Hawaii-2010-HB2750-Introduced

SECTION 1. The legislature finds that, although the State and its local government units have granted numerous economic development subsidies, awarded several public contracts and distributed enormous tax breaks in the last twenty five years, the real wage levels and health care coverage of working families have declined.

Some programs providing economic development subsidies lack measurable job creation goals, and in some cases, businesses have closed, relocated, or outsourced facilities or jobs for which subsidies were provided to sites outside of the State.

Also, some contractors do not fulfill intended savings goals, which places a great burden on taxpayers. Citizen participation in economic development and the contracting process have been impeded by a lack of readily accessible information regarding expenditures and outcomes.

Data collected by the federal government indicate that state corporate income taxes represent a declining share of state tax revenue and that the effective rate at which states are taxing corporate profits has fallen sharply in recent decades. Studies by numerous states find that a majority of corporations filing income tax returns have zero liability, even in years in which the economy is growing and corporate profits are healthy.

Research conducted by leading academics suggests that the causes of state corporate tax base erosion include such factors as greater corporate aggressiveness and sophistication in exploiting loopholes and structural weaknesses in state corporate income tax laws, state conformity to federal tax law changes, the enactment of tax cuts and special credits aimed at stimulating in-state job creation and other desired corporate behavior, and the implementation of federal corporate income tax shelters.

Data extracted from state corporate income tax returns and then published in an aggregated form that averages results for corporations falling within certain income or asset-size categories are extremely limited in their capacity to illuminate the source of state corporate income tax base erosion. Such data does not, for example, permit an examination of whether corporations that reported losses on their state income tax returns reported profits to their shareholders in the same year.

In order to determine whether Hawaii's corporate income tax is structured in such a way as to ensure that all corporations doing business here are paying their fair share and whether tax incentives enacted to encourage corporations to invest and create jobs here are effective, it is necessary to require corporations to publicly disclose the amount of corporate income tax they pay to the State, the amount of economic development tax incentives they receive, the number of employees they have in the State, and additional information drawn from their tax returns to understand the major factors that determine their corporate income tax liability.

Therefore, in order to augment the effectiveness of expenditures for economic development, ensure the State is achieving savings when using contractors, and improve the social, economic, and fiscal outcomes for taxpayers and working families in the State, the legislature finds it necessary to collect, analyze, and make publicly available information regarding those expenditures and to enact certain safeguards for their use. Furthermore, by providing concrete, real-world examples of the operation of Hawaii's corporate income tax, such company-specific disclosure will facilitate both understanding of and interest in critical corporate tax policy issues confronting the State on the part of policymakers and interested citizens alike.

The purpose of this Act is to promote corporate transparency within the State of Hawaii.

SECTION 2. The Hawaii Revised Statutes is amended by adding a new chapter to be appropriately designated and to read as follows:

"CHAPTER

CORPORATE TRANSPARENCY

PART I. GENERAL PROVISIONS

§ -1 Definitions. For the purposes of this chapter:

"Consulting services" means work that a person other than a regular employee of an agency of the State or county does for or on behalf of the agency of the State or county in return for compensation provided under the terms of a public contract. The work may include, but is not limited to:

(1) Performing or providing research, analysis, assessments, data processing or computer programming, training or education, accounting, audits or evaluations, or treatment or security;

(2) Giving professional advice or recommendations;

(3) Designing business or communications processes, procedures, methods, or strategies; or

(4) Other work related to the functions of the state agency or county agency.

"Contract" means any expenditure of public funds of at least $25,000 for the purpose of establishing an agreement, outlining a transaction between an entity and a government body to perform a specific service for compensation.

"Contracting agency" means any agency of the State or its political subdivisions that awards contracts.

"Contractor" means any person other than a regular employee of a state or county agency who performs work for or on behalf of the agency in return for compensation provided under the terms of a public contract.

"Corporate parent" means any person, association, corporation, joint venture, partnership, or other entity, that owns or controls fifty per cent or more of a recipient corporation.

"Corporation" means any entity subject to the tax levied by the department of taxation and the department of commerce and consumer affairs or by Section 11 of the Internal Revenue Code, except that "qualified personal service corporations", as defined in Section 448 of the Internal Revenue Code, shall be exempt from this chapter.

"Date of subsidy" means the date that a granting body provides the initial monetary value of a development subsidy to a recipient corporation; provided, however, that where the subsidy is for the installation of new equipment, the date shall be the date the corporation puts the equipment into service; provided further that where the subsidy is for improvements to property, the date shall be the date the improvements are finished, or the date the corporation occupies the property, whichever is earlier.

"Development subsidy" means any expenditure of public funds with a value of at least $25,000 for the purpose of stimulating economic development within the State, including but not limited to bonds, grants, loans, loan guarantees, enterprise zones, empowerment zones, tax increment financing, grants, fee waivers, land price subsidies, matching funds, tax abatements, tax exemptions, and tax credits.

"Doing business in the State" means owning or renting real or tangible personal property physically located in the State; having employees, agents, or representatives acting on the corporation's behalf in the State; making sales of tangible personal property to purchasers that take possession of the property in the State; performing services for customers located in the State; performing services in the State; earning income from intangible property that has a business site in the State; engaging in regular and systematic solicitation of sales in the State; being a partner in a partnership engaged in any of the preceding activities in the State; or being a member of a limited liability company engaged in any of the preceding activities in the State.

