be happy to answer any questions. Thank you very much.

Thank you. That's all the written testimony received. Anybody else in the room or on Zoom willing to wishing to testify? Seeing none Members questions?

Okay, thank you. We're going to move on to House Bill 1147. Vice Chair.

First up, Department of Taxation.

Kristin Sakamoto, Deputy Director of Taxation. The Department supports this measure which does a few cleanup items for the Earned Income Tax Credit. It requires non residents to adjust their claim amount similar to part year residents and also imposes a deadline for the carry forward for tax year 22. Thank you.

Thank you. Also, Tax Foundation of Hawaii on Zoom.

Thank you, Chair, Vice Chair, Members of the Committee, Tom Yamachika, Tax foundation of Hawaii. We will stand our written comments and be available for questions.

Thank you. That's all the written testimony we've received. Anybody in the room or on Zoom wishing to testify? Seeing none. Members, questions?

Okay, Members, we're going to move on to House Bill 1149. Vice Chair.

First up, Department of Taxation in support. Thank you. And Tax foundation of Hawaii on Zoom.

We will also stand our testimony though, for questions. Thank you.

Thank you. That's all the written testimony received. Anybody else in the room or on Zoom wishing to testify? Seeing none. Members, questions?

Okay, we're moving. No, sorry, no question. Okay, thank you. We're going to move on to House Bill 1153. Vice Chair.

No, sorry. Department of Transportation on Zoom in support. Maybe not. Okay. That's all the written test. So testimony support. That's all the written testimony we received. Anybody else in the room or on Zoom wishing to testify and no one to ask questions.

Okay. Nobody here to ask questions. Okay. Moving on to House Bill 1173.

First up, Department of Taxation with comments. Tax foundation of Hawaii with comments on Zoom.

Yes. Thank you, Chair, Vice Chair, members of the Committee, Tom Yamachika from Tax foundation of Hawaii. Apparently there's a dispute between the practitioner community and the Department about what the 15 year statute of limitations on collection of tax means.

The tax practitioner community, as we understand it, understands that our rule is supposed to be the same as the federal rule, except that the number of years is different. So under the federal system, it's very clear that after the specified period comes and goes, the IRS then cannot collect any money toward that tax debt.

If they manage to collect it, for some reason, they have to give it back. We think that was the intent behind the 2009 law that adopted this for Hawaii taxes as well, although the Department doesn't agree with that.

So that's why this Bill is being proposed, to fix that and conform the at least one aspect of how this statute of limitations is supposed to work with with the federal system. Happy to answer any questions. Thank you very much.

Thank you. We also have one individual, Richard McClellan on Zoom.

Good afternoon, Chair, Vice Chair, Members of the Committee, I will stand on my written testimony. Thank.

Thank you. We also received testimony and support from the Hawaii Association of Public Accountants and another individual. Is there anybody else in the room or on Zoom wishing to testify? Seeing none. Members, questions?

Okay. Okay, Members, thank you very much. Okay, we're going to move. Hold on. Okay, Members, going forward, we're going to recess for decision making. Now, just to be clear to the people in the room, the public and the Members, when this Committee says recess for decision making, we are recessing to gain quorum to move into decision making.

The chair will be making recommendations and decision making will be done. When I say any discussion and then we will be discussing the Bill and then we will vote on the Bill. So right now we're going to recess for decision making. Recess.

We're going to reconvene the Committee on Finance for our decision making on Agenda 1, our 2:00 agenda. First up is House Bill 1026 HD1. Recommendation is to move as is. Any discussion? Okay, Vice Chair for the vote.

Members voting on HB 1026 HD1 chair's recommendations to pass as is. Chair and Vice Chair vote aye. Representative Grandinetti is excused. Representative Holt.

Aye

Representative Hussey.

Aye.

Representative Keo Hokupu Liloi is excused. Representative Kitagawa.

Aye.

Representative Kush.

Aye.

Representative Lamasao. Representative Lee.

Aye

Representative Miyake.

Aye

Aye.

Representative Morikawa.

Representative Templo.

Aye.

