The bills indicate that lawmakers are starting to listen to public concerns about accountability in government, said Isaac Choy, chairman of the Tax Review Commission and a partner at the Manoa Consulting Group.

"Absolutely. They haven't had transparency and accountability before, so it's a step in the right direction," Choy said. "Once we have the data, we can decide whether to continue the (technology tax) credit or not.

"And then let's cheer on these high-tech guys because if they are creating jobs and bringing kids back home, that's good."

In the past lawmakers have said that making names public might discourage companies from participating in the program. The recent policy change follows the release of a report earlier this year by the Tax Review Commission that criticized the state for providing generous tax credits without tracking the costs and benefits.

"This bill is a direct result of that report," said state Rep. Kyle Yamashita, D-12th (Pukalani, Makawao, Olinda), chairman of the House Economic Development and Business Concerns Committee.

The goal is to increase transparency so lawmakers can determine whether the tax breaks should remain in place beyond 2010 — the date they're scheduled to expire.

"That's the intent, not only to be transparent, but so we can gather information and know what's going on," Yamashita said. "To make good decisions we need good information."

Industry advocates that once were against disclosing the names of technology businesses now endorse the change.

"I think the public and even the Legislature can benefit from more knowledge about the innovation sector of the economy," said Bill Spencer, president of the Hawai'i Venture Capital Association.

The bill also requires the Department of Taxation to report employment, wage and sales to the Legislature. However, the bill does not appropriate added money for data analysis.

WHAT PROGRAM DOES

Created in 2001, the program provides a 100 percent income tax credit to investors in qualified high-technology businesses. The program's goal was to boost Hawai'i's technology sector. However, pinning down the impact has been difficult.

For example, technology job growth lagged behind overall job growth in Hawai'i in rising by just 350 new positions between 2001 and 2005, according to a one state report. However, according to separate tax department draft figures, 111 companies that benefitted from the credits reported creating 4,234 jobs between 2001 and 2004. That figure includes jobs created at technology and performing arts businesses, but excludes potential job losses during that period.

Spencer said the state should not focus solely on job creation.

"The original intent of Act 221 and 215 is capital formation, not job formation," he said. "From a practical standpoint you don't create great jobs in a year."

Changes to the tax-credit program would take effect July 1. Under the changes high-technology businesses would be required to consent to the public disclosure of their business name and status as a beneficiary of the credit for any investments made after June 30. The bill does not specify when those names would be disclosed. The bill would not divulge the individual amounts of the credits or the identities of investors claiming the credits.

Among other bills passed this session was House Bill 122, which could make it easier to determine who benefits from taxpayer money by disclosing the identities of entities and organizations that receive $25,000 or more in state funds via a searchable Web page. Other information, including the identities of state contractors and grant recipients, is sometimes public. However, to obtain the information, people must approach individual agencies, which sometimes balk or attempt to charge high fees for the data.

WILL LINGLE SIGN BILL?

Linda Smith, the governor's senior policy adviser, said the administration has yet to decide what to do with HB 122 and HB 1631. However, they "are in keeping with this administration's overall theme for transparency and accountability about how government is operating and how funds are spent," she said.

Lingle has until July 10 to decide whether to sign or veto bills passed by the Legislature.

Separately, lawmakers passed HB 1659, which would require that money raised by state agencies for state purposes be deposited into the general fund and disbursed via legislative appropriation. The legislation would eliminate activities such as the Department of Business and Economic Development and Tourism's use of a nonprofit organization to handle $268,000 in private sponsorships raised for Lingle's trade mission to China in 2005.

In using a nonprofit DBEDT was able to keep confidential the identities of trade mission sponsors, individual sponsor amounts and records on how sponsorship money was spent. State House Rep. Marcus Oshiro, D-39th (Wahiawa), chairman of the House Finance Committee, said the bill would make data on future trade mission sponsors and expenditures public.

"They need to account for that," said Oshiro, who introduced the bill. "They can't just put (the records) in a shoebox and hide it under a desk."

However, Lingle's adviser Smith said the bill would result in less accountability over private-sector sponsorship money by directing such money into the general fund where it could be spent on nontrade-mission projects. "We don't believe that it fits into this category of transparency and accountability," she said.

DBEDT Director Ted Liu, who testified against the bill, was unavailable for comment yesterday. In March, Liu said he was willing to work with the Legislature to develop trade-mission funding guidelines that would allow more openness in the transaction of government business that involves private money. That could include requiring a state Procurement Office or state Ethics Commission opinion prior to engaging in any fundraising effort.

"These guidelines may accomplish the legislative intent, without affecting the state's efforts to develop business and economic development marketing and promotional activities," said Liu in his March testimony submitted to the Senate Committee on Ways & Means.

Reach Sean Hao at shao@honoluluadvertiser.com.