"Full-time job" means a job in which an individual is employed by a recipient corporation for at least thirty-five hours per week.

"Granting body" means any agency, board, office, public benefit corporation, or authority of the State or county that provides a development subsidy.

"LEED" means an internationally-recognized green building certification system developed by the U.S. Green building council that provides third-party verification that a building or community was designed and built using strategies aimed at improving performance across all the metrics that matter most: energy savings, water efficiency, carbon dioxide emissions reduction, improved indoor environmental quality, and stewardship of resources and sensitivity to their impacts.

"LEED-certified" means a project means that meets the requirements developed by the Leed system.

"Local government unit" means an agency, board, commission, office, public benefit corporation, or public authority of a political subdivision of the State.

"Part-time job" means a job in which an individual is employed by a recipient corporation for less than thirty-five hours per week.

"Project site" means the site of a project for which any development subsidy is provided.

"Property-taxing entity" means any entity which levies taxes upon real or personal property.

"Recipient contractor" means any person, association, corporation, joint venture, partnership, or other entity that is awarded a contract bid.

"Recipient corporation" means any person, association, corporation, joint venture, partnership, or other entity that receives a development subsidy.

"Small business" means a corporation whose corporate parent, and all subsidiaries thereof, that employed fewer than twenty full-time employees or had total gross receipts of less than $1,000,000 during the calendar year.

"State" means an agency, board, commission, office, public benefit corporation or public benefit authority of the State.

"Subsidy value" means the face value of any and all development subsidies provided to a recipient corporation.

"Tax expenditure" means a statutory provision, however denominated, that exempts certain persons, property, goods, or services, in whole or in part, from the operation of a tax.

"Tax expenditure budget" means a compilation of information about the State's tax expenditures that includes data from the previous, current, and upcoming fiscal year.

"Temporary job" means a job in which an individual is hired for a season or for a limited period of time.

PART II. APPLICANT AND RECIPIENT CORPORATION REPORTING

§ -21 Application for economic development subsidies. (a) Each granting body, together with the applicant for a development subsidy, shall complete an application for the subsidy on a form prepared by the department of business, economic development and tourism. The information required on the application shall include the following:

(1) An application tracking number for the granting agency and the project;

(2) The name, street and mailing address, and phone number of the chief officer of the granting body;

(3) The name, street and mailing address, and phone number of the chief officer of the applicant's corporate parent;

(4) The name, street and mailing address, and phone number of the chief officer of the applicant;

(5) The name, street and mailing address, and phone number of the granting agency official responsible for monitoring the subsidy;

(6) The street address of the project site;

(7) The name, type, and description of the economic development subsidy;

(8) The three-digit North American Industry Classification System number of the project site;

(9) The total number of individuals employed by the applicant at the project site on the date of the application, broken down by full-time, part-time, and temporary positions;

(10) The total number of individuals employed in the State by the applicant's corporate parent, and all subsidiaries thereof, as of December 31 of the prior fiscal year, broken down by full-time, part-time, and temporary positions;

(11) The development subsidy or subsidies being applied for with the granting body, and the value of the subsidy or subsidies; the name of any other granting body from which development subsidies are sought or obtained, and the aggregate value of all development subsidies requested or received from all sources;

(12) The number of new jobs to be created by the applicant at the project site, broken down by full-time, part-time, and temporary positions;

(13) The average hourly wage to be paid to all current and new employees at the project site, broken down by full-time, part-time, and temporary positions, and further broken down by wage groups as follows: $6.00 or less an hour, $6.01 to $7.00 an hour, $7.01 to $8.00 an hour, $8.01 to $9.00 an hour, $9.01 to $10.00 an hour, $10.01 to $11.00 an hour, $11.01 to $12.00 an hour, $12.01 to $13.00 an hour, $13.01 to $14.00 an hour, and $14.01 or more per hour;

(14) The type and amount of health care coverage to be provided by the applicant within ninety days of commencement of employment at the project site, including any costs to be borne by the employees;

(15) The number of current employees provided health benefits;

(16) The number of current employees and anticipated new employees represented by a collective bargaining unit;

(17) For project sites located in a metropolitan statistical area, as defined by the federal Office of Management and Budget, the average hourly wage paid to non-managerial employees in the State for the industries involved at the project, as established by the United States Bureau of Labor Statistics;

(18) For project sites located outside of metropolitan statistical areas, the average weekly wage paid to non-managerial employees in the county for industries involved at the project, as established by the United States Department of Commerce;

(19) Whether or not the project will be LEED-certified and if so, provide the rating;

(20) The start and end dates for the economic development subsidy;

(21) The project site's proximity to mass transit, a regional rail line, or a major highway off-ramp;

(22) A statement as to whether the development subsidy may reduce employment at any other site controlled by the applicant or its corporate parent, within or without of the State, resulting from automation, merger, acquisition, corporate restructuring, or other business activity;

(23) A statement confirming the subsidy applicant's past legal compliance, including minimum wage, employee rights, and affirmative action laws;

(24) A statement as to whether or not the project involves the relocation of work from another address and if so, the number of jobs to be relocated and the address from which they are to be taken from and the address where they are sent;

(25) The projected net tax revenue accruing to the local agency as a result of the economic development subsidy;

(26) Inclusion of any material documents, such as insurance policies, rating agency reports, or other pertinent documents, that are necessary to ensure the subsidy is reasonably crafted and geared towards its public interest within a co-financed or leveraged project;

(27) Projected subsidy value; and

(28) A certification by the chief officer of the applicant as to the accuracy of the application.

