House Standing Committee on Economic Development & Technology

Okay. Good morning. We're here for Economic Development Committee hearing. It is February 18, 2026. It's 9:30 am, we're in Room 423. Let's see. Because morning hearings must adjourn prior to floor session, not all testifiers may have the opportunity to testify. In that event, please know that your written testimony will be considered by the Committee.

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Please avoid using any trademarked or copyrighted images. Please refrain from profanity or unsub behavior. Such behavior may be grounds for move from the hearing without the ability to rejoin. We're joined this morning by Chair Ilagan, Representative Gedeon, Representative Templo. I'm Representative Hussey. Okay.

We're going to start first with HB2410 relating to the Hawaii Technology Development Corporation. Our first testifier is Trung Lam from HTDC.

Good morning, Chair, vice chairs and Members of the Committee. Trung Lam with the Hawaii Technology Development Corporation. And I stand on my written testimony.

Thanks. I forgot to mention, sort of assume that everyone's standing the written testimony. I'll just ask if you. If you'd like to add anything and if not, then it's fine. Sherry Menorah, Chamber of Commerce. Do you have anything like that?

We'll stand on a written testimony as well. Thank you.

Let's see. Lauren Zirbel from these. She's from Hawaii Food Industry Association. She's on Zoom.

Not present.

Okay, all told, we have seven testimonies in support. None in opposition, none with comments. Would anyone like to add anything or would like to testify in this measure? Do you have any questions or comments from our Committee Members? Chair.

Could you come up? I didn't find an amount. It's banked out, but how much were you requesting for funding?

Currently, for this year, we do have a million from the Governor for SBIR. But the other two programs were vetoed. And in the original proposal for the biannual, it was 1 million for each program.

So you're requesting 1 million for each program. So a total of three.

Correct.

Thank you.

Thank you.

Any other questions? Okay. And no other testifiers. All right, move them to HB 2235 HD1. This is related to the Military and Community Relations Office. For this measure, we have foreign support, none in opposition, none with comments. Would anyone like to add anything to their written testimony? Would anyone like to just testify? Okay.

I'm happy to.

Sure. Please.

I'm Laurie Moore. I'm the Executive Director for the MACRO. And we ask that you please consider this additional funding. We are otherwise funded federally, but this funding will allow us to, I think, provide some greater support for our local businesses and education to career initiatives that we want to do statewide. Open to any questions. Thank you so much.

Thanks. Are there any questions for any of the testifiers on this budget? Chair.

Same question. I didn't find an amount for this.

1.3 million total. Yes. Anything else? All right. Thank you.

Okay, thanks. If there's another question, we'll move to HB 1904. This is related space operations. Okay.

For this measure, we have three in support, one in opposition, none with comments. Would anyone like to add anything to your written testimony? Would anyone like to testify this measure? Any questions, comments from our Committee Members? All right, we're going to move then to HB2201. Relating to state enterprise zones.

This Measure, we have 12 in support, none in opposition, one with comments. Would anyone like to add anything to written testimony or to testify?

Aloha chair, vice chair, committee members, ... We stand with written testimony

Okay. Anybody else?

Thank you. Chair. Vice Chair. Members of the Committee just wanted to. Acknowledge the support and the well run program in BDS day for enterprise zones. And this is really enhancing the rest. Of our initiatives this session introduced by. The House and the Senate to help. Enhance and make more competitive our film industry for the state. Thanks.

Just for the record, could you please see your name?

Oh, excuse me. I'm so sorry. Hi. Georgia Skinner, Creative Industries, Department of Business, Economic Development and Tourism. Thank you very much.

Anyone else like to testify? Yes. Someone on Zoom? Okay. Mr. Yamachika.

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

Okay.

Are there any questions from our Committee? Okay. We're going to move then to HB2349 related to the DCCA. Okay. For this measure we have six in support, none with opposition, one with comments. Would anyone like to testify? Or add a feature written. ... Okay, thanks. ... Would anyone like to ask any questions?

I have one. Marylin. All right. So why aren't we doing this already.

We currently, as explained in our testimony, do have a program wherein we provide an access to those who register with the business registration division. This is both for newly registering entities as well as current entities that file reports with us, such as their annual reports and other required filings.

So your program is providing them the resources that's available. But this Bill particularly is integration between departments with DBEDT

to be more accurate. We are providing them information to connect to DBEDT so that they can learn more information, if they're interested, from DBEDT directly and establish the relationship with DBEDT. So we're facilitating.

Right you are. However, I think you may not be understanding DBEDT with the data that you're already receiving. They may be able to do their own outreach with that information. And I'm just curious, why won't you just integrate with DBEDT and just allow that information to transfer to another Department?

Certainly, if that is the request of DBEDT, we would, and the will of the Legislature, then we will certainly cooperate and assist with that. But here, up till now, the request from DBEDT has been to provide a link and information to their programs. And we've agreed to do that and offered our assistance in that respect.

As explained our testimony, we've also included the specifically designed DBEDT link in our communications as well as in our website on the Business Action center web pages. So to the extent that there are the will of the Legislature for us to do more, we'd certainly cooperate with that.

We've outlined some of the issues and challenges that we'll need to address, such as adoption of new rules to allow for the collection of certain information that's required the Bill and also the funding that may be necessary in order to retain a vendor that will allow us to collect this information, revise the forms, and be able to transmit the data in a form that DBEDT requires to do their outreach.

Okay, thank you. Thank you very much. DBEDT. Please say your name.

Dennis Ling with DBEDT.

So are you satisfied with just a link provided to DCCA? Would it benefit your Department to have the data that you requested in this Bill?

The responses we got from the link is not very much. I think if we had something where we could reach out initially with information and resources that we have that would provide us with.

Have you communicated with DCCA your needs?

I think in the past, yes. In the past, how this was worked out between the two parties, it was that when the registrants register, upon getting notification that their registration has been completed, they would include contact information for DBEDT directing them to the link to our website. And that's the response that we've agreed to.

We feel that perhaps more could be done given email addresses, names and that we can reach out more proactively and.

We can even just make it optional for them to input that information and not necessarily required for just additional. Like for example, a disclaimer could be in the business registration that says this information will be shared with DBEDT to share resources that's available from the state.

So what I'm trying to say right now is are you willing to do some cost share? Because DCCA is stating that it's going to take some resources to accommodate this request. Is DBEDT willing to cost share some of these expenses to get this data?

I think DCCA is funded through the fees that are generated from registration cost sharing. You know, it depends on the total amount, but if we receive the funding directed towards this effort, definitely.

And the reason why I'm saying that is typically when you need data, you still have to purchase that data from somewhere. So it's similar to purchasing data from another Department. And in this case they should just give you the data.

But if their position is that they won't do anymore unless we mandate them to do it, I think you should communicate with DBEDT to see if they're willing to do some sort of cost share and see, I mean communicate with DCCA to see if they can do some sort of cost share.

