Honorable Robert Bunda

President of the Senate

Twenty-Third State Legislature

Regular Session of 2005

State of Hawaii

Honorable Calvin K.Y. Say

Speaker, House of Representatives

Twenty-Third State Legislature

Regular Session of 2005

State of Hawaii

Sir:

Your Committee on Conference on the disagreeing vote of the Senate to the amendments proