THE SENATE	S.B. NO.	1183
TWENTY-NINTH LEGISLATURE, 2017		S.D. 2
STATE OF HAWAII		H.D. 2

A BILL FOR AN ACT

 

 

RELATING TO TAXATION.

 

 

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

 

     PART I

     SECTION 1.  Section 46-16.8, Hawaii Revised Statutes, is amended by amending subsections (b) and (c) to read as follows:

     "(b)  Each county that has established a surcharge on state tax prior to [[]July 1, 2015,[]] under authority of subsection (a) may extend the surcharge [from January 1, 2023,] until December 31, [2027,] 2029, at the same rates.  A county electing to extend this surcharge shall do so by ordinance; provided that:

     (1)  No ordinance shall be adopted until the county has conducted a public hearing on the proposed ordinance; and

     (2)  The ordinance shall be adopted prior to [July] January 1, [2016, but no earlier than July 1, 2015.] 2018.

     A county electing to exercise the authority granted under this subsection shall notify the director of taxation within ten days after the county has adopted an ordinance extending the surcharge on state tax.  [Beginning on January 1, 2023, the] The director of taxation shall levy, assess, collect, and otherwise administer the extended surcharge on state tax.

     (c)  Each county that has not established a surcharge on state tax prior to [[]July 1, 2015,[]] may establish the surcharge at the rates enumerated in sections 237-8.6 and 238-2.6.  A county electing to establish this surcharge shall do so by ordinance; provided that:

     (1)  No ordinance shall be adopted until the county has conducted a public hearing on the proposed ordinance;

     (2)  The ordinance shall be adopted prior to [July] January 1, [2016,] 2018 [but no earlier than July 1, 2015]; and

     (3)  No county surcharge on state tax that may be authorized under this subsection shall be levied prior to January 1, [2018,] 2019, or after December 31, [2027.] 2029.

     A county electing to exercise the authority granted under this subsection shall notify the director of taxation within ten days after the county has adopted a surcharge on state tax ordinance.  Beginning on January 1, [2018,] 2019, the director of taxation shall levy, assess, collect, and otherwise administer the county surcharge on state tax."

     SECTION 2.  Section 237-8.6, Hawaii Revised Statutes, is amended by amending subsection (b) to read as follows:

     "(b)  Each county surcharge on state tax that may be adopted or extended pursuant to section 46-16.8 shall be levied beginning in [the] a taxable year after the adoption of the relevant county ordinance; provided that no surcharge on state tax may be levied:

     (1)  Prior to:

         (A)  January 1, 2007, if the county surcharge on state tax was established by an ordinance adopted prior to December 31, 2005; or

         (B)  January 1, [2018,] 2019, if the county surcharge on state tax was established by the adoption of an ordinance after June 30, 2015, but prior to [July 1, 2016;] January 1, 2018; and

     (2)  After December 31, [2027.] 2029."

     SECTION 3.  Section 238-2.6, Hawaii Revised Statutes, is amended by amending subsection (b) to read as follows:

     "(b)  Each county surcharge on state tax that may be adopted or extended shall be levied beginning in [the] a taxable year after the adoption of the relevant county ordinance; provided that no surcharge on state tax may be levied:

     (1)  Prior to:

         (A)  January 1, 2007, if the county surcharge on state tax was established by an ordinance adopted prior to December 31, 2005; or

         (B)  January 1, [2018,] 2019, if the county surcharge on state tax was established by the adoption of an ordinance after June 30, 2015, but prior to [July 1, 2016;] January 1, 2018; and

     (2)  After December 31, [2027.] 2029."

     SECTION 4.  Section 248-2.6, Hawaii Revised Statutes, is amended by amending subsection (a) to read as follows:

     "(a)  If adopted by county ordinance, all county surcharges on state tax collected by the director of taxation shall be paid into the state treasury quarterly, within ten working days after collection, and shall be placed by the director of finance in special accounts.  Out of the revenues generated by county surcharges on state tax paid into each respective state treasury special account, the director of finance shall deduct [ten] one per cent of the gross proceeds of a respective county's surcharge on state tax to reimburse the State for the costs of assessment, collection, [and] disposition, and oversight of the county surcharge on state tax incurred by the State.  Amounts retained shall be general fund realizations of the State."