Okay, I think I understand what your needs are. I, I just want to leave with one more question. What's the greatest benefit of having this extra information? Because I, I think I have it in my mind. But I just want to hear what DBEDT is thinking with this additional data that you would acquire.

Well, we can ex. We would have a mailing list and they would be put on our mailing list. And it's not just a one shot deal. It's continuous.

That we advise them of conferences and trade shows and missions and other opportunity opportunistic programs that they may want to avail themselves of as they come up and as we find out from other resources.

How big is your mailing list now? 9,000. And potentially how big could your mailing list be?

Well, I don't know how much DCCA gets in registrants, but I think doubling that amount would be very conservative.

Okay, thank you.

Actually, I have a question for.

Yes?

Would you be satisfied if we were to amend if, if instead of there being an automatic transmission of, of contact information from DCCA to DBEDT, if it were to Be opt in for. For the register. I'm just like, I'm one of those people. I have like 15 corporations registered DCCA.

I'm not excited about the notion that of my information all being, you know, available to the General public. Yeah. I'm curious and I'm sure there's a lot of other people in the community who feel the same way.

Right. Opt in is fine.

Okay. Yeah.

Thank you.

Thank you.

Any other questions?

Go ahead.

This is just to clarify.

Yeah, let's. Let's ask the questions he had. Would you be open to the op in?

That would certainly be an option that we would consider and perhaps it may even address the concerns of personal email addresses being made public so that parties that register are aware that their information is out there and that they can do something about it.

If they choose not to release that information to the public, work to any other agency besides for the purpose of registering for visits.

I also thought having an optional column there where they can put their email address if they want to. And if they do this is knowing that this is going to be shared with DBEDT to receive resources.

And I would suggest the same also goes for telephone numbers because often registering entities use personal phone numbers or numbers that they don't wish to disclose as well as email addresses.

Would this be a expensive modification in your system that's needed or is this can be built in into your current procedures?

Well, it is a modification of the system because currently, while we do collect or require entities to submit their mailing addresses and addresses of their agents, we currently don't have any requirement by statute to collect phone numbers or email addresses.

So that needs to be changed both on paper, the paper forms that are filled out, as well as online when parties prefer to register through our online portal. In addition, there needs to be systems involved in collecting that information, harvesting that and preparing it in a form that would be readily transmittable to deepen.

But getting back to an earlier issue that you had raised, you are correct that the Business Registration Division is funded by the fees that it collects. And to clarify, Reg is not position is not that we're only doing something if we're asked to do it, but rather we are bound by a ceiling.

And so if there are additional services and, and vendors that we need to retain in order to accomplish this, then we request that our ceiling be raised in order to Fund these additional services.

What's your ceiling right now? Is it a ceiling in your special Fund?

Unfortunately, I'm not on the financial end of that.

I can find that information Out, I believe in the earlier budget briefing that had been discussed by our Director. But specific as to bread, we do have a set ceiling that will need to be approved by the Legislature. We are going to require additional services.

Who's your vendor right now?

Who does your web services? Again, I hate to speak out of turn. I will need to confirm who that vendor is. It's an outside vendor working in conjunction with our computer service. I don't even know what they're called. It's ISCO, but I don't know what that acronym stands for.

Okay, thank you.

Thank you. Thanks very much. Okay, Any other questions on this measure? All right, we're going to move down to HB1972HD1. This is related to taxation. For this measure, we have 31 in support, none with opposition, three with comments. Would anyone like to add anything to your test, to your written testimony or to testify in person?

Aloha, Chair Iligan and Members of the Committee. I'm Kaylie E. Lopez, State Director for AARP Hawaii. Thank you for hearing this measure. Just wanted to reinforce the understanding that family caregivers are the backbone of Hawaii's health care system.

Many people are able to remain in their homes as they age and this is because their family caregivers keep them at home. A good example for me is my mother in her 80s, had a stroke. She was able to remain her in her home in Nanakuli because five of us took turns taking care of her 24/7.

What this Bill does is it recognizes that many family caregivers, about 1 in 4 people here in Hawaii as a family caregiver, caring for their loved one results in them not having to be in a very expensive care home, which is actually tax subsidized.

So we believe this really, I would say, you know, reasonable request for these caregivers. They spend about $7,200 of their own funds to care for a loved one, whether it's transportation, modifying their home, adult resident, I mean, adult daycare, those types of things.

So we really think it's time for Hawaii to recognize the great work and really the heroes in family caregiving. Thank you.

Thank you. Anyone else like to testify?

Hello, chair, vice chair and Committee Members. I'm Chris Caulfield from the Hawaii Public Health Institute. As many of you may know, the institute has as one of its programs the Kupuna Collective. So this measure has become very important to us and we want to support AARP as much as we can.

And trying to push this across the finish line. Just to put some additional Data points on this Bill, there's about 154,000 caregivers providing unpaid care across the state. 144 million hours each year. That's care that's valued, that would be valued at $2.6 billion annually if it was actively paid.

And also there are studies that show that caregivers pay out of pocket up to $7,200 a year or more on average to support a loved one. Nearly 60% of caregivers are also working. When they have to provide care, they often leave the workforce or have to reduce their hours, and that obviously impacts their financial stability.

Research shows that a caregiver tax credit really helps families stay afloat, stay employed, keep loved ones at home, where people are often healthier and safer and more connected to their communities. So please don't ignore this invisible workforce. Let's honor it by providing economic relief that uplifts human dignity.

Thank you. Thank you. Any further testifiers? Okay. Zero, Tom. Okay, go ahead.

Yes, Tom. Thank you. Vice chair, Chair, Members of the Committee, Tom Yamachika from Tax Foundation.

We just wanted to suggest that because the amounts being paid out are relatively small, that it may be more efficient to do this with a subsidy program or a grant program as opposed to messing up the tax system.

We note that if you do a tax credit, you don't know how much you're spending and what exactly it is that you're paying for, whereas with a grant program, you would have more control over it. I'd be happy to answer any questions. Thank you very much.

Thank you. I also see Nicole Wu,

Aloha Vice Chair. Yeah, good morning. Aloha Chair. Vice Chair. Members of the Committee, Nicole Wu from Hawaii Children's Action Network speaks. We work closely with parents across the state and many of them are in that sandwich generation.

So this tax credit proposal would address the affordability issue that we're having with families not being able to make ends meet. So as the prior testifiers, Kaylee and Chris, were mentioning, this tax credit would reduce pressure on family budgets, also long term care facilities and our broader healthcare system. So thanks for hearing this Bill.

We support it strongly.

Thank you. Anybody else want to speak out on this one? Caroline Dotax, Alzheimer's Association. ... Okay, thank you. All right. Are there any questions or comments from our Committee Members?

Okay.

All right. If no one else is jumping up, we're going to move into HB 2007 HD1 related to the household Independent Care Services tax credit. For this measure, we have 47 in support, one in opposition, two with comments would anyone like to add to their written testimony?