Aye

Representative Aukos is excused. Representative Reyes Oda.

Representative Ward is excused. Chair recommendation is adopted.

Okay, thank you Members. Moving on to House Bill 1027 HD1. Recommendation is to move as is. Discussion. Vice Chair for the vote

Voting on HB 1027 HD1. Chair's recommendation is to pass as is. Noting the excused absences of Representatives Grand Grandinetti, Kapu, Lee, Loy, Elkos and Ward who will remain noted excused for the rest of this agenda unless otherwise noted. Any members voting with reservations. Any members voting no? Seeing none. Chair recommendations adopted.

Okay, thank you. Moving on to House Bill 1028. Recommendation is to pass as is. Supervisors.

Vice Chair for the vote voting on HB 1028 HD1 recommendations to pass as is any reservations? Any Members voting no? Chair recommendations adopted.

Okay, moving on to House Bill 1029 HD1 Recommendation passed as is discussion.

Voting on HB 1029 HD1. Recommendation is to pass as is. Any Members voting reservations? Any no's? Thank you. Recommendations adopted.

Thank you. Moving on to House Bill 1030 HD1. As is discussion question. Vice Chair.

Voting on HB1030HD1. Recommendations to pass as is. Any reservations? Any noes? Recommendations adopted.

Okay, moving on to House bill 1031 HD1 as is, discussion.

Voting on HB 1031 HD1 recommendations passed as is. Any members voting reservations? Any no's seeing that? Recommendations adopted.

Okay, moving on. House Bill 1032 HD1 as is. Discussion. Question. Vice Chair.

Voting on HB1032 HD1. Recommendations passed as is. Any reservations? Any nos? Recommendations adopted.

Okay, moving on to House Bill 1033 HD1 as is. Discussion. Vice Chair.

Voting on HB 1033 HD1. Any Members voting reservations? Any no's. Seeing none. Recommendations adopted.

Moving on. House Bill 1034 HD1 as is. Discussion. Vice Chair.

Voting on HB 1034 HD1 recommendation is passed as is. Any reservations? Any no's Recommendations adopted?

Okay, moving on. House Bill 1035 HD1 as is. Discussion. Vice Chair.

Voting on HB 1035 HD1 recommendations pass as is. Any reservations? Any no's. Recommendations adopted.

Okay, moving on to House Bill 1038 HD1 as is the session Vice Chair 1037 sorry. 1037 HD1 recommendations to pass as is. Discussion. Vice Chair.

Voting on HB 1037 HD1 recommendations passed as is any reservations? Any no's. Recommendations adopted.

Okay, now we're moving on to House Bill 1038 HD1 as is discussion. Vice chair.

Voting on HB 1038 HD1 recommendations to pass as is. Any reservations? Any no's? Recommendations adopted.

Okay, Moving on to 1039 HD1 as is. Discussion. Vice Chair

Voting on HP1039HD1 Recommendations pass as is. Any reservations? Any no's. Recommendations adopted.

Okay, moving on to the next Bill, House Bill 1439. Recommendation is to defect the effective date to July 1st, 3000. Any discussion? Vice Chair.

Voting on HB 1439 recommendations to pass with amendments. Any reservations? Any no's. Recommendations adopted.

Okay, moving on to the next Bill, House Bill 795 recommendation is to fix the effective date the 7/1/3000. Any discussion? Question?

Voting on HB 795. Recommendations passed with amendments. Any reservations? Any no's. Recommendations adopted.

Okay, moving on to House Bill 794 recommendations to take the AG and BNF's amendments and also defecting the date to 713000. Any discussion? Okay, Vice Chair for the vote voting.

On HB794 recommendations passed with amendments. Any reservations? Any noes? Recommendations adopted.

Okay, thank you Members. Moving on to House Bill 529 HD1 As is. Discussion. Questions. Vice Chair.

Voting on HB 529 HD1 recommendation is passed as is. Any reservations? Any no's. Recommendations adopted.

Okay, moving on to the next Bill House Bill 1145. Okay, members, we're going to be taking those taxes amendments to conform with the disaster relief portion and defecting the effective date the 7/1/3000 any discussion? Okay, Vice Chair for the vote.