(b) If the granting body approves the application, it shall send a copy to the department of business, economic development and tourism within fifteen days of the approval. If the application is not approved, the granting body shall retain the application in its records.

(c) Before granting an economic development subsidy, each local agency shall provide public notice and a hearing regarding the economic development subsidy. A public hearing and notice under this subsection is not required if a hearing and notice regarding the economic development subsidy is otherwise required by law.

§ -22 Application for contract bid. (a) Each contracting agency, together with the applicant for a contract bid, shall complete an application for the contract on a form prepared by the department of budget and finance. The information required on the application shall include the following:

(1) An application tracking number for the contracting agency and the contract;

(2) The name, street and mailing address, and phone number of the chief officer of the contracting agency;

(3) The name, street and mailing address, and phone number of the chief officer of the applicant's corporate parent;

(4) The name, street and mailing address, and phone number of the chief officer of the applicant;

(5) The name, street and mailing address, employer and employment category or job description of each person that will provide consulting services under the contract, including subcontractors;

(6) The name, street and mailing address, and phone number of the contracting agency official responsible for monitoring the contract;

(7) The three-digit North American Industry Classification System number of the entity applying for a bid;

(8) Type of service required by contract;

(9) The total number of individuals employed by the applicant on the date of the application, broken down by full-time, part-time, and temporary positions;

(11) The bids being applied for with the contracting agency, and the value of the contract or contracts; the name of any other contracting agencies from which bids are sought or obtained, and the aggregate value of all bids requested or received from all sources;

(12) The number of contractors or subcontractors needed to perform required services, broken down by full-time, part-time, and temporary positions;

(13) The types of services the contractor, subcontractor, and any contract employees provide;

(14) The average hourly wage to be paid to each contractor, subcontractor, and contract employee, broken down by full-time, part-time, and temporary positions, and further broken down by wage groups as follows: $6.00 or less an hour, $6.01 to $7.00 an hour, $7.01 to $8.00 an hour, $8.01 to $9.00 an hour, $9.01 to $10.00 an hour, $10.01 to $11.00 an hour, $11.01 to $12.00 an hour, $12.01 to $13.00 an hour, $13.01 to $14.00 an hour, and $14.01 or more per hour;

(15) The number of hours each person, including each subcontractor and contract employees, is expected to work in providing consulting services to the agency under the terms of the contract;

(16) The total compensation of each contractor and subcontractor;

(17) The type and amount of health care coverage to be provided by the applicant within ninety days of commencement of the contract, including any costs to be borne by the employees;

(18) The number of contractors or subcontractors associated with the contract represented by a collective bargaining unit;

(19) For applicants based in a metropolitan statistical area, as defined by the federal Office of Management and Budget, the average hourly wage paid to non-managerial employees in the State for the industries involved at the project, as established by the United States Bureau of Labor Statistics;

(20) For applicants based outside of metropolitan statistical areas, the average weekly wage paid to non-managerial employees in the county for industries involved at the project, as established by the United States Department of Commerce;

(21) The start and end dates for the contract;

(22) A statement confirming the applicant's past legal compliance, including minimum wage, employee rights, and affirmative action laws;

(23) Projected savings accruing to the contracting agency;

(24) Projected total cost of contract; and

(25) A certification by the chief officer of the applicant as to the accuracy of the application.

(b) If the contracting agency approves the bid, it shall send a copy to the State department of budget and finance within fifteen days of the approval. If the application is not approved, the granting body shall retain the application in its records.

(c) Before approving a contract bid, each contracting agency shall provide public notice and a hearing regarding the contract bid. A public hearing and notice under this subdivision is not required if a hearing and notice regarding the contract bid is otherwise required by law.

PART III. REPORTS ON SUBSIDIES AND CONTRACTS

§ -31 Establishment of measurable standards. (a) Before entering into a public contract, a contracting agency shall establish measurable standards for assessing the quality of the goods or services, personal services, personal property, public improvements or public works, alterations, repairs or maintenance that a contractor will provide or perform under the contract. The contracting agency may develop the quality standards applicable to the public contract in cooperation with or as a result of negotiations with the contractor to which the contracting agency has awarded the public contract. Unless the contracting agency for good cause specifies otherwise, the quality standards may not be less than the highest standards prevalent in the industry or business most closely involved in providing the appropriate goods or services, personal services, personal property, public improvements, public works, alterations, repairs, or maintenance.

(b) If a contracting agency performs a cost analysis before a procurement for goods or services with an estimated contract price that exceeds $25,000, that analysis shall be subject to disclosure under chapter 92F. The contracting agency shall provide a comparison of the findings of the cost analysis with the actual cost of the contract in its annual and biannual report described in section ‑22.