Hello again, chair, vice chair and Committee Members. I'm Chris Cockle from the Wyette Public Health Institute. We're also in support of this, the Household Independent Care Credit. Buildings in front of you. Today in Hawaii, families are spending some of the highest child care costs in the nation.

Just to highlight some of those figures for you, there are studies that show that they're spending more than $24,000 a year on infant care, in many cases over $2,700 a month. That means that families are spending 13 and a half percent of their income on childcare, which is the highest share in the country.

And when families are forced to spend that much on child care, they often cut back on food, on housing, and on health care. So this is a public health concern for us as well. This is a fix to Act 163 from 2023. That measure sort of strengthened the household Independent Care credit by half.

What it failed to do was increase the so it increased the amount the taxpayers could claim under the household Independent Care Credit, but it failed to increase the percentage of expenses that could be claimed. And it didn't adjust the income thresholds to which the credit applies, which severely limited its impact.

So, we see this as an investment in the future of our state. We, as our cost of living continues to store working parents, really deserve our support. So we hope that you'll move this forward. Thank you so much.

Thanks, Chris. Anyone else? Kaylee.

Aloha again. I'm Kaylee Lopez, State Director for AARP. We also support HB 2007 HD1. We believe it's critical to continue providing support to family, Members and this particular tax dependent Household Independent care giver, a care service tax credit.

I just want to make sure it's clear that between the Bill we just heard before and this one, it's really you claim one or the other, right? So if you're already claiming your child or your parent as a dependent, you would not be able to file for the tax credit.

This, of course, I think, is really important because it's the beginning and really where most of family caregivers are doing this work, which is where someone is actually living with them and they're caring for them really quite more frequently. Thank you very much.

Thank you very much. Nicole from HCAN, did you want to speak out on this?

Yes. Aloha Again, Nicole from Hawaii Children's Action Network speaks my testimony and the online at least packet is on pages eight and nine. And I have some tables in there.

To kind of help everyone understand this tax credit, it was created decades ago to help people with child care and dependent care expenses, but it kind of got stuck behind inflation and also super high rising costs.

So as Chris mentioned, a few years ago, you and your colleagues and the Governor increased the amount that could be claimed for this tax credit, but the percent wasn't changed. So right now, if you make over $50,000, 50,000, $50,000 a year, you can claim only 15% of your care expenses.

So let's just say a family has, you know, cheap pre k and they're only paying $10,000 a year, they can only claim,$1500 of their child care expenses or, you know, if they have an adult family Member that they're caring for, only 15%.

So right now the credit really isn't meeting the need and it's honestly, I don't think doing what it was intended to do. So we're asking to have that percent raised and also the ceiling on the amount of income for, you know, claiming this tax credit.

And so it shows in this table on page eight that a lot of our lowest income families already get child care subsidies. And so they're not paying a whole lot for child care. But it's those Alice families. They're right above the subsidy level and even up to median household income.

People right in the middle, they're the ones who would benefit the most. They would get the biggest boost in their family budget from this tax credit. So that's why we really think this is important.

If you go to the next page on page nine, we have some alternative formulas just in case we know this is a tight budget year. If there are is a need to lower kind of the thresholds on income, maybe reduce a little bit of the boost. We have an alternative in the middle in yellow.

And even in our footnotes, it goes to a spreadsheet with like two other alternatives to sort of, you know, maybe target this a little bit more the way that the Legislature might want to go and maybe reduce the cost of it. So happy to take any questions. Thanks for hearing this Bill. Obviously, we support it very strongly.

Thank you very much. Any other testifiers. Okay, Tom.

Thank you. Chair, vice chair, Members of the Committee, Tom Yamashika from Tax Foundation. We do have a couple of technical concerns. One is that the, the formula enacted in this Bill makes the process of computing this credit a little bit more complex.

And we don't think complexity is a good thing, especially when we're talking about people of lesser means who have, you Know less access to things like computers.

Secondly, we know, we note that the Bill enacts what we call debarment provisions, where if you make a claim as disallowed, you can't claim any more for the next either two years or 10 years, depending on whether it's for fraud or not.

What the Bill doesn't address is when there's a partial disallowance, like if you, if you claim 10, 10,000 in expenses, you know, you actually had, you know, $9,800 in expenses because you added a couple of receipts wrong, does that mean the debarment provision hits you and you can't do any, any more claims for the next two years?

Well, I think this is an issue that needs to be addressed. Happy to answer any questions. Thank you very much.

Thank you. Any other testifiers, any questions from the Committee?

Is DOtax here. So. We had the tax credit report, and in 2022, this was claiming 6 million ish, this tax credit. And looking at HCAN's testimony with the current Bill, how much was it projected that this, this would actually potentially cost?

I don't have those estimates in front of me, but we are working on getting some of those figures.

Looking at the change, it's quite drastically higher from what I'm noticing. I'm not a numbers guy, so I'm just.

Well, I can't comment on how those numbers were calculated, but what I would say is if the intent of the Bill is to increase access to the credit, to open it up for more people to be able to claim it, then we would expect that there would be a greater cost.

So this 6 million potentially is the current figure that people are collecting. So we're looking at maybe twice, three times, four times,

potentially difficult to say. Like I said, we'd have to get those estimates for you. And we are working on estimating the cost impact of some of these bills, but I would anticipate it to go up. Yeah.

Okay. The alternative seems like a compromise in the sense of what the Bill is asking. And I mean, compared to all the economic credits, the social welfare credits are definitely needed. And trying to figure out how to support the cause and be reasonable with the amount is what we're trying to find.

So if you can give us that information, that'd be great. If you could look at the alternative as well and see how much that would cut the cost. Thank you. Thank you.

Any other questions?

No, thank you. So I had a question actually for someone else from ATM or HCAN Speaks, and the question is Regarding, I guess what's happening with the federal tax credit landscape right now with, you know, in this space. If you could provide sort of a. Some context for us. Appreciate it.

Oh, yes. So far this tax credit has not been touched by the Federal Administration. So there is a federal tax credit as well. And. But we never know what the other. What's going to come from Washington. There are some threats to actual child care programs like Head Start.

We were very lucky to get our annual funding before a bunch. Before the Federal Government decided not to provide a bunch of federal support for child care in General. So as we know, our state is facing a lot of uncertainty on that level.

Okay, thanks very much. Any further questions? All right, we'll move then to HB 2007, HD 1. No, no, I'm sorry, that's where we just were. HB 2385, HD 1, related to housing. And, and by the way, thanks to everyone for submitting your testimony in 2007. That's excellent. Okay, so for 2385, HD 1, we have three in support, one in opposition, three with comments.

Would anyone like to add to your written testimony? Please.

Hi, good morning, Chair, Vice Chair, and Members of the Committee. I am Deputy Attorney General Lindsey Hostetter-Takaesu and we have provided our written comments on HB 2385. So, at the February 6th hearing, the House Committee on Housing asked the Department of the Attorney General to review whether the Bill limits county authority and to suggest any corrections.

So, as drafted, the Bill adds a date-based clause to HRS section 46-15.1 that may be construed as restricting county authority after July 1st, 2026.