Voting on HB 1145 recommendation is passed with amendments. Any reservations? Any no's? Recommendations adopted?

Okay, thank you very much. We're moving on to the next Bill House Bill 1146 we're going to be defecting the effective date. Any discussion?

Vice Chair voting on HB 1146 recommendation is to pass with amendments. Any reservations? Any no's? Recommendations adopted.

Okay, Moving on to 1147. Defecting the effective date 7/1/3000. Any discussion?

Voting on HB 1147. Recommendations to pass with amendments. Any reservations? Any no's? Chair, Recommendations adopted.

Okay, moving on. House Bill 1149 defecting defective date. Vice Chair for the vote. Any discussion? Okay, Vice Chair

Voting on HB 1149. Recommendations passed with amendments. Any reservations? Any no's? Recommendations adopted.

Okay, thank you very much. Moving on to the next Bill. House Bill 1153. Defecting the effective date 7/1/3000. Discussion. Vice Chair

Voting on HB 1153. Recommendations passed with amendments. Any reservations? Any no's? Recommendations adopted.

Okay, thank you very much, members. Moving on to the final Bill of the agenda, House Bill 1173. We're going to be taking the Hopwa recommendations that shall read as follows. The 15 year limitation on collections after assessment are set in HRS 235.11 for income tax, 237.40 for GET, 237D-9 for TAT, 238.7 for use tax. 243 for fuel tax, 247-6.5 for conveyance tax, 251.8 for a vehicle surcharge and 431:7204.6 insurance tax. And also defecting the effective date to 7/1/3000. Any discussion members? Okay, that's for clarity, to be clear. Okay, Vice Chair for the vote

Voting on HB 1173. Recommendations to pass with amendments. Any reservations? Any no's? Recommendations adopted.

Okay, thank you very much members. We're gonna recess and then move on to our next agenda. Recess? I mean, I'm sorry. We're adjourned this hearing and then we're going to move on to our next agenda.

We're going to convene our second agenda for the House Committee on Finance. Sorry, 2:30 agenda, which is 15 minutes late. Not too bad. Okay. There's only one bill on the agenda, House Bill 1369, relating to taxation. Okay.

What we're going to do on this bill is the intent of it initially was most of the credits that are before us are those that were identified by the Auditor to be possibly repealed. And then the ones that I added into the bill was the film credit and the solar credit. So the purpose was to have a discussion with the community and with the Members to see how these things are moving forward, if they're working for us, and to understand how they're working and things like that.

In general, I think where I'd like to see us move to is use the tax code primarily to bring money in and move us towards, if we're going to incentivize things going forward in the future. And like I said, this is something that I think will take a lot of work and time to move towards.

But if we're going to incentivize something, it should be either a direct grant, direct appropriation, or an RFP from a department or something like that. And with that, there would be metrics that would be have to be met, oversight, and monitoring of these appropriations to see if they are providing what they're supposed to. And so that's the idea of where I'd like to get us to. But for today, it's to have a discussion and review of these credits that are before us in this bill.

Thank you. Next, we have Hawaii Green Infrastructure Authority with comments. Next, we have DBEDT with comments.

Hello. Hi. Good afternoon, Vice Chair, Members, Chair, and Members of the Committee. DBEDT stands in support of our testimony and hope that you consider the implications of our department and this bill. Thank you very much.

Thank you, Director. Next, we have Hawaii State Energy Office with comments. Thank you. Next, we have SAG-AFTRA Hawaii Local. Thank you. In opposition. Next, we have Tax Foundation of Hawaii on Zoom with comments.

Good afternoon, Chair, Vice Chair, Members of the Committee. Tom Yamachika for Tax Foundation of Hawaii. We provided comments on two of the of the provisions that are targeted by this bill. One is the sublease deduction under HRS 237-16.5, which we see as more a part of the system as opposed to a targeted tax break for any particular industry.

The purpose of this provision is to align how leases and subleases are taxed with how the successive sales of goods or services with 0.5% coming in front and a retail rate coming at the end are taxed for other industries. For the exemption for sales of tangible personal property to the federal government in Section 237-25.