§ -32 Report on economic development subsidies. (a) Annual reporting requirements shall be as follows:

(1) Each granting body, together with the recipient of the subsidy, shall complete a report for the subsidy on a form prepared by the department of business, economic development and tourism no later than thirty days after the start of the fiscal year. The report shall include the following information:

(A) The application tracking number;

(B) The name, street and mailing addresses, phone number and chief officer of the granting body;

(D) The name, street and mailing address, and phone number of the contracting agency official responsible for monitoring the subsidy;

(E) A summary of the number of jobs required, created and lost, broken down by full-time, part-time, and temporary positions;

(F) The name, type, and description of the economic development subsidy;

(G) The average hourly wage to be paid to all current and new employees at the project site, broken down by full-time, part-time and temporary positions, and further broken down by wage groups as follows: $6.00 or less an hour, $6.01 to $7.00 an hour, $7.01 to $8.00 an hour, $8.01 to $9.00 an hour, $9.01 to $10.00 an hour, $10.01 to $11.00 an hour, $11.01 to $12.00 an hour, $12.01 to $13.00 an hour, $13.01 to $14.00 an hour, and $14.01 or more per hour;

(H) Location of employees by zip code;

(I) The type and amount of health care coverage provided to the employees at the project site, including any costs borne by the employees;

(J) The number of current employees represented by a collective bargaining;

(K) Whether or not the project will be LEED-certified and if so, provide the rating;

(L) The start and end dates and schedule for the economic development subsidy;

(M) The project site's proximity to mass transit, a regional rail line, or a major highway off-ramp;

(N) The comparison of the total employment in the State by the recipient's corporate parent on the date of the application and the date of the report, broken down by full-time, part-time and temporary positions;

(O) A statement as to whether the use of the development subsidy during the previous fiscal year has reduced employment at any other site controlled by the recipient corporation or its corporate parent, within or without of the State as a result of automation, merger, acquisition, corporate restructuring or other business activity;

(P) A statement as to whether any affordable housing has been displaced by the project;

(Q) A statement as to whether or not the project has involved the relocation of work from another address and if so, the number of jobs relocated and the address from which they were taken from and the address they were moved to;

(R) Identification of all sources of public and private financing in relation to the project;

(S) Inclusion of any cost analysis or feasibility study that may have been conducted by the State or granting agency before the subsidy was awarded;

(T) Inclusion of any material documents, such as insurance policies, rating agency reports, or other pertinent documents, that are necessary to ensure the subsidy is reasonably crafted and geared towards its public interest within a co-financed or leveraged project;

(U) The net tax revenue accruing to the local agency as a result of the economic development subsidy;

(V) Total subsidy value;

(W) Record action, if any, the granting agency has taken against potential non-compliance; and

(X) A signed certification by the chief officer of the recipient corporation as to the accuracy of the progress report;

(2) The granting body shall then compile the data specified in paragraph (1) and file a progress report with department of business, economic development and tourism for each project for which a development subsidy has been granted, no later than sixty days after the start of the fiscal year;

(3) On all subsequent annual progress reports, the granting body shall indicate whether the recipient corporation is still in compliance with its job creation, wage and benefit goals, and whether the corporate parent is still in compliance with its state employment requirement; and

(4) Granting bodies and recipient corporations shall file annual progress reports for the duration of the subsidy, or not less than five years, whichever period is greater.

(b) Two-year reporting requirements shall be as follows:

(1) No later than fifteen days after the second anniversary of the date of subsidy, the granting body shall file with department of business, economic development and tourism a two-year progress report including the same information as required under subsection (a) of this section. The recipient corporation shall certify as to the accuracy of the report; and

(2) The granting body shall state in the two-year report whether the recipient corporation has achieved its job creation, wage, and benefit goals, and whether the corporate parent has maintained ninety per cent of its employment in the State.

(c) The department of business, economic development and tourism shall compile and publish all data from the progress reports in both written and electronic form, including the department of business, economic development and tourism's website. The department of business, economic development and tourism's website shall provide an easily accessible, searchable database of the specified data.

(d) The county agency shall provide a final report at the conclusion of each economic development subsidy that shall contain the information described in subsection (a), in written form available to the public, and through its website. The local agency's website shall provide an easily accessible, searchable database of the specified data.

(e) The granting body and department of business, economic development and tourism shall have access at all reasonable times to the project site and the records of the recipient corporation in order to monitor the project and to prepare progress reports.

(f) A recipient corporation that fails to provide the granting body with the information or access required under subsections (a) and (b) of this section shall be subject to a fine of not less than $500 per day, the recipient corporation has not provided the agency with necessary information thirty days after the start of each fiscal year.

§ -33 Report on contracts. (a) Annual reporting requirements shall be as follows:

(1) Each contracting agency, together with the contract recipient, shall complete a report for the contract on a form prepared by the department of budget and finance no later than thirty days after the start of the fiscal year. The report shall include the following information:

(A) An application tracking number for the contracting agency for the service;

(B) The name, street and mailing address, and phone number of the chief officer of the contracting agency;

(D) The name, street and mailing address, and phone number of the chief officer of the applicant;

(E) The name, street and mailing address, employer and employment category or job description of each person that provided consulting services under the contract, including subcontractors.