So, to clarify legislative intent, the Department recommends either deleting section two of the Bill to avoid any unintended limitation on county authority or expressly amending HRS section 46-15.1 to prohibit counties from exercising the authority granted under HRS section 201H-36A5. And I am available if you have any questions. Thank you.

Any other testifiers on this measure?

Yes, Tom Yamachika from Tax Foundation. We would echo the Attorney General's concerns. We had flagged this, a particular date-based amendment in, in the prior Committee and they had written it up in the Committee Report. Thank you very much.

Thank you. Anyone else? Any questions?

Can the AG come up? Could you state your name?

Oh, yeah, Lindsay Hosttetter-Takaesu from the Department of the Attorney General.

Did I hear you correctly, did housing request this language from you?

Yeah, they requested us to see any—where they requested from us, any suggestions.

And when—so, they would prefer to see this language into the Bill because I haven't had a chance to talk to the housing?

They—when I spoke with them, they said that they did not intend to limit county authority, but we provided suggestions either way.

Okay. All right, we'll make sure this is added. Thank you.

Thank you.

Any other questions? Okay, that was 2385 HD1. We're going to move down to 2444 HD1 related to taxation for this measure. We have four in support, none with opposition, two with comments. Would anyone like to add anything to your written test of testimony?

Okay. Anyone just want to testify?

Chair on zoom.

Okay, very good. Hey, Betty Lou, can you hear me?

Aloha, Chair, Vice Chair. I'm Betty Lou Larson with Catholic Charities Hawaii. We're in strong support of the Bill with amendments we get about 11,000 calls a year at Catholic Charities away from people asking for about housing subsidies. Anything to do with housing and rent is really a problem as we know. It's just exploded. It's gone up.

And so this Bill, which is very good, we're appreciating that the Legislature wants to raise the tax credit for renters, but it doesn't even account for inflation. Really, renters are under great stress. Almost 53% of Hawaii's renters pay over 50% of their income on rent. That's a fair severely cost burden.

And so we would ask for amendments to raise not only the tax, but what really impacts most of the low income workers like our Ellis workers is the cap on the income. So very few people can actually get this credit now because their income has gone beyond that. I think it's $30,000 cap.

So we suggest that for inflation reasons to raising the tax credit to about $170 would be what the inflation would be and then the cap up to at least $77,000. A survival budget for Ella's family of four is about $99,000. So we appreciate your considering these amendments.

We thank you for your consideration for renters and their severe needs. Thank you for hearing this Bill.

Thank you very much. Any further testimony?

Thank you. Chair, Vice chair, Members of the Committee, Tom Yamachika for Tax Foundation. We just wanted to generally express our concern that there are many, many credits applying to this base. We have household renters, dependent care credit, food excise credit, earned income credit.

So it's a very complex landscape and I think concern, I mean consideration should be given to simplifying the landscape so, so people can access it better and hopefully make it easier for the relief to get to people who need it. Thank you very much.

Thank you. Nicole Wu.

Aloha again from Hawaii Children's Action Network. We support this Bill.

There's a group called the National Low Income Housing Coalition that does a report every year on all 50 states and they think they determine that the housing wage needed to afford a one bedroom apartment in Hawaii is about $37 an hour which is an annual income of 60, $78,000.

Meanwhile, our minimum wage right now is $16 per hour for full time work. That's about $33,000 a year. So it's less than half of what a national group has determined is needed just to afford a one bedroom apartment here.

As Betty Lou mentioned, there is an income tax on the renters credit of 30,000 a year that was put into place back in 1989 which, and then back then that was a little bit above the median household income. So that's why I'm so glad that you looked at the tax credit report.

Chair I pulled the tape, the table from DoTax showing it's on page six of the testimony showing how much the use of the renters credit has dropped over the years. And as Betty Lou has mentioned, it is because of that income eligibility cut off.

So that is the reason, you know, if we just wanted to raise it to keep up with inflation, it should be up around 77,000 a year. And again, the amount has not been changed since the 1980s. It was put at $50 to keep just up with inflation. It would be at least $170 here.

So you know, we definitely support this Bill. We think it could go farther, farther and we thank you very much for hearing this Bill.

Thank you. Any other question, any questions from the Committee? All right, let's move on. Thank you very much for that excellent discussion. Let's move to HB2391HD1 related to taxation.

We have five testimonies in support, zero in opposition, two with comments. Would anyone like to testify in person?

Department of Taxation, we'll stand on our comments.

Thanks. I'm sorry, what was your name again?

Clinton Piper.

Thank you, Clinton. Anyone else? Okay. Oh Tom.

Thank you. Vice chair, Chair, Member of the Members of the Committee, Tom Yamachika for Tax Foundation. Our concern with this one is that the, you know, parts of the Bill are going to be very hard to enforce.

Such as the part that says all savings generated by this section shall be passed on by the seller to the purchaser without any increase in price. I mean that's pretty much impossible to enforce in practice.

And we also are concerned about the definition of school supplies being a non exclusive list because non exclusive lists will create debates and litigation over what qualifies. Happy to answer any questions. Thank you very much.

Thank you. Any other testifiers? Okay. Any questions from our Committee? Okay.

Last measure, HB 2575 HD1 related to taxation. For this measure we have two in support, six in opposition, two with comments. Would anyone like to add anything to your written testimony? Please.

Aloha Chair, Vice Chair and Committee Members, Chris Delaney with Sanhi Government Strategies here. On behalf of enterprise, we are in strong opposition of HB 2575. This will increase or get rid of the wholesale tax and replace it with a retail tax at 4%.

And this will actually impact the renter or the consumer, the end user at the end of the day. So this would be our tourists, our local residents that rent cars.

So when you increase this tax, basically the tourists are going to have to pay more, the local residents are going to have to pay more and tourists are going to probably look at it and say, you know, the cost of traveling to Hawaii is a little too high.

You got increase in this tax will actually make it not, you know, reasonable for them to come. They might choose alternative places to go and visit. So this could hurt us economically downstream. And also, you know, currently the, the rental car companies pay a significant amount of taxes. Especially when you get rental cars from the airports.

You're paying about 48% of the, the cost is fees and taxes that go to our, you know, government functions and so forth, including infrastructure to build airports, projects and so forth.

So this will definitely have a impact and it's not guaranteed to bring the tax revenue that we think it may bring in because you know, the cycle time could be longer for these cars cycling now if it costs more, you're. Going to have, they're going to have.

To make a business decision to say, you know, we're probably not going to buy or hold cars longer. And so that would decrease that type of tax revenue. And so you're going to have older cars in the fleet, you know, less fuel efficient cars in the fleet and so forth that are going to be rented out.

And also to note that, you know, enterprise has been here for like 30 years and they hire a lot of our local residents. So these are jobs, these are people, local people that depend on this for a living. These types of employment opportunities. Do we want to protect the visitor industry?

We want to protect the rental car companies because they help out our local communities and also again, they provide a significant amount of tax revenue currently for the state.

