Just one bill affecting incentives for film production in Hawaii remains standing, and it’s chock full of proposed new benefits and other rule changes.

There’s a question mark attached, however: Tax credit rollover provisions in House Bill 1373, along with other elements from loosely related, stalled bills, were inserted into HB 1373 after the committee hearing process ended, and after a deadline for introducing new bills.

This raises a serious issue as to whether costly and important aspects of the “new” HB 1373 should be written into law without having been adequately aired before the public.

Some critics have characterized HB 1373 as a victim of “gut and replace,” a technique for changing the character of legislation late in session to substitute new and unrelated content. This practice has been ruled unconstitutional by Hawaii’s Supreme Court.

HB 1373’s original language focused on “workforce development,” providing a wage rebate for smaller, independent productions. Wage rebate provisions remain in the bill, and all added content also pertains to film industry incentives.

Technically, then, this bill may not be a gut-and-replace job. Nonetheless, the process of stuffing it with new elements did bypass significant opportunities for debate and testimony that could otherwise have been available.

For that reason, a better, more transparent legislative tack would be to postpone enacting back-from-the-dead pieces of the bill until they are fully vetted, with full opportunity for public scrutiny and testimony.

Supporters maintain the original, “workforce development” legislation will support Hawaii-based film crews, but the timeline for making wage rebates available, specific qualifications and staffing questions must be addressed to make this part of the bill street-ready. The Department of Business, Economic Development and Tourism’s interim director, Chris Sadayasu, asked that timelines for remittances be lengthened and a position be funded within DBEDT; these changes, at a minimum, are necessary.

HB 1373’s latest iteration raises the total payout cap on tax credits available for film and TV projects from $50 million to $75 million for just one year, 2024, to pay off a backlog of unpaid refunds, and ends rollover credits after 2024. It also creates a $25 million annual tax credit, available through 2032, for expenses related to building media production facilities.

There’s a good argument to be made that the cap should rise. A University of Hawaii Economic Research Organization (UHERO) analysis in 2021 recommended increasing it to $75 million — and indeed, inflation-adjusted industry spending in Hawaii more than doubled once tax credits were implemented, from $165 million in 2007 to $356 million in 2019.

However, the process by which this bill was assembled raises doubts about whether an adequate cost-benefit analysis or even adequate discussion has been allowed for. The public will be served best by limiting the scope of HB 1373 this year to the workforce development rebates and a one-time rise in the tax credit cap.

Other, less studied and debated provisions, including the rollover and a multi-year, $75 million tax credit cap, as well as the production facility credits, are better reintroduced next year.

Although UHERO recommended ending rollover tax credits, they are in themselves an incentive, and this is no time to turn projects away. And as UHERO also recommended, DBEDT must direct a more rigorous analysis of the program, so that economically sound decisions can be made.

Current film subsidies sunset in 2033. Close study is required to know whether the industry can continue expanding, justifying continued public support, or if it has reached a stable state, meaning taxpayer-funded subsidies can be phased out.