(F) The name, street and mailing address, and phone number of the contracting agency official responsible for monitoring the contract;

(G) The three-digit North American Industry Classification System number of the entity applying for a bid;

(H) The procedure the agency used to solicit and award the contract. The record should note whether the procedure involved competitive bidding or competitive proposals and summarize the extent to which the procedure sought to and succeeded in soliciting bids or proposals from minorities, women or emerging small businesses;

(I) Type of service required by contract;

(J) The total number of individuals employed by the applicant on the date of the application and the date of the report, broken down by full-time, part-time, and temporary positions;

(K) The total number of individuals employed in the State by the applicant's corporate parent, and all subsidiaries thereof, as of December 31 of the prior fiscal year, broken down by full-time, part-time, and temporary positions;

(L) The bids applied for with the contracting agency, and the value of such contract or contracts; the name of any other contracting agencies from which bids were sought or obtained, and the aggregate value of all bids requested or received from all sources;

(M) The number of contractors, subcontractors, and contract employees who performed required services, broken down by full-time, part-time and temporary positions;

(N) The types of services the contractor, subcontractor, and any contract employees provide;

(O) The average hourly wage paid to each contractor, subcontractor, and contract employee, broken down by full-time, part-time and temporary positions, and further broken down by wage groups as follows: $6.00 or less an hour, $6.01 to $7.00 an hour, $7.01 to $8.00 an hour, $8.01 to $9.00 an hour, $9.01 to $10.00 an hour, $10.01 to $11.00 an hour, $11.01 to $12.00 an hour, $12.01 to $13.00 an hour, $13.01 to $14.00 an hour, and $14.01 or more per hour;

(P) The number of hours each person, including each subcontractor, works in providing consulting services to the agency under the terms of the contract;

(Q) The total compensation of each contractor, subcontractor, and any contract employees;

(R) A summary of each amendment to the contract that changed the contract term, the contract price or estimated total value, the nature of the consulting services or the identity of a person providing consulting services under the contract, including the identity of subcontractors;

(S) The type and amount of health care coverage provided by the applicant within ninety days of commencement of the contract, including any costs to be borne by the employees;

(T) The number of contractors or subcontractors associated with the contract represented by a collective bargaining unit;

(U) For applicants based in a metropolitan statistical area, as defined by the federal Office of Management and Budget, the average hourly wage paid to non-managerial employees in the State for the industries involved at the project, as established by the United States Bureau of Labor Statistics;

(V) For applicants based outside of metropolitan statistical areas, the average weekly wage paid to non-managerial employees in the county for industries involved at the project, as established by the United States Department of Commerce;

(W) The start and end dates for the contract;

(X) A statement confirming the applicant's past legal compliance, including minimum wage, employee rights, and affirmative action laws;

(Y) The savings accrued to the contracting agency;

(Z) Total cost of contract;

(AA) Inclusion of cost analysis, if previously conducted by a state or contracting agency;

(BB) A comparison of the actual cost with the findings of a cost analysis, if previously conducted by the contracting agency;

(CC) A copy of the actual contract and any revisions or amendments; and

(DD) A certification by the chief officer of the applicant as to the accuracy of the application.

(2) Each contracting agency shall compile the data specified in paragraph (1) and file a progress report with the state department of budget and finance for each contract, no later than sixty days after the start of each fiscal year;

(3) On all subsequent annual progress reports, the contracting agency shall indicate whether the recipient corporation is still in compliance with its savings, wage, and benefit goals, and have met the measurable standards set by the agency, section ‑21; and

(4) Contracting agency and recipient contractors shall file annual progress reports for the duration of the contract, or not less than five years, whichever period is greater.

(b) Two-year reporting requirements shall be as follows:

(1) No later than fifteen days after the second anniversary of the date of contract, the contracting agency shall file with the department of business, economic development and tourism a two-year progress report including the same information as required under subsection (a). The recipient contractor shall certify as to the accuracy of the report; and

(2) The contracting agency shall state in the two-year report whether the recipient contractor has achieved its savings, wage, and benefit goals, and have met the measurable standards set by the agency section ‑21.

(d) The contracting county agency shall provide a final report at the conclusion of each economic development subsidy that shall contain the information described in subsection (a) of this section, in written form available to the public, and through its website. The county agency's website shall provide an easily accessible, searchable database of the specified data.

(e) The contracting agency and department of business, economic development and tourism shall have access at all reasonable times to the project site and the records of the recipient corporation in order to monitor the project and to prepare progress reports.

(f) A recipient contractor that fails to provide the contracting agency with the information or access required under subsections (a) and (b) shall be subject to a fine of not less than $500 per day, if the recipient corporation has not provided the agency with necessary information thirty days after the start of each fiscal year.

§ ‑34 Contract audits. (a) The comptroller may audit a contractor's performance under a public contract into which a state contracting agency enters. The audit shall use generally accepted accounting principles and may:

(1) Examine the contractor's books, papers, correspondence and other records related to the public contract;

(2) Assess whether the contractor has met the quality standards set forth in the public contract under section ‑21.

(3) Determine whether the contractor has met commercial standards of good faith and fair dealing in the contractor's course of dealing with the contracting agency; and

(4) Examine other issues that the comptroller deems germane to assessing the contractor's performance under the public contract.

(b) A state contracting agency may request the comptroller to audit a contractor's performance under a public contract for any reason and at any point during that the public contract is in effect or for a period of six years after the date on which the public contract terminates.

(c) The terms of a public contract shall require a contractor to keep books, papers, and other records and to document the contractor's performance under the terms of the public contract, with particular reference to the contractor's compliance with the quality standards set forth in the public contract, in as much detail as will enable the comptroller to conduct an audit under this section. The contractor shall keep the records described in this subsection for a minimum period of six years after the date on which the public contract terminates.