And to add this on would disrupt this whole cycle and ultimately impact the end user, which again are not only the tourists, but our local residents who travel neighbor islands to visit family, weddings, funerals, etc. So we ask that you defer this measure and thank you for this opportunity. Appreciate it.

Thank you. Any other testifiers?

Good morning, Chair, Vice Chair, Members of the Committee, Jolene Garidan Prietzo. On behalf of Avis budget, we respectfully stand on our testimony in opposition to HB 2575 HD.

One, just wanted to emphasize that Hawaii tax law and regulations have distinctly supported the framework for wholesale treatment and acquisition for rental car companies while preserving the retail get on rental receipts. Additionally, rental vehicles qualify as capital goods and rental contracts are true leases.

Both of the affirmation were confirmed by Hawaii case law and thus reinforcing the statutory basis in changing the application of the rental car tax revenue by applying the retail or higher get or use tax reform rate on rental car companies. HB 2575 singles out one industry which raises both fairness and equity concerns.

Mahalo for the opportunity to testify.

Thank you. Any other testifiers.

Tom Yamachika from Tax Foundation? May I?

Yes, please.

Thank you. Chair, Vice Chair, Members of the Committee, Tom Yamachika from Tax Foundation. We had taken a look at the rationale that the Transportation Committee advanced for singling out rental car companies as opposed to less sores of heavy equipment for construction or farm machinery. We don't think the argument holds water.

They rely, for example, on accelerated depreciation as an argument. But as we all know, there is no depreciation allowed in GE tax. So that we think is a very flawed argument. We do understand that the tax law generally does contain a place where rental car companies are singled out and that's in the RV tax.

So I think if this Legislature wants to increase the burden on this industry, in particular, it should go there in Chapter 251 instead of, instead of mucking up the GE tax. Thank you very much and happy answer any questions?

Okay, thank you. Any other testifiers? Okay.

Hello, Chair, vice Chair, Committee Member Seward Akahi with Hertz Dollar Thrifty Rent A Car. We respectfully oppose HB 2575. We have our written testimony. We stand on that. Thank you.

Thank you very much. Okay, any of the testifiers, any questions please?

Some questions. Okay, let's start with DoTax.

Garrison Kurth DoTax, how are you?

Thank you. All right, so this is interesting. And. I want to start off with. I want to start off with this Bill is proposing a 4% or 4.6 GT add up that retail amount instead of a Wholesale amount of 0.5 for rental car companies purchasing new vehicles to add into their fleet of rental cars. Okay.

When they sell that rental car after they leased it out, let's say for whatever life Cycle 5, 10, 15, 20 years, whatever they deem resell it, do they have the option to or can they only resell it at 4% with the get they can't charge like a wholesale on lower because then otherwise they would have to absorb the rest.

Not that I'm aware of. No. I don't know of any situation where that's happening. Maybe they could tell you that is. But I'm not aware of that because it's the retail.

So with that said, that's what the Bill does. Now their current practice is they're currently purchasing at a wholesale and then they can resell it at the half percent wholesale or do they have the option to charge a 5% retail when they resell it or do they have to resell it at that half percent?

You mean resell it at the end of their use as a rental vehicle? Correct. Right. So it's being sold, my understanding is at the retail rate of four and a half percent. I don't, again, I don't know of any situation where it's being sold wholesale at that point.

So what I was, what I, the information I got was they can go to a dealership and they can sell it to a dealership at a wholesale rate. Is that, is that allowable?

That would make sense. And I can't say 100% for sure because again, I wasn't familiar with that concept. But that does make sense in the scheme of what you're saying. So it's very likely that's what occurs.

Okay, so if this Bill were to be enacted and they have to pay the half 4.5% in the beginning, if they were to sell it to a dealership at that half percent wholesale, would they? Is there any sort of laws that they're breaking or.

No. As long as they meet the qualifications for the wholesale, then it's wholesale. There's nothing else that I'm aware of, that at least tax law. I don't think there'd be any other laws.

Okay, so with that scenario, would they be losing money because they're paying 4.5% in the beginning and then reselling it with half percent?

Just thinking that through. Because I mean, the tax itself is passed on. To the consumer. So they're paying it. So I don't know how the rental car company would be losing it.

That's what I'm trying to calculate in my mind because the numbers are different, but I'm not sure exactly how the pass through part works. So that's why I'm asking the expert in the house here.

So, I mean, you're not required to pass on the GET, but pretty much everyone does. Just like a sales tax in most other states so.

Because if they don't pass it on, they're absorbing it,

You still have to pay it.

Exactly. Okay, so with that said, with those two scenarios, I'm going to deem in my head that they're passing on the tax and regardless of that, they're able to sell it. Passing on the tax. Okay.

I can't say because I don't do it, but that's the way the system is set up. So they could say they're not passing it, but I doubt that's the case.

I have every confidence in your expertise than I do with mine. So with that said. That's my questions for you for now. Okay, thank you. I have some questions for any of the rental car companies. Who wants to come up first?

Sure, I'll come up.

Thank you. Chris. Please say your name.

Chris Delaunay. SanHi Government Strategies here, on behalf of Enterprise.

You brought up some interesting points and I can see your opposition in this. But hearing what I just asked, DoTax, what's your concern with that current structure if you're already passing it on to the customer?

And I can think in my mind that your concern would be the cost of the new vehicles will be more expensive because it's a higher tax up front. I can see why Pasha would be concerned because with fewer vehicles you're purchasing, the fewer vehicles are coming into Hawaii and with them transporting these vehicles, lower inventory.

So I'm curious, what's your concern? Other than those concerns that I can think about, is there additional concerns you may have?

Well, I mean, the concern is, yeah, it's basically going to impact the industry and it's also going to impact the end user, too, at the end of the day. Right. And it.

And broadly speaking, I go back to that example where people are going to look and say, hey, it's kind of too much now to visit Hawaii. And I'm just not taking that trip to Hawaii. And that's going to impact a whole other industry, the hotel industry, visitor industry, et cetera.

So those are major concerns, not only as a representative of the car company, but also as a resident here in the state of Hawaii too. Our economy is very fragile right now.

And also if you want to collect more taxes, I mean, they're being taxed, like if you rent a car, 48% of that is going to the state. Right? That's a significant amount. But if you raise that and you know, it could impact that, that cycle time.

And so, you know, after so many years, it might have a negative impact on the revenue coming in. And that's not what we need right now. It's so unpredictable. I think at this stage in time, our economy is so fragile and we've got cuts, federal cuts, this and that. And I understand we're all looking for money, right?

We gotta. But I think this isn't the way to do it because this is like so unpredictable in terms of if you do this, this is longstanding, it's been there for decades, and it's basically to, you know, the indirect effect is to help out the consumer. So basically you can kind of keep it at a reasonable rate.

You know, if you put too much taxes, it still comes to a point where this is too much. You know what I mean? I can't handle it. So anyway, you know, I think, you know, it's. It's important to really think this through.