     SECTION 5.  Act 247, Session Laws of Hawaii 2005, as amended by Act 240, Session Laws of Hawaii 2015, is amended by amending section 9 to read as follows:

     "SECTION 9.  This Act shall take effect upon its approval; provided that:

     (1)  If none of the counties of the State adopt an ordinance to levy a county surcharge on state tax by December 31, 2005, this Act shall be repealed and section 437D-8.4, Hawaii Revised Statutes, shall be reenacted in the form in which it read on the day prior to the effective date of this Act;

     (2)  If any county does not adopt an ordinance to levy a county surcharge on state tax by December 31, 2005, it shall be prohibited from adopting such an ordinance pursuant to this Act, unless otherwise authorized by the legislature through a separate legislative act; and

     (3)  If an ordinance to levy a county surcharge on state tax is adopted by December 31, 2005:

         (A)  The ordinance shall be repealed on December 31, 2022; provided that the repeal of the ordinance shall not affect the validity or effect of an ordinance to extend a surcharge on state tax adopted pursuant to [Act 240, Session Laws of Hawaii 2015;] an act of the legislature;

         (B)  This Act shall be repealed on December 31, [2027;] 2029; and

         (C)  Section 437D-8.4, Hawaii Revised Statutes, shall be reenacted in the form in which it read on the day prior to the effective date of this Act; provided that the amendments made to section 437D-8.4, Hawaii Revised Statutes, by Act 226, Session Laws of Hawaii 2008, as amended by Act 11, Session Laws of Hawaii 2009, and Act 110, Session Laws of Hawaii 2014, shall not be repealed."

PART II

     SECTION 6.  Section 46-16.8, Hawaii Revised Statutes, is amended by amending subsection (e) to read as follows:

     "(e)  Each county with a population greater than five hundred thousand that adopts or extends a county surcharge on state tax ordinance pursuant to subsection (a) or (b) shall use the surcharges received from the State for[:

     (1)  Capital] capital costs of a locally preferred alternative for a mass transit project[; and

     (2)  Expenses in complying with the Americans with Disabilities Act of 1990 with respect to paragraph (1).

The]; provided that revenues derived from the county surcharge on state tax shall not be used:

     (1)  [to] To build or repair public roads or highways, bicycle paths, or support public transportation systems already in existence prior to July 12, 2005[.]; 

     (2)  For operating costs of the mass transit project or any purpose not consistent with this subsection; or

     (3)  For administrative or operating costs, including personnel costs, of a rapid transit authority charged with the responsibility for constructing or operating the mass transit project, or both."

PART III

     SECTION 7.  (a)  For the purposes of this section:

     "Locally preferred alternative for a mass transit project" means the minimum operable segment of the locally preferred alternative for a mass transit project that the county rapid transportation authority is constructing under a full funding agreement with the Federal Transit Administration.

     (b)  A county with a population greater than five hundred thousand shall not:

     (1)  Prohibit the use of county funds for the capital cost of the locally preferred alternative for a mass transit project; or

     (2)  Expend funds derived from the county surcharge on state tax revenues for purposes other than the capital cost of the locally preferred alternative for a mass transit project.

     Notwithstanding any other law to the contrary, if there is an existing ordinance that violates paragraphs (1) or (2), or both, in effect on the effective date of this Act, the county shall repeal the ordinance before December 31, 2017.

     (c)  The mayor of a county with a population greater than five hundred thousand shall notify the director of taxation within ten days of the mayor's approval of the repeal of an ordinance that violates subsection (b)(1), (b)(2), or both.

PART IV

     SECTION 8.  Statutory material to be repealed is bracketed and stricken.  New statutory material is underscored.

     SECTION 9.  This Act shall take effect upon its approval; provided that in a county with a population greater than five hundred thousand:

     (1)  If on December 31, 2017, all of the conditions set out in section 7(b) of this Act are met, then effective January 1, 2018, the director of taxation may levy, assess, and collect the surcharge on state tax and disburse surcharge revenues pursuant to the surcharge extension provisions of part I of this Act; and

     (2)  If on December 31, 2017, all of the conditions set out in section 7(b) of this Act have not been met, the authorization to extend the levy, assessment, and collection of a surcharge on state tax and the disbursement of surcharge revenues pursuant to part I of this Act shall not take effect.

 

Report Title:

County Surcharge on State Tax

 

Description:

Reduces the amount deducted from the county surcharge on state tax to reimburse the State for administrative costs from 10% to 1% and extends authorization of the county surcharge on state tax to 12/31/2029; provided that certain conditions are met by the counties.  Prohibits disbursement of surcharge revenues after December 31, 2017, to a county that prohibits the use of county funds for capital costs of a locally preferred alternative for a mass transit project or uses county surcharge revenue for purposes other than those capital costs.  (SB1183 HD2)

 

 

 

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