Hawaii - 2004

Overview of SB 2558 (Fukunaga)/ HB 2611 (Chang) – Tax Incentives for the Entertainment Industry

Updated: April 21, 2004

History:

• Early 2004 – IATSE Local 665 decided to work with the Administration and allies on this measure since there was a strong indication from the Governor that she would sign a meaningful bill.
• February and March 2004 - IA District 2 and Local 665 tracked progress on the bill and facilitated its movement.
• March 25, 2004 – IAD2 worked with the Labor Federation and Senders Communication to send out a GetActive alert to members. Faxes went in to the Entertainment policy committee just prior to their action on the bill. The bill passed policy committees.
• March 31, 2004 – SB 2558 was heard in Finance Committee. Amendments are taken to push back the implementation date to July 1, 2010 in order to move the measure forward and allow for further dialog.
• April 13, 2004 – SB 2558 passes the second house (Assembly Floor) and is sent to conference committee.

Current Status:

• Conference Committee: The Governor, labor (IA Local 665; SAG), industry (Fox, Warner Brothers), and legislators are in negotiations about the final bill. The governor is concerned about the caps for state budgeting reasons. The implementation date will likely be moved up to July 1, 2004 with tax credits starting January 1, 2005.

Overview:

• This is a broad incentive measure covering much of the Entertainment industry, including: Motion picture, film, video, television production, digital media and sound recording.
• The bill increases the tax incentive from 4% to 15% on qualifying costs (not just labor costs) on Oahu and 20% on other islands.
• The implementation date is July 1, 2010 (this will likely be changed, see above).
• There is a 75% local hire requirement that can be waived in banner years when the labor market may get tight. This is lower for sound and commercial production at 50%. The state must consult with labor regarding labor market conditions that would trigger the requirement.
• There are caps on the amount of incentives that large productions can collect -- probably a $2 million per year cap per production; $10 million annual cap, and $60 million total cap for 6 years per corporation.