And I think that it's probably gonna be disappointing, you know, later down the road, like I said, because it's not. Probably not gonna. It could definitely increase the cycle times and it's not going to produce the revenue that we thought it may have produced. Right. Or might produce. So. Yeah. And they're singling out one wholesaler, right.

You know, and there's a lot of. My understanding is, you know, manufacturers sell at wholesale to leasing companies and they lease it out. Right. And they pay the 4%. That's what this is right here. And so you're really tapping into a area of the law that is going to, could be a slippery slope and impacting others.

You know, so what I'm, what I'm hearing you, Chris, is that you're opposed to increase in taxes because your company and you represent is going to be affected. And at the end of the day, I look at this and I'm trying to figure it out in why this is happening.

One of the conclusions I have reached is when a rental company purchase a new vehicle, that new vehicle is now being leased out, it's being used. Anytime a auto dealership who's buying new vehicles, they're not using that vehicle, they're reselling that vehicle. So it's brand new, that vehicle.

However, when a rental company purchase a new vehicle, they are leasing it out for who knows, to five to 10 to 15 years and that vehicle is no longer new, it's used.

And to have the option still to either wholesale it used or new or whatever it may be, you still have that option to sell it to a car dealership or sell it to any other person that you want to sell it to. Because I don't think you have any restrictions on who you're going to sell it to.

However, when you're purchasing that, I believe you are purchasing it at a retail value because you're using it for a retail purpose, which is leasing it out to the public.

And that's where I think the rental car companies need to figure out what is your justification of having a wholesale tax and still being, having to lease it out and then reselling it at the end. So that's, that's where I'm at.

I want to ask you to fine-tune where that argument can be countered because at this moment, that's where I'm at. I can see if a rental company were purchasing new vehicles and then reselling it brand new, I would believe they should have a wholesale rate purchasing it right off the bat because they're reselling it.

However, if they're using it and leasing it out, I have some concerns. Now I want to ask DoTax another question. Thank you. They mentioned double taxation and I did refer them to the income tax paid to another state and foreign country.

I want to verify if they feel that they're paying the tax twice, are they able to apply for this tax credit to be able to offset any sort of pyramiding or double taxation, or not even this tax credit in particular, but are they able to reach out to a tax to your Department and apply for offsetting that double taxation?

I'm not thinking of anything in that situation that allows that. I mean, I know you mentioned pyramiding. I mean, each one of those transactions is a different transaction. So it's not truly double taxation. Like.

So this testimony of that this is double permitting. Double taxation and permitting. Would you consider that false?

I understand the argument, but it's layered taxation. So, yes, I guess you could say that it's. Each transaction is a different transaction, otherwise it would be double taxation. But legally it's not.

Okay, because. Okay. Thank you. Do we have the AG here? Are you able to comment on this?

I can.

Okay. Can you just make sure that we're in compliance, that it's not double taxation and permitting?

Yeah.

Thank you. I think that's a strong argument. If we are doing that, we shouldn't, and if that is the case, we should have something to avoid any sort of lawsuit in the state. Thanks. Okay. Thank you, Chair.

Chair. I think in General, the broader question is just from a broad policy, as far as I think the half percent maybe have been created during the time of the Economic Validation Task Force where they're trying to de. Pyramid the get. And this could have been part of it, but I'm not sure. I don't know if you know if.

That's where I don't, unfortunately. I mean, we don't focus so much on policy more as looking at Administration. So.

So this depermitting of. And it's. If you. Because I think the assumption is that when they came up with this, you know, wholesale, that at some point they would pay it if they're leasing it. But. So how broad is this depermitting of half percent for when you.

When you rent or lease your equipment, meaning, you know, there's other companies that rent equipment. Are they getting the half percent also?

No. My understanding is no, and I think Tom Yamachika covered that pretty well in his testimony.

How narrow is it?

For this Bill?

No, no, the General policy.

Narrow in the sense of. I'm trying to.

Like I said, does it apply to other companies that rent equipment? And you said no. Yeah. So where's the line?

Well, I'd have to check and get back. I'm not aware of any line other than the line we're drawing here. Maybe Tom knows.

Yeah, Chair, can I bring Mr. Yamachika? Sure. Is Tom still there? Yes. Can you answer that, Tom?

What I. What I do know is that the provision in question was enacted in 1971. So I think it might be before the economic revitalization thing. The Idea was that you import it at, or you, you buy it at half a percent because the rental stream is going to get taxed at 4%.

Unlike, you know, people who either keep the goods for resale and put them in inventory, if you lease out goods as a service to others, they do get taxed at 4% of the rental stream.

Well, like I said, I'm trying to understand how broad it is. Like there's other companies that rent large equipment, right? Lighting for different things. Okay, let's take a stream of other bills that came before this Committee. The film industry rents equipment, large equipment for their sets and things like that.

Are they buying that equipment at a half percent?

I don't know about that specific industry.

Are they allowed to? Do you know if they're allowed to?

What the statute says is that if what's involved is equipment with a depreciable life of more than three years, then yes, you're allowed that treatment. So I do know that heavy equipment, farm equipment, vehicles, they're all five-year property.

If it's like something really, really small, like maybe a camera, I don't think, I mean, maybe that's three year property, I don't know. And that wouldn't qualify if it were. But my understanding is that, you know, the five year property, seven year property, ten year property, that's all covered.

So it could be large equipment that is very expensive.

Yes, absolutely.

Okay. And so the argument of the slippery slope where, where if we change it for rental cars, then we may apply it to other large equipment eventually is a good argument.

We are concerned that there is unequal treatment being put in the tax system and as a result there may be some arguments or litigation around. Well, exactly how far does that go? Does it apply to boats? Does it apply to SUVs, does it apply to cybertrucks? Whatever it is, we don't know how.

Again, that would probably depend on if this Committee were to write in some very strict definitions which not now currently appear in the Bill.

Thank you. Thank you very much. Thank you, Chair.

Thanks, Tom. Any further questions?

Do we have DOT here?

DOT?

Can I just say my question out loud? I just want to understand if DOT has any plans on increasing any of their fees that would impact the rental car industries and if they could get back to us on that so we can understand the different taxes and fees that impact this industry so we can make better decisions.

Thanks for that question. Maybe DOT, if they are listening, they could provide some written response later. I had one more question for the Industry, Chris, maybe, or are you okay, coming up. And I know you're not like representing everyone, but you're an excellent spokesperson. So my question is regarding.

I guess it's like a price sensitivity question. You know, part of your testimony is that if we were to push the tax level too high, at some point there will be a breaking point and we could see, you know, demand start to falter.

And you also sort of intimated that the corporation itself might decide to, you know, you talk about there being jobs at stake and so forth. It's, you know, and I'm curious if you have a sense of what, you know, what the price sensitivity is and at what point does market forces take over?

You know, because market forces are also a very important thing that we need to consider. Right. We can push. If we were to increase taxes that. I'm assuming that the first thing that the corporation would do is absorb some of those costs internally in order to maintain an overall viability of your business.