We explained in our testimony that the purpose of this exemption is to really level the playing field for Hawaii suppliers because the the feds can, unlike any other entity, bring in stuff from the mainland or elsewhere without use tax. Because we can't tax the feds, we need to exempt the GET on the on the supplier side to help our businesses remain competitive. Happy answer any questions. Thank you for the opportunity.

Thank you. Next, we have the International Alliance of Theatrical Stage Employees 665 in opposition. Thank you. And also Democratic Party of Hawaii Labor Caucus in opposition.

Tuia'ana Scanlan, Chair, Democratic Party of Hawaii Labor Caucus, also stand in strong opposition.

Thank you. Next, we have Hawaii Solar Energy Association in opposition.

Aloha, Chair, Vice Chair, Members of the Committee. I'm Rocky Mould. I'm the Executive Director of the Hawaii Solar Energy Association. I'll stand on my written testimony in strong opposition to this measure, in particular the measure that repeals the solar tax credit.

And I'll just briefly say the solar tax credit really has been a benefit to Hawaii and the people of Hawaii that has multiple salutorious benefits for our economy, for our environment, and for our people. It's helped residents, businesses of Hawaii lower their energy costs in the face of volatile and high energy costs.

And it's in direct alignment with state energy policy to achieve 100% renewable energy, but also to achieve energy resilience that is lower, less volatile energy costs for our repairs. In addition, we have significant headwinds and uncertainties coming at the federal level right now.

So now would be a really difficult time to see such a, such a drastic cut of such an important tax credit. In addition, you know, this tax credit actually is like an investment and it comes back with returns financially, economically, and you know, in other ways for the people of Hawaii. So thank you for the opportunity to testify. I'm here for any questions if you have them.

Thank you. Next we have Hawaii Renewable Fuels Coalition in opposition.

Aloha, Chair, Vice Chair, Members of the Committee. My name is Nahelani Parsons. I'm here today as the Executive Director for the Hawaii Renewable Fuels Coalition in opposition to this measure. We appreciate the Chair's thoughtful effort behind this measure to improve our... to make it more efficient and accessible. The tax credit is an important economic driver.

It encourages local investment, creates jobs, and it encourages and strengthens our agricultural sector. By supporting fuel production from local feedstocks, we can help activate underutilized ag lands, we can provide farmers with an additional revenue stream, and we can give ranchers access to affordable feed for their livestock. All of these benefits contribute to a stronger, more resilient Hawaii. So thank you for the opportunity to testify.

Thank you. Next, we have Par Hawaii in opposition.

Hello, Chair, Vice Chair, Members of the Committee. My name is Marc Inouye from Par Hawaii. We respectfully oppose repealing Sections 18 and 22 of HB 1369. Section 18 provides a renewable fuels production tax credit and is very valuable for producing renewable fuels for our state.

Repealing it was significantly slow, as you can imagine, the momentum to achieving Hawaii's clean energy and decarbonization laws for 2045. Par Hawaii is actively working with groups like the Renewable Fuels Coalition, State Energy Office, and other state agencies to really ensuring that this credit becomes catalysts for creating jobs, activating ag lands, supporting local farmers.

That will all be necessary means for producing renewable, local renewable fuels for the state. This will benefit aviation. This will benefit ground and marine transportation, utility sectors, as well as the state DOT, helping them decarbonize as well. With respect to Section 22, it would repeal the GET exemption for certain petroleum refiners.

Other refiners who purchase products, for example from Par Hawaii, without an exemption could pass the cost to their customers. This would ultimately lead to higher costs energy costs for our state. For these reasons, we ask you to delete Section 18 and Section 22. Mahalo.

Thank you. Next up, we have Sunrun Inc. in opposition. Thank you. Next, we have Climate Protectors Hawaii with comments.

Thank you, Chair Yamashita, Vice Chair Takenouchi, and Members of the Committee. Ted Bohlen on behalf of Climate Protectors Hawaii. Thank you, Chair, for your guidance and explanation at the beginning of this hearing for where you want to go. I look forward to working with you on it.

I think there is a lot of merit in where you're going. But at this point I would not like to see the Section 15 repeal of the renewable energy tax credit. It has many benefits, as previous speakers have talked about, and we're at a time when the federal cuts are already going to give a hit to that industry. We need to have the development of alternative energy as well as other sources, and this would be not a good time to repeal that tax credit.

But we could certainly look into other things that we might do so that going forward the credit is either more refined or captured in other ways that do not lose the purpose of it but do not waste any of the taxpayers' money. Thank you for the opportunity to testify. I'm available for questions.

Thank you. Next up, we have Good Current in opposition.

Aloha, Chair, Vice Chair, and Members of the Committee. Thanks for the opportunity to testify. Just wanted to share some real project impacts for projects that we have that are ongoing. Starting, so testifying in opposition. You know, the tax credit is essential for renewable energy, energy savings, but also resiliency currently have 42 projects with the County of Maui that are beginning construction next month.

And so a portion of those are resiliency hubs, which are designed to provide solar and battery backup that allow the community, as passed by the council in December, to have a resiliency hub and a place to come to charge cell phones or kupuna to keep medicine cold in power outages that are happening due to power supply shutdowns. And so, you know, this, the renewable energy tax credit portion is essential to that. It's not possible just due to permitting and interconnection times to get all of those done before January, 1st, 2026, when this would go into effect.

So if the Committee does feel it's necessary to abolish the renewable energy tax credit, we would request at least a phase down or a safe harbor, which is how the federal government did it in prior times, where if a project's under contract and 5% of those funds have been spent, then the tax credit is still available as it phases down just to avoid... We also have, you know, customers that are aoaos, nonprofits, and other projects that are active. And so, at a minimum, we would request that consider that amendment. And thank you for the opportunity to testify.

Thank you. Next, we have RevoluSun Smart Home in opposition.

Chair, Vice Chair, and honorable Members. It's my privilege to deliver testimony in opposition of this bill. I just wanted to kind of spell out how I see the credits and how we see them. Our business is 15 years old, we apply 150 people. And you know, over the course of the history of the business, my math is about 100 million in potential state tax credits, primarily to local residents. In that same time period, 150 million in payroll, over 25 million in GET.

And if you start doing the math and the radiative effects of those things, just like Rocky Mould described, the net benefit to the State of Hawaii is profound. In addition to that, 65 million a year in the 11,000 systems that we've installed in the last 15 years. 65 million a year comes back to Hawaii consumers in the form of energy that they don't have to buy. And if you think of that energy as a factor of the cost of energy today, it's about a $30-40 million net benefit over the cost of retail energy.

So the consumers that have purchased solar over the years are saving that much every year, and compound that by 15 and you see that this really benefits the state in a profound way. And I would argue that tax credits are actually an incredibly effective way of motivating consumers and businesses to do things. And I've seen that firsthand. It's definitely had a profound effect on our ability to have a business. We started 15 years ago. We had 10 employees. We've been 150 for over a decade now. Thank you.

Thank you. Next up, we have Alaska Airlines and Hawaiian Airlines.

Aloha, Chair, Vice Chair, Members. Jacob Aki on behalf of Hawaiian Airlines. We stand on our testimony, but did want to provide a few comments. One of our biggest concerns is the repeal of the GET and use tax exemption for aircraft leasing, maintenance, and and the repairs.

This helps to keep our operating costs manageable, and it also allows us to invest in Hawaii based maintenance that allows us to create high paying, specialized jobs. Taking away this would increase our operating costs by over 20 million, which could have a potential loss of service, reduction, higher fares, and other job related losses.

We also appreciate the intent of this measure to improve the overall tax credit system. However, we also ask that the renewable fuels production tax credit not be taken away, as we believe this has the opportunity to create jobs, activate ag lands, and to support our local farmers.

Aviation is a cornerstone of our of our economy here, and maintaining these tax policies is critical to keeping jobs, services, and the and the service here. So we urge the Committee to please keep these exemptions and credits in place, and we are available for any questions. Thank you.