(d) A local contracting agency shall designate a person that shall have the authority to audit contractor performance under a public contract into which the county agency enters. The person the county agency authorizes to conduct the audit shall do so in accordance with the standards prescribed in this section and shall follow as closely as practicable the procedures employed by the comptroller.

(e) The contracting agency and the contractor shall cooperate with the auditing agency in all respects and shall permit full access to all information that the auditing agency deems necessary for a true and complete review.

PART IV. UNIFIED REPORTING

§ ‑41 Unified tax expenditure budget. (a) No later than sixty days after the end of the fiscal year, the department of budget and finance shall compile a tax expenditure budget for the previous fiscal year and present the tax expenditure budget, including an analysis of tax expenditures, to the governor and the legislature. The tax expenditure budget shall report on tax expenditures with revenue impacts equal to or greater than $5,000 in the aggregate for a specific tax expenditure, and shall include:

(1) The amount of uncollected state tax revenues resulting from every tax credit, abatement, exemption and reduction provided by the State or a political subdivision including but not limited to gross receipts, income, sales, use, raw materials, excise, property, utility, and inventory taxes;

(2) The name of each corporate taxpayer that claimed any tax credit, abatement, exemption, or reduction under paragraph (1) of any value equal to or greater than $5,000, together with the dollar amount received by each the corporation;

(3) A projection of the costs of tax expenditures for all significant general fund revenue sources;

(4) Identification of each tax expenditure and its statutory basis, purpose, year of enactment, and date of repeal, if any;

(5) Identification, to the extent possible, of the beneficiaries of each tax expenditure, including the number of businesses that used the tax expenditure and the number of businesses that potentially qualified for but failed to use the tax expenditure;

(6) Identification of any unintended consequences of the tax expenditure that have come to the attention of the department;

(7) Provide an estimate of total state revenue distributed for tax expenditures in the current fiscal year;

(8) Provide an estimate of total state revenue to be distributed for tax expenditures in the upcoming fiscal year; and

(9) All state-appropriated expenditures for economic development, including line-item budgets for every state-funded entity concerned with economic development, including but not limited to department of commerce and consumer affairs, employment and training programs, vocational education programs, University of Hawaii research programs, manufacturing extension service, workforce investment boards, economic development commissions, industrial development authorities, regional development authorities, and finance authorities. The department of budget and finance shall additionally include a comprehensive presentation of the costs of all development subsidies to the State during the prior fiscal year, an estimate of the anticipated costs of development subsidies for the current fiscal year and an estimate of the costs of all development subsidies for the fiscal year of the requested budget, including:

(A) The total cost to the State of tax expenditures resulting from the development subsidies, the costs for each category of tax expenditure, and the amounts of tax expenditures by geographical area; and

(B) The cost to the State of all appropriated expenditures for development subsidies, including line-item budgets for every State funded entity concerned with economic development.

(b) Any tax credit, abatement, exemption, or reduction received by a corporation of less than $5,000 each shall not be itemized. The department of budget and finance shall report an aggregate dollar amount of such expenditures and the number of companies so aggregated for each tax expenditure.

(c) The department of business, economic development and tourism is authorized to request from a state agency or a county agency official information necessary to complete the tax expenditure budget required by this section. An agency or official shall comply with a request made pursuant to this section by the department.

(d) Before the conclusion of any tax expenditure under subsection (a)(1) of any value equal to or greater than $5,000, the department of business, economic development and tourism shall submit a report to the legislature and governor to assess whether or not to reappraise the particular tax credit, abatement, exemption, or reduction, which includes:

(1) A statement of the purpose served by the tax expenditure;

(2) An appraisal of the tax expenditure's effectiveness in serving its purpose;

(3) An evaluation of whether the tax expenditure serves a public need;

(4) An evaluation of whether other statutes have enhanced or impeded the tax expenditure's effectiveness in serving its purpose;

(5) An appraisal of whether the tax expenditure promotes economic growth and development;

(6) An estimate of the amount of revenue lost each fiscal year because of the tax expenditure;

(7) A recommendation as to whether the tax expenditure should be allowed to expire or be renewed; and

(8) Any other relevant information.

(e) The department of business, economic development and tourism shall compile and publish all data from the report in both written and electronic form, including the department of business, economic development and tourism's website. The department of business, economic development and tourism's website shall provide an easily accessible, searchable database of the specified data.

§ ‑42 Unified reporting of contracts. (a) For the aggregated total of public contracts, each contracting agency shall provide a comprehensive report to the department of budget and finance, no later than three months after the end of the fiscal year detailing:

(1) The total number of contracts that the local contracting agency or each state contracting agency awarded in the previous fiscal year, along with the total expenditures for all contracts up until the date on which the agency produced the report, including:

(A) Consulting;

(B) Construction;

(D) Grants;

(E) Leases;

(F) Miscellaneous services;

(G) Printing;

(H) Repayment agreements;

(I) Intergovernmental agreements; and

(J) Goods;

(2) The total workforce of the agency;

(3) The total number of persons, including subcontractors that provided consulting services to the agency;

(4) A calculation of contractors as a percentage of total agency workforce;

(5) The total number of minorities, women or emerging small businesses that provided consulting services to the agency;

(6) The total number of bids or proposals the agency received in connection with each contract;

(7) Description of the types of contracts the agency awarded;

(8) The frequency of contracts awarded during the previous fiscal year arranged by the number of bids or proposals and the source selection method;

