Honorable Robert Bunda

President of the Senate

Twenty-First State Legislature

Regular Session of 2001

State of Hawaii

Sir:

Your Committee on Labor, to which was referred S.B. No. 1494 entitled:

begs leave to report as follows:

The purpose of this measure is to create an employee transportation expenses subsidy tax credit for employers, to encourage employers to pay the transportation expenses of employees commuting to work from a neighboring island.

Your Committee received testimony in support of this measure from the Chair and two members of the Maui County Council. The Department of Budget and Finance and the Department of Taxation submitted testimony in opposition to this measure. The Tax Foundation of Hawaii provided comments.

Your Committee finds that the State of Hawaii is unique in that it is an island state, most of the jobs are concentrated on Oahu, and transportation costs between the islands are relatively high.

Under these circumstances, it is very difficult for residents of neighboring islands to find suitable employment without commuting to Oahu. Commuting from another island to Oahu, however, is not always cost effective. As a result, unemployment rates on neighboring islands tend to be higher than on Oahu.

Your Committee finds that this measure will encourage employers on Oahu to retain employees from other islands and to subsidize their commuting expenses. This will lead to a better distribution of the employment rate among the various islands.

As affirmed by the record of votes of the members of your Committee on Labor that is attached to this report, your Committee is in accord with the intent and purpose of S.B. No. 1494 and recommends that it pass Second Reading and be referred to the Committee on Ways and Means.