Thank you. Next, we have Sunnova Energy Corporation in opposition. Thank you. Next, Holu Hou Energy in opposition.

Aloha, Chair, Vice Chair, Committee Members. My name is Ted Peck. I'm the President of Holu Hou Energy. I do stand on my testimony, but there's a number of things that I wanted to emphasize and point out that aren't in my testimony. First of all, we currently do not give a tax credit to utility scale solar. That's been removed. So really this measure is considering removing the credit from homeowners or renters. This is technology just like any other technology. Early investors are typically high end, higher wealth individuals.

So what we're really doing now is getting to the rest of the market. The cost has been taken down. The price has been driven down. And with HGIA and their work in low income, low to medium income, the that's who we're getting to now. We have done systems in PSPS areas where the utility and the risk of a fire will shut off. We actually have a customer, a couple, older couple, and the husband has medicines that have to be in the refrigerator.

And so we have literally made a huge impact on their lives because we were able to do this under a lease system with third party investment. I understand the intent of the Energy Office's testimony, but I would say that you know all the high end investors have really largely done their own homes now.

And any high end investors that are putting tax credits or equity into systems are doing it likely for third party, which means typically low income. So those are already been, you know, the folks left behind now is who we're trying to get to, and removing this credit means we're not going to get to those people.

And as has been said in a couple of other testimonies, this is actually a moneymaker. So from an economic perspective, it is really wrong headed to remove the tax credit because it in GET and income tax, it'll bring that money back to the state. Appreciate the opportunity. Thank you, and if you have any questions I'd be happy to answer.

Thank you. Next, we have Hawaii Gas in opposition. Thank you. Next, we have HNU Energy on Zoom in opposition. Thank you. Okay, next we have Blake Briddell in opposition.

Aloha, Chair, Vice Chair, Committee. Thanks for having us. I really like Ted's point around this disproportionately impacts lower income folks. I think this also disproportionately impacts local solar companies. I think large national providers will be much, have a much easier time absorbing this sort of change. But local mom and pop companies will really struggle as a result, and we need to support them. Thank you.

Thank you. Next we have Ryno Irwin on Zoom.

Aloha, can you guys hear me? Aloha, Chair, Vice Chair, and Committee Members. My business, Hawaii Unified, could be classified as one of those mom and pops. It's a family business. We're located on out in Makaha on the Leeward Coast. We are the third largest private employer on the Leeward Coast.

Our business is predominantly in the renewable energy industry, and this renewable energy tax credit is a critical factor in our customers being private homeowners, and our residents here in Hawaii being able to afford to go solar. You know, let's call it what it is. We are in an energy crisis here in Hawaii.

We have the highest cost of electricity in the nation. This tax credit actually allows residents to access clean energy and affordable energy and save money on those overhead costs to running a household, which is increasingly getting more difficult here in Hawaii. Hence the priced out of paradise tagline that we hear constantly.

This would be catastrophic for our industry if we were to repeal this tax credit right now. You could expect our business to be cut in probably by 70% without this tax credit because it just wouldn't economically pencil out for financing and things like that that are necessary for our homeowners to adopt clean energy.

Not to mention is in direct contrast with the Governor Green's executive order to have 50,000 renewable energy systems installed over the next five years. So I strongly oppose this bill, and I know our community does, and they will suffer if this is removed. Thank you.

Thank you. Next up, we have Brad Albert on Zoom in opposition.

Hello. I assume you guys can hear me. Thanks. Thanks for the opportunity to testify. I think I'm probably echoing what a lot of people have said, but to really like sort of make it clear, there's three points here. There's the environment and state energy goals.

And as Ryno said, the Governor has set a goal of 50,000 systems by 2030. It's an aggressive goal. It won't be reached if we repeal the tax credit. Second is jobs. If we're going to install those 50,000 systems over the next five years, we're going to be hiring more people and creating, not just jobs, but good paying jobs. And a lot of myself, just like Ryno, I owned a solar company that I started in 2002.