But what is the point at which you're no longer, you know, not you, but enterprise is no longer willing to absorb that price differential and it becomes a more catastrophic.

Yeah, I mean, that's like, that's unknown. Right. You know, that's something that I can't answer right now. I don't know. You know, and it is so unpredictable. Once you make that adjustment, there's going to be a lot of unintended consequences along the way. Right.

It's such a huge adjustment in statute that the impacts would just be unknown. But there comes. There does come a point where someone is going to impact not only the company, but again, the end user is going to be impacted by this. So sorry, I can't specifically tell you what that.

Where that big breaking point is or what, but I mean, just look at how, how much they're taxed already, you know, in fees and so forth, and you're just adding on more cost, you know, so it's definitely going to have.

I would think it would have an impact, you know, not only the rental car industry, but also the visitor industry. What's the, what's the profit rate of a rental car company nowadays? I can't answer that question.

Yeah. All right, thank you very much. Thank you. Any other questions?

I do. I want to just follow up on Rep. Templo's question. I think maybe DoTax could come up. I'm assuming her question kind of lies in with DOT because DOT collects revenue with rental with the rental companies. And I think it's maybe tacked on to rental fees. Are you familiar with that?

Not with the DOT process, no.

Okay. Because DOT has shared with us that in their special fund, some of their revenue sources are based from the rental companies, depending on how well they're doing economically.

And I'm not sure if that was the questioning you were getting into, but I felt that if the rental car companies are not doing well, like during COVID then that revenue stream for the state would be much lower and then we're not able to do DOT projects that are needed in our communities.

So I believe that fee is tacked onto when they rent out the car, not necessarily when they purchase the car. So my question is, when they purchase the car, the only tax that's there is the GET, right? Or is there additional tax that they would have to pay when they purchase a new vehicle?

I don't know of any other specific tax other than just fees and, you know, licensing and things like that. So, I mean, I'm sorry, your logic makes sense for everything else you said. I just don't know, you know, the DOT processes and what they collect and different contracts they have.

So that's what I'm, that's what I'm thinking that I have to do more research to figure that out, but that's what I assume. I also thank you. I want to ask Tax foundation of Hawaii, Tom, I have some fundamental questions to ask you first. I've always been curious. The Tax Foundation of Hawaii, are you a non profit?

Are you a lobbying entity? Like what are you?

We're a nonprofit. We're 501c3.

501C3. Okay, so you collect donations and you collect donations from everybody?

Yes.

Okay, so your opinion is a non profit, but do major rental car companies donate into your nonprofit?

I don't know off the top of my hand, off the top of my head, whether we have any rental car companies as donors. We might, I'm not sure.

I just want to be able to treat you unbiasedly on your testimony when you come before this Committee. And I'm just trying to understand how you are funded.

So Rep. Yamashita brought up a point that you have made some comments and you mentioned about heavy machinery, farm vehicles, construction equipment as your examples that are allowed to use the half percent.

That's correct.

You feel that the rental company would be targeted with this high amount.

But based on the GET, isn't it supposed to be based, I mean, in theory and in principle it's supposed to be a Widespread brush that's supposed to affect everybody. So technically, removing them from this exemption is the policy and principle of what the GET is supposed to be doing.

The GET is extraordinarily broad. Yes, but there are a number of exemptions that are built into it so that it doesn't pyramid. The wholesale rate is one of them.

You're saying that there's pyramiding that's happening right now with this current Bill with.

Any gross receipts tax as a General principle, you have pyramiding. Yes. In our GE tax, you have permit.

You're saying that DOE tax statement of there's no pyramiding or no double taxation happening with this Bill is incorrect.

Yes, that it's incorrect. I mean the concept is that if you have the same good or service passing down the economic stream.

Yeah, I know what it is.

From a supplier to an user, the question

Can we go back to the question of so GET is a broad stroke and removing this retail, the rental car companies will actually live up to the principle of the GET. So.

I don't agree with that. Chair.

Okay, so I have a question for you. What's the justification of the exemption for you to exempt them out of the GET and have this wholesale price? So if you don't believe that, what is your justification of having them have the wholesale rate?

Well, there is a provision in the Wholesale Rate Law 237-489 that says if you are purchasing goods that are leased as capital goods that are thereafter leased as a service to others, you're entitled to the half percent rate.

And this was affirmed to apply to the rental car companies in race 711 motors, which is the case we cite under testimony. It's a 1976 case, which is 50 years ago.

So you're stating a law that was enacted 50 years ago.

55 actually. But the case was 50 years ago.

So it's not HRS?

It is HRS.

Okay, so you're stating HRS that was enacted a while ago for their justification of the exemption. But what is the justification of that enactment of that law? That's where I'm getting to the root of. So you're saying.

I've quoted the Committee report from Ways and Means Committee in my testimony.

I'm sorry, I did not read that Committee report. What did you quote?

It was a quote from Ways and Means Committee. It was kind of lengthy, but basically it says your Committee finds that in the leasing field, the General excise tax has a permitting effect which increases taxes on the lease article to 12%.

There's a 4% General excise tax in the sale for the lessor, a 4% General excess tax on the leasing of the article, and a 4% or 1/2% General excise tax on the final sale of the article by the lessor, depending on to whom it is sold. The purpose of this, I think you're.

You're starting to go back to the whole pyramiding thing. I'm trying to just dig into the root of why that law was enacted 50 years ago. Well, it's because what you're telling me.

I was quoting. I was quoting the Senate Ways and Means Committee report from 1971 verbatim. Okay. It's in my testimony. It's in my testimony. It says your Committee finds that in the leasing field, the General excise tax has a permitting effect which increases taxes on the leased article to 12%.

There is a 4% GE tax on the sale to the lessor, a 4% GE tax to the leasing of the article, and a 4% or 1/2% GE tax on the final sale of the article by the lessor, depending on to whom it is sold.

Okay, Tom, that was good information. Thank you. DoTax, could you come up. You heard the report and it sounds like they were concerned of permitting and double taxation. We really need a clear answer. Whether or not these are individual purchases or does that open up to any sort of double taxation and pyramiding? Right.

I'm not able to.

Yeah, no, no worries.

To give you a legal answer. Yeah, of course. And you know, everybody looks at different definitions. What's pyramiding? What's layered taxation? What is double taxation?

So my understanding, and I don't believe there's any argument here, at least legally, is that if you have different transactions between different parties, those are separate transactions that can be taxed. So is it layered or is it pyramiding because it's taxed later in another transaction? Yes.

Well, I can tell you legislators are not all 100% the truth. And during 50 years ago, they may have the wrong definition of what pyramiding is. But I would like to know for now where we are in this modern time in understanding in a clear definition what is pyramiding and what is not.

And if you could talk and work with the AG and have us a memo that states what is and what is not, and if this is clearly not, then I would love to have that statement because that is a clear indication of whether or not what we are doing is within the law. Thank you.

