Repeals the employment and training fund and related assessments.

A BILL FOR AN ACT

SECTION 1. Hawaii's poor business climate has been the subject of many newspaper and magazine articles printed across the country. This negative publicity works against the State's efforts to attract capital and new economic activity to the islands. The legislature must begin to search our laws to correct past decisions that add unnecessarily to the cost of doing business in the State.

Payroll taxes and insurance protection for workers add up to a heavy burden on employers. Hawaii's workers' compensation, temporary disability, and prepaid health care coverages, taken together, are the most broad based and expensive employee benefits program in the nation for employers. The broad scope of these benefits work against full-time employment; many employers are forced by the expense of the system to turn to part-time workers who do not work enough hours to earn benefits. This adds to the problem of workers forced into taking two or three jobs just to survive.

In 1991, the legislature added an additional .05 per cent assessment on wages subject to unemployment taxes to fund an employment and training fund. This law was to sunset at the end of 1996. Many employers felt it would be allowed to die because the training programs had affected employment only marginally. Unfortunately, instead of repealing the provision, the legislature expanded the purposes for which the funds could be used to include grants and subsidies to agencies who provide services for the school to work program. As laudable as this program might seem, it should not be funded by a tax on employers who are already doing a service by providing jobs and training. The legislature intends to reverse this decision and repeal the assessment as a first step toward reducing employers' costs.

The purpose of this Act is to repeal the employment and training fund and associated payroll assessments.

SECTION 2. Section 383-128, Hawaii Revised Statutes, is repealed.

["§383-128 Employment and training fund established. (a) Effective January 1, 1992, there is established in the state treasury, apart from all other funds in this State, a special fund to be known as the employment and training fund. All assessments collected pursuant to section 383-129 and all other moneys received by the fund from any other source shall be deposited into the employment and training fund.

(b) The moneys in the employment and training fund may be used for funding:

(c) The director may require employers assisted by any of these programs to contribute up to fifty per cent of the cost of such assistance in cash or in-kind contributions.

(d) The department may contract for employment, education, and training services from public and private agencies and nonprofit corporations. Contracts, pursuant to subsection (b), shall be exempt from chapters 103D and 103F so funds for these services may be expended in a timely manner to effectuate the purposes of this section. All other disbursements shall be in accordance with chapters 103D and 103F.

(e) For purposes of grants and subsidies awarded under subsection (d), any organization requesting a grant or subsidy shall:

(f) Recipients of grants or subsidies shall be subject to the following conditions:

(g) The director shall submit a report to the legislature on the status of the employment and training fund, including expenditures and program results, at least twenty days prior to the convening of each regular legislative session.

(h) The director of finance shall act as the treasurer and custodian of the employment and training fund, invest those moneys in accordance with applicable laws and rules, and disburse the moneys in the employment and training fund in accordance with directions by the director of labor and industrial relations. All interest earned from investment of moneys in the employment and training fund shall be deposited in the fund. The director of finance shall be liable on the director's official bond for the faithful performance of all duties in connection with the employment and training fund. All sums recovered on the surety bond for losses sustained by the employment and training fund shall be deposited in the fund.

(i) Administrative costs for the collection of employment and training fund contributions and for costs related to the establishment and maintenance of the employment and training fund shall be borne by the fund beginning with fiscal year 1992-1993 and thereafter.

(j) The director may establish positions and hire necessary personnel to establish and administer the employment and training fund without regard to chapters 76 and 77."]

SECTION 3. Section 383-129, Hawaii Revised Statutes, is repealed.

["§383-129 Employment and training assessment. (a) Effective January 1, 1992, through June 30, 1997, and from January 1, 1999, through December 31, 2003, in addition to contributions determined by section 383-68, every employer, except an employer who has selected an alternative method of financing liability for unemployment compensation benefits pursuant to section 383-62 or an employer who has been assigned a minimum rate of zero per cent or the maximum rate of five and four-tenths per cent in accordance with section 383-68, shall be subject to an employment and training fund assessment at a rate of:

For 2003 and all subsequent years, there shall be no employment and training fund assessments.

(b) Collections from the employment and training assessment shall be made in the same manner and at the same time as any contributions required under section 383-61, and shall not be deducted, in whole or in part, from the wages of individuals in an employer's employ.

(c) Any assessments collected pursuant to this section shall remain separate and shall not be included in any manner in computing unemployment contribution rates assigned to employers in accordance with sections 383-63 to 383-68.

(d) The director may impose penalty and interest on delinquent employment and training assessments in the same manner as provided for contributions to the unemployment compensation fund in section 383-73. For purposes of computation of penalty and interest under this subsection, employment and training assessments shall be considered part of the employer's contributions to the unemployment compensation fund.

(e) Collection of money from an employer delinquent in paying employment and training assessments or contributions to the unemployment compensation fund pursuant to this chapter shall first be applied to interest and penalty, then applied to delinquent unemployment compensation contributions, and finally to delinquent employment and training assessments.]"

SECTION 4. Statutory material to be repealed is bracketed and stricken.

SECTION 5. This Act shall take effect upon its approval.