(9) The number of contracts disapproved by the agency during the previous fiscal year and the reasons for disapproval arranged by state agency and source selection method, and the number and outcome of bid protests;

(10) The total compensation the agency paid to each person, including subcontractors that provided consulting services to the agency under all contracts the agency awarded to the person;

(11) Average wages paid;

(12) Total savings agency accrued from using contractors;

(13) Estimated number and costs of contracts to be awarded in the following fiscal year;

(14) The total cost of all contracts awarded; and

(15) A comparison of the number of contracts the agency solicited and awarded independently to the number of contracts the agency solicited and awarded in connection with a cooperative procurement process. This shall also show the sum of the contract prices or estimated dollar values of the contracts solicited and awarded independently, together with the sum of the agency's expenditures for the contracts up until the date on which the agency produced the report, compared to the corresponding sums for contracts solicited and awarded in connection with cooperative procurements.

(b) The department of budget and finance shall compile the data in subsection (a) and provide to the Legislature and governor, a comprehensive presentation of the data in subsection (a) as well as the costs of all contracts to the State during the prior fiscal year, an estimate of the anticipated costs of contracts for the then current fiscal year, and an estimate of the costs of all contracts for the fiscal year of the requested budget.

(c) The department of budget and finance shall compile and publish all data from the report in both written and electronic form, including the department of budget and finance's website. The department of budget and finance's website shall provide an easily accessible, searchable database of the specified data.

§ ‑43 Unified reporting of property tax reductions and abatements. (a) Each property-taxing entity shall annually submit a report to department of budget and finance regarding any real property in the entity's jurisdiction that has received a property tax abatement or reduction during the fiscal year. The report shall contain information including:

(1) The name of the property owner;

(2) The address of the property;

(3) The start and end dates of the property tax reduction or abatement;

(4) The schedule of the tax reduction;

(5) Each tax abatement, reduction, and exemption for the property; and

(6) The amount of property tax revenue not paid to the taxing entity as a result of the reduction or abatement.

(b) Each property-taxing entity shall also submit a report to the department of budget and finance setting forth the total property tax revenue not paid to the entity during the fiscal year as a result of all property tax reductions and abatements in the entity's jurisdiction.

(c) The reports required under subsections (a) and (b) shall be prepared on two forms prepared by the department of budget and finance, and shall be submitted to the department of budget and finance by the property-taxing entity no later than three months after the end of the fiscal year.

(d) The department of budget and finance shall annually compile and publish all of the data contained in the reports required under subsections (a) and (b) in both written and electronic form, including department of budget and finance's website. The department of budget and finance's website shall provide an easily accessible, searchable database of the specified data.

(e) If a property-taxing entity fails to submit its reports to the department of budget and finance within the prescribed time, the department of budget and finance shall notify the comptroller, whereupon the comptroller shall withhold further tax reductions or abatements to the delinquent entity until the entity files its reports with the department of budget and finance.

PART V. CORPORATE TAX DISCLOSURE

§ ‑51 Tax disclosure statement required. The following corporations, if doing business in this State, shall file with the comptroller the statement described by section ‑21:

(1) All publicly traded corporations, including corporations traded on foreign stock exchanges; and

(2) All corporations fifty per cent or more of the voting stock of which is owned, directly or indirectly, by a publicly traded corporation.

§ ‑52 Content of tax disclosure statement. (a) The statement required by section ‑51 shall be filed annually in an electronic format specified by the comptroller no more than thirty days following the filing of the tax return required by chapter 414, or, in the case of a corporation not required to file such a tax return, within ninety days of the filing of such corporation's federal tax return, including such corporation's inclusion in a federal consolidated return. The statement shall contain the following information:

(1) The name of the corporation and the street address of its principal executive office;

(2) If different from paragraph (1), the name of any corporation that owns, directly or indirectly, fifty per cent or more of the voting stock of the corporation and the street address of the former corporation's principal executive office;

(3) The corporation's 4-digit North American Industry Classification System code number; and

(4) A unique code number, assigned by the Secretary of State, to identify the corporation, which code number will remain constant from year to year.

(b) The following information reported on or used in preparing the corporation's tax return filed under the requirements of chapter 414, or, in the case of a corporation not required to file a tax return under the requirements of chapter 414, the information that would be required to be reported on or used in preparing the tax return were the corporation required to file such a return:

(1) Total gross receipts of the unitary group of which the corporation is a member;

(2) Total cost-of-goods-sold claimed as a deduction from gross income by the unitary group of which the corporation is a member;

(3) Taxable income of the unitary group of which the corporation is a member prior to net operating loss deductions or apportionment;

(4) Property, payroll, and sales apportionment factors of the corporation as calculated on the combined report;

(5) Calculated overall apportionment factor in the State for the corporation as calculated on the combined report;

(6) Total business income of the corporation apportioned to the State;

(7) Net operating loss deduction, if any, of the corporation apportioned to the State;

(8) Total non-business income of the corporation and the amount of non-business income allocated to the State;

(9) Total taxable income of the corporation;

(10) Total tax before credits;

(11) Tax credits claimed, each credit individually enumerated;

(12) Alternative minimum tax, if applicable;

(13) Tax due;

(14) Tax paid; and

(15) Amount of tax due paid under protest, if applicable.