When I did that, there were seven grid tie systems on Maui. And I'm from Maui, where the Chair is from. And I wanted to, this brings me to my last point, which is resiliency. When the Lahaina fires happened and the Upcountry fires happened, many people were left without energy.

But there were a lot of people that had solar plus storage, so there was a resiliency there. But the solar industry stepped up that during that time and installed solar systems as well as Internet connections at resiliency hubs that wouldn't have been possible if you didn't have a solar market. So just to reiterate the environment, jobs, and resiliency, all Hawaii goals, all positives. And like Rocky said, this is not a negative impact to the economy, it's a positive one. Thank you for the opportunity to testify.

Okay, thank you. Sorry, Members, and to some of the testifiers. I missed some of our Zoom organizations. So we also have 350 Hawaii in opposition on Zoom.

Oops. Okay, there we go. No. Okay. Okay. Can you hear me? Okay. Aloha, Chair, Vice Chair, Members of the Committee. My name is Sherry Pollack, and I'm co-founder of 350 Hawaii. 350 Hawaii is in strong opposition to HB 1369, which seeks to repeal Hawaii Solar Investment Tax Credit, amongst other tax credits.

Repealing the solar tax credit as HB 1369 proposes would be very, very harmful and a mistake that would certainly have very serious negative consequences to our economy and our efforts to transition to clean energy. Let's be very, very clear. We are the first generation to feel the effects of climate change, and we are the last generation who can do something about it. Hawaii rightly declared a climate emergency. In an emergency, you don't put the brakes on. You accelerate your efforts to combat the crisis.

Our children and the next generation are counting on our lawmakers to take actions to fight climate breakdown. We have to transition to clean energy, and solar is one of the most effective strategies to do that. Tax credits are needed to help families do that. I can speak from personal experience. We urge you to reject HB 1369 that would impede our progress in moving to clean energy future and a safe and stable climate. Bottom line, let's all be good ancestors, please. Do not repeal the solar tax credit. Thank you for the opportunity to testify.

Thank you. And we also have Greenpeace Hawaii on Zoom in opposition.

Thank you for letting us share the link.

David Mulinix here at Greenpeace Hawaii. We're the largest and one of the oldest climate environmental organizations in the world. We stand in strong opposition. This will really hurt the solar industry to repeal that solar tax credit when we... We've done this sort of thing before when we have the... Anyway, sorry, I get my head together here quickly.

Anyway, it will hurt the solar industry, as they're telling you. And I can tell you personal experience, we have solar panels in our house only because of that tax credit. We would not have been able to afford it. And because of that tax credit, multiple homes in my neighborhood now have solar panels. We're all moderate income families. So it is essential to keep our solar industry going. The second thing I just want to point out that is we are in a climate emergency. We are in a growing climate crisis. This is no joke.

We need to be taking this so seriously and we need to get involved to make things happen. You folks have committed to this climate emergency and to doing something. We really appreciate your efforts to get us off of fossil fuels. And 2024 was the hottest year in recorded history. 2025 is going to be hotter than that.

And every year after that's going to get hotter and hotter. We're seeing huge major climate disasters. We have 17 major climate disasters, billion dollar disasters in 2022. In 2024, we had 27. So you know, the number of huge billion dollar climate disasters are growing. We have to act quickly, we have to act now, and we need to get solar panels on every rooftop that we can. Thank you so much for hearing my testimony, and thank you for your efforts to protect our our climate and our planet. Aloha.

Thank you. Members, just noting we also received written testimony from a number of organizations in opposition and with comments and numerous individuals in opposition. Are any of them or anyone I didn't call in the room wishing to testify? Anybody on Zoom? Okay, seeing none. Members, any questions? Representative Lamosao.

I have a question for the Hawaii Energy Office and potentially DOTAX, but hopefully you can answer this. So in your testimony, you mentioned that while higher income households have historically been more likely to claim tax credits for Section 12.5 renewable energy technologies income tax credit, its benefit can extend to all income groups.

Can you talk a little bit about how many, if you can kind of talk about like some of the income tax brackets that have tried to take advantage of this tax credit and then some of the numbers within the some of the lower income tax tax brackets as well.

