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REPORT OF THE <br />COMMITTEE ON FINANCE <br />DATE: August 8, 2000 <br />PLACE: Council Chambers <br />TIME: 10:10 A.M. <br />Council Chair and Members <br />Hawaii County Council <br />Hilo, Hawaii 96720 <br />Re: Comm. No. 813 /Bill No. 276 <br />Your Committee on Finance, to which was referred Bill No. 276, reports as follows: <br />Bill No.276, transmitted by Deputy Corporation Counsel Gerald Takase, via Communication <br />No. 813, dated June 9, 2000, amends Chapter 19, Hawaii County Code, by adding a new section <br />relating to real property taxes. <br />Prior to December 23, 1999, the County granted all public utility companies real property tax <br />exemptions pursuant to Chapter 239, HRS. However, this exemption prohibited the County from <br />collecting its share of the public service company tax collected by the State in lieu of the County <br />real property taxes. Therefore, the County Council deleted the public utilities tax exemption in <br />Ordinance No. 99 -159. <br />The County filed suit against the State, Civil No. 99 -194, to seek a portion of those taxes <br />collected pursuant to Chapter 239. The County, along with the utilities, also proposed legislation <br />to amend Chapter 239 to pay the counties their fair share of the public service company tax. <br />With the help of the utilities, the other counties and the Council Chair, the bill passed the House <br />and Senate before dying in the final conference committee. <br />Furthermore, the County's lawsuit was dismissed with final judgment entered on May 5, 2000. <br />The court upheld the position of the State that the references to real property taxes in the public <br />service company tax were repealed by implication with the passage of the Constitutional <br />amendments. Thus, the court held that since the County had made no attempt to tax the utilities, <br />the case was premature and there was no case or controversy until attempts to tax utilities are <br />denied. <br />Therefore, in order to collect real property taxes from utility companies, Bill No. 276 proposes to <br />add a new section to Chapter 19, HCC, which establishes a method of valuation for the <br />properties owned by public utility companies. <br />Members of Your Committee were concerned that the utility companies would be double taxed <br />and ultimately higher utility rates would be passed on to the consumer. <br />FC REPORT NO. 313 <br />