Construction tax credit bills sent to governor
Advertiser Capitol Bureau
Two bills to grant construction tax credits to homeowners and businesses that build or renovate their facilities won final approval from the Legislature and are awaiting review by Gov. Ben Cayetano.
State Tax Director Marie Okamura said her office is still reviewing and analyzing the bills. However, at least one of the two bills appears likely to be signed into law because the Cayetano administration proposed similar measures.
Cayetano has the option of signing the bills into law, vetoing the measures or allowing them to become law without his signature.
Last year, lawmakers granted a 4 percent tax credit to homeowners to encourage remodeling and construction in the aftermath of the economic slump that followed Sept. 11. Lawmakers voted this year to extend that tax credit.
The credit was scheduled to end July 1, and Senate Bill 2831 would extend the credit for another year.
Cayetano initially had been a strong advocate for the tax credit and proposed an extension of the tax credit to lawmakers this year. That suggests the governor may sign the bill.
State tax officials have estimated that the extension of the residential tax credit would cost the state $18 million.
Lawmakers also proposed a second measure, Senate Bill 2383, which would provide a 4 percent tax credit for commercial construction projects started after Dec. 31 but before Jan. 1, 2007. Lawmakers last year granted a similar but more generous 10 percent tax credit for hotel and resort construction projects.
State tax officials have estimated the lost tax collections from the commercial construction credit would amount to $23 million. Among the companies that stand to benefit is The Honolulu Advertiser, which is building a printing and distribution center in Kapolei.
Lawmakers cite the tax credits as an important part of their effort to stimulate the economy. Cayetano had proposed that the state spend an additional $1 billion on new construction to invigorate the construction industry, but the Legislature rejected that. Lawmakers contend it makes more sense to offer tax credits that encourage private investment in construction.