Totally makes sense. Will do. Thanks.

Okay, thank you. Any other questions? Okay. And in that case, we're going to. We're going to recess, and we'll be back.

We are back from recess. Thank you everyone for your patience. We are going to go to the top of the agenda.

But before we go there, just want to share to the public as a reminder that when we are changing the effective date to a defective year, such as 3000, allows the house to continue working out changes in conferences the bill advances forward. Just so you're not confused when we defect the date. We are now at HB 2410.

This Bill invests in Hawaii's innovation economy by funding HCDC programs that help local entrepreneurs and startups grow. Chair's recommendation is to note 1 million for each program for a total of 3 million in the Standing Committee Report. We're going to defect the effective date to year 3000, technical amendments for the purpose of clarity, consistency, and style.

Any questions, Members? No questions. Vice Chair, please take the vote.

[Roll Call]

Thank you, Vice Chair. Moving on to HB 2235. This Bill strengthens coordination between the state and the military by funding DBEDT's Military and Community Relations Office. Chair notes that 1.3 million for this program in the Standing Committee Report. We're going to defect the effective date to year 3000, technical amendments for the purpose of clarity, consistency, and style.

Members, any questions?

Chair, I'd like to vote...

Okay. At this moment, with no question, Vice Chair, please take the vote.

[Roll Call]

Thank you, Vice Chair. Moving on to 1904. This Bill prepares Hawaii for the growing space industry. Chair recommends to blank appropriation and notes 5 million in the Standing Committee Report, defect the effective date to year 3000, and technical amendments for the purpose of clarity, consistency, and style. Members, any questions? With no questions, Vice Chair, please take the vote.

[Roll Call]

Thank you, Vice Chair. Moving on to HB 2201. This Bill expands enterprise zones by adding recycling and film production as eligible activities. We're going to defect the effective date to year 3000, technical amendments for the purpose of clarity, consistency, and style. Members, any questions? With no questions, Vice Chair, please take the vote.

[Roll Call]

Thank you, Vice Chair. Moving on to HB 2349. This Bill improves business support by making basic contact information for newly registered entities available online and sharing it with DBEDT. Chair recommends language to add an opt in for contact information like phones or emails. Chair notes in the Standing Committee Report, the DCCA requests to raise their ceiling, if this act is implemented.

We're going to defect the effective date to year 3000. Technical amendments for purpose of clarity, consistency, and style. Members, any questions? No questions. Vice Chair, please take the vote.

[Roll Call]

Thank you, Vice Chair. Moving on to 1972. This bill supports families caring for loved ones by creating a tax credit for unpaid family caregivers. Chair recommends to blank appropriation and notes 100,000 in the standing Committee report. Technical amendments for the purpose of clarity, consistency and style. Any questions, Members? No questions. Vice Chair, please take the vote.

We're at. HB 1972 HD1 recommendations to pass the measure with amendments. Any votes in opposition? Any reservations? The measures adopted.

Thank you, Vice Chair. Moving on to HB 2007. This bill helps working families afford child care and dependent care. Chair notes in the Standing Committee report an alternative formula under each cans testimony. Technical amendments for the purpose of clarity, consistency and style. Members, any questions? No questions. Vice Chair, please take the vote. Sorry, one second.

Okay, we are in. HB 2007 HD1 recommendations to pass this measure with amendments. Any votes in opposition? Any reservations? Recommendation is adopted.

Thank you, Vice Chair. Moving on to HB 2385. This bill supports affordable housing by allowing HHFDC to certify generalized excise tax exemptions for qualifying projects under county housing incentive programs. Chair recommends to add language from the AG's testimony to not limit the county's authority. Technical amendments for the purpose of clarity, consistency, and style. Members, any questions? No questions. Vice Chair, please take the vote.

HB 2385, HD 1. Recommendation is to pass with amendments. Any votes in opposition? Any reservations? Chair, the recommendation is adopted.

Thank you, Vice Chair. Moving on to HB 2444. This Bill supports low income renters by doubling the renter tax credit. Chair recommends to adjust the renter tax credit to tie it to inflation, technical amendments for the purpose of clarity, consistency and style. Members, any questions? Go ahead.

I understand why the chair wants to tie it to CPI, but in General, the Legislature has always been cautious on putting CPI in there because we want the ability to adjust in the future instead of just having it automatically adjust. But I'll support the chair's recommendation for further discussion.

I also had that same concern with Representative Yamashita. What's your thoughts about raising it to 170 right now?

You can make that as an option. So like I said, this is just a discussion piece, right? And then we just keep it moving.

The introducer of this Bill is Representative Templo, and I wanted to just ask her, what's your thoughts about having the flexibility in the future? Where the benefit of this is that these tax credits, depending on the time and the period we're going through, we have to consider changes.

And if we tie it to inflation, it's out of our hands and out of our control. And having it at a set amount, I'm more comfortable because we can always come back and make those adjustments. But what's your thoughts? Because you are the introducer and I want to give you some latitude in this Bill.

Okay. Thank you, chair, for hearing this Bill and thank you also, Chair Yamashita, with that comment. I think at this point we should increase it to a certain amount, which I feel that HCAT did provide that number, and since it's relevant to the time now, I think let's go with that.

Thank you. Well, thank you for your flexibility.

I'll just take one more comment that, you know, I think, you know, one of the concerns when we did the.

When we adjusted the brackets a year ago, two years ago, when we adjusted the brackets and then we increased the standard deduction was that some of these credits were not being taken by the people that it was intended to help. And it was mainly because they don't have the resources on the professional tax preparers and CPAs.

And that's why at that point in time, the Legislature felt that it was more important to just increase the standard deduction and just give them the money without having them apply or ask for it. And as you know, out in the future, the standard deduction will be still increasing. Right?

So there will be benefits to help people of need, because usually the idea is that people on the bottom income brackets don't usually itemize. That's why the standard increase in standard deduction was a better policy, and that's why we chose to do it then and then we target exactly who we're trying to help. Right.

So anyway, that's just a comment.

Thank you for your comment. All right, I want to strike my previous recommendation. The recommendations is going to adjust the renter tax credit to set amount based on inflation of today and I believe right now that's in the testimony in HCAM. But it won't be tied to a adjusted to inflation every single year.

Technical amendments for purpose of clarity, consistency and style. Any further questions? No questions. Vice Chair, please take the vote.

HB2444HD One recommendation is to pass with amendments. Any votes in opposition? Any reservations? Chair, the recommendation is adopted.

We're going to move on to HB 2391. This Bill helps families save money during back-to-school season. I'm going to move this Bill as is. Members, any questions? No questions. Vice Chair, please take the vote.

[Roll Call]

Thank you, Vice Chair. Moving on to HB 2575. This Bill increases standard retail level tax rate to new vehicles purchased or imported by rental car companies. Chair moves this Bill as is. Members, any questions? With no questions. Vice Chair, please take the vote.

[Roll Call]

Thank you everybody. This hearing is now adjourned.