(1) Total deductions for management services fees, for rent, and for royalty, interest, license fee, and similar payments for the use of intangible property paid to any affiliated entity that is not included in the unitary combined group that includes the corporation and the names and principal office addresses of the entities to which the payments were made;

(2) A description of the source of any non-business income reported on the return and the identification of the state to which the income was reported;

(3) A listing of all corporations included in the unitary group that includes the corporation, their state identification numbers assigned under the provisions of this section, if applicable, and a listing of all variations in the unitary group that includes the corporation used in filing corporate income or franchise tax returns in any of the following states: Alaska, Arizona, California, Colorado, Hawaii, Idaho, Illinois, Kansas, Maine, Minnesota, Montana, Nebraska, New Hampshire, North Dakota, Oregon, Utah, and Vermont;

(4) Full-time-equivalent employment of the corporation in the State on the last day of the tax year for which the return is being filed and for the three previous tax years;

(5) In the case of a publicly-traded corporation incorporated in the United States or the affiliate of such a publicly-traded corporation, profits before tax reported on the Securities and Exchange Commission Form 10-K for the corporation or the consolidated group of which the corporation is a member for the corporate fiscal year that contains the last day of the tax year for which the return is filed; and

(6) Accumulated tax credit carryovers, enumerated by credit.

§ ‑53 Alternative statement option for corporations not required to file tax return. (a) In lieu of the statement described in, section ‑52, a corporation doing business in this State but not required to file a tax return under the requirements of chapter 414 may elect to file a statement with the comptroller containing the following information:

(1) The information specified in subsection (a) of section ‑52(a)(1) to (4);

(2) An explanation of why the corporation is not required to file a corporate income tax return in this State, which explanation may take the form of checking one or more possible explanations drafted by the comptroller;

(3) Identification of which of the following ranges the corporation's total gross receipts from sales to purchasers in this State fell into the tax year for which this statement is filed:

(A) Less than $10,000,000;

(B) $10,000,000 to $50,000,000;

(D) More than $100,000,000 to $250,000,000; or

(E) More than $250,000,000.

§ ‑54 Supplemental information permitted. Any corporation submitting a statement required by this chapter shall be permitted to submit supplemental information that, in its sole judgment, could facilitate proper interpretation of the information included in the statement. The mechanisms of public dissemination of the information contained in the statements described in section ‑33 shall ensure that any supplemental information be publicly available and that notification of its availability shall be made to any person seeking information contained in a statement.

§ ‑55 Amended tax disclosure statements required. If a corporation files an amended tax return, the corporation shall file a revised statement under this section within sixty calendar days after the amended return is filed. If a corporation's tax liability for a tax year is changed as the result of an uncontested audit adjustment or final determination of liability by the board of review as provided for in section 232-17 or by a court of law as provided for in section 415-140, the corporation shall file a revised statement under this section within sixty calendar days of the final determination of liability.

§ ‑56 Public access to tax disclosure statements. The statements required under this chapter shall be a public record. The comptroller shall make all information contained in the statements required under this chapter for all filing corporations available to the public on an ongoing basis in the form of a searchable database accessible through the Internet. The comptroller shall make available and set charges that cover the cost to the state of providing copies on appropriate computer-readable media of the entire database for statements filed during each calendar year as well as hard copies of an individual annual statement for a specific corporation. No statement for any corporation for a particular tax year shall be publicly available until the first day of the third calendar year that follows the calendar year in which the particular tax year ends.

§ ‑57 Enforcing compliance. The accuracy of the statements required under this chapter shall be attested to in writing by the chief operating officer of the corporation and shall be subject to audit by the department of budget and finance as the agent of the comptroller in the course of and under the normal procedures applicable to corporate income tax return audits. The comptroller shall develop and implement an oversight and penalty system applicable to both the chief operating officer of the corporation and the corporation itself to ensure that corporations doing business in this State, including those not required to file a return under the requirements of chapter 414 shall provide the required attestation and disclosure statements, respectively, in a timely and accurate manner. The comptroller shall publish the name and penalty imposed upon any corporation subject to a penalty for failing to file the required statement or filing an inaccurate statement. The comptroller shall adopt appropriate rules to implement this chapter under the rulemaking procedures described in chapter 91.

§ ‑58 Private enforcement action. If a granting body or contracting agency fails to enforce any provision of this chapter, any individual who paid personal income taxes to the State in the calendar year prior to the year in dispute, or any organization representing such taxpayers, shall be entitled to bring a civil action in state court to compel enforcement under this statute. The court shall award reasonable attorney's fees and costs to such prevailing taxpayer or organization.

§ ‑59 Public record disclosure. All records required to be prepared or maintained under this chapter, including but not limited to applications, cost analyses, audits, progress reports, and any other records or proceedings relating thereto, shall be subject to disclosure under chapter 92F.

§ ‑60 Preemption. Nothing in this chapter shall be construed to require or authorize any recipient corporation to reduce wages or benefits established under any collective bargaining agreement or state or federal prevailing wage law."

SECTION 3. If any provision of this Act, or the application thereof to any person or circumstance is held invalid, the invalidity does not affect other provisions or applications of the Act, which can be given effect without the invalid provision or application, and to this end the provisions of this Act are severable.

SECTION 4. This Act shall take effect upon its approval.

INTRODUCED BY:	_____________________________

HOUSE OF REPRESENTATIVES	H.B. NO.	2750
TWENTY-FIFTH LEGISLATURE, 2010
STATE OF HAWAII