Honorable Robert Bunda

President of the Senate

Twenty-First State Legislature

Regular Session of 2001

State of Hawaii

Sir:

Your Committee on Ways and Means, to which was referred S.B. No. 749, S.D. 1, entitled:

begs leave to report as follows:

The purpose of this measure is to establish a preference in state contracts for state residents and contractors, and to define those terms.

Your Committee finds that the federal government, through the Defense Appropriations Acts, is supposed to give a preference to Hawaii residents when Hawaii's unemployment exceeds the national average. Although the Hawaii unemployment rate has been above this average since 1994, in practice this requirement is subverted as the law does not define "state resident," and contractors have simply imported employees to Hawaii and termed them state residents.

Your Committee finds that creating statutory definitions of the terms "state resident," "state contractor," and "state subcontractor" will obviate this problem. The bill also clarifies the procurement code provisions for bidders on state agency contracts by increasing the differential from seven per cent to thirteen per cent and requires the contractor to attest to compliance with the state residency requirements. Your Committee finds that these changes are necessary to address the issue of state unemployment.

Your Committee has amended this bill by changing the effective date to July 1, 2100, to make the bill defective for the purpose of promoting further discussion.

As affirmed by the record of votes of the members of your Committee on Ways and Means that is attached to this report, your Committee is in accord with the intent and purpose of S.B. No. 749, S.D. 1, as amended herein, and recommends that it pass Third Reading in the form attached hereto as S.B. No. 749, S.D. 2.