Thank you, Chair. Thank you for the question. There is a disproportionate amount of users who have been able to take advantage of tax credit in higher income categories. The discussion that we had just was to illustrate that there are efforts by the Hawaii Green Infrastructure Authority and others to correct that with other forms of financing, and the tax credits are key in offsetting that capital cost of those systems.

So while there is currently a discrepancy of 2/3 or more that have benefited from being higher income that have been able to afford these systems and have homes that they've been able to place these, there are strategies in place now that have only come into place in the last couple years that are now beginning to correct that. And we think that's incredibly important and that the tax credit is key to being able to assist low and moderate income users.

DOTAX. Sorry. Chair, can I ask Kristen? Can you tell me, like among the tax credits or tax brackets that we have, like how many families in each tax bracket have or individuals have taken advantage of this tax credit?

I don't have data at that level with me now, but I do have a breakdown. For example for tax year 22, individuals versus corporations claiming the credit. So for the renewable energies technologies tax credit, total claims for tax year 22 was a little over 105 million. Of that, 55 million were claimed by individuals, 48 million, little under 49 million by corporations, and then about 470,000 by fiduciaries.

Thank you. Members, any other questions? Representative Kusch.

Thank you. Just to clarify, Department of Tax. You said that was the high technology tax credit or the solar tax credit?

No. So the renewable energy technologies tax credit.

Thank you.

Any other questions?

Okay. DOTAX. So, you know, earlier we asked you for a breakout of the tax credits and what each one is projected to cost the state. And then in your testimony, you revised the number, the total numbers down. So is there a new sheet with the breakout of each individual tax credit?

Yep. So I asked our tax revenue officer to look into that. It could be because of the dynamic scoring, but I can get you an update just to make sure. Because I did realize, yes, that the totals do not match what we previously provided.

So he is using dynamic scoring?

I believe he did for at least the GET. And then also took into account...

If you could get that to the Committee on the updated.

Okay, will do.

Okay, thank you very much. Okay, Members, any further questions? Okay, we're gonna, I'm gonna recess, Members, for decision making. Recess.

Okay. We're going to reconvene the Committee on Finance for our second agenda, House Bill 1369, relating to taxation. Members, the recommendation for this is, as I said earlier, that we will be looking into these credits more deeply, but I want to keep the measure moving. So to ease the public a little bit.

Like I said, the film credit and the solar credit is something that I think we want to have a larger discussion on. So we'll be pulling those two sections out of the bill, but we will be moving forward with the rest of them because the rest of them were in the Auditor's report.

So that's kind of the justification for us keeping the session moving on that. To some degree, Members, like I said, the bill initially, pre-January, when we introduced the bill or when drafting the bill, it was to have that discussion with the community and so that the Members would have the opportunity to.

When you bring up these kind of controversial issues, they tend to call your office and talk to you and send you emails and all those kind of things, so it forces engagement. So that's kind of what I wanted also that people start talking about it and understanding it. So we want to.

I understand the value, I understand what it brings. I understand our goals. I understand all those different things. But at the same time, it is the responsibility of this Committee that we evaluate all the money that is affected with the State of Hawaii. So we will continue that work.

At some point in time, I have asked the solar industry in particular that every market as it matures, there has to be an exit to subsidy. And I don't know. Nobody's been able to answer, give me the answer to that question. When is it time? Because if you don't exit, then there is market distortion.

Because whenever there's a subsidy, there's some level of market distortion. So we need to consider that. And the same goes with film. At some point when it is in perpetuity, it creates market distortion. So that is something that I think is the responsibility of the Legislature, but particularly this Committee.

So we will be working on that going forward. But again, we'll be taking out those two sections, the solar section and the film section, and having further discussions in the future. Other than that, we're going to be defecting the bill to 7-1-3000. Any discussion? Okay. Vice Chair for the vote.

Members, voting on HB 1369. Chair's recommendation is to pass with amendments. Chair and Vice Chair vote aye. [Roll Call] Chair, recommendation's adopted.

Okay, thank you very much. We are adjourned.