Honorable Calvin K.Y. Say

Speaker, House of Representatives

Twenty-Second State Legislature

Regular Session of 2004

State of Hawaii

Sir:

Your Committee on Labor and Public Employment, to which was referred H.B. No. 1792, H.D. 1, entitled:

begs leave to report as follows:

The purpose of this bill is to conform state statutory provisions to the Temporary Extended Unemployment Compensation Act of 2002 and eliminate the restrictions on funds earmarked for the administration of the State Unemployment Insurance Program. This bill also directs the Department of Labor and Industrial Relations (DLIR) to use:

for fiscal year 2003-2004.

DLIR testified in opposition to this measure.

On January 27, 2004, DLIR briefed your Committee on its budget outlays for fiscal year 2003-2004. Currently, $30 million in federal Reed Act funds are available for use by the State for unemployment insurance purposes. However, these funds cannot be used without express statutory authority. When asked why the Administration has not requested this authorization, the Director of Labor and Industrial Relations (Director) responded that these funds are not needed because of Hawaii's low unemployment rate and that DLIR would like to fully plan how these moneys should be used before requesting statutory authorization.

While on its face, this approach appears to be fiscally prudent, your Committee believes it ignores the significant financial difficulties the State continues to experience in funding necessary programs and initiatives.

Your Committee agrees with the Director that federal Reed Act funds may only be used for unemployment insurance purposes. However, your Committee asserts that Reed Act funds are not the only federal funds that are used for unemployment insurance purposes. If some of these other federal funds are less restrictive and allow the State to use them for other purposes within DLIR's jurisdiction, these moneys, in theory, could be used to supplant general fund appropriations for DLIR that, in turn, could be used for high-priority programs.

Given these desperate fiscal times, it is not only prudent but essential that the Legislature analyze every possible means to maximize the use of federal funds for the benefit of our citizenry. To do any less would be a disservice to the constituents we were elected to serve.

Finally, your Committee respectfully urges the Committee on Finance to carefully consider other strategies to maximize the use of these federal funds so that general funds may be diverted to address other needs of our community.

As affirmed by the record of votes of the members of your Committee on Labor and Public Employment that is attached to this report, your Committee is in accord with the intent and purpose of H.B. No. 1792, H.D. 1, and recommends that it pass Second Reading and be referred to the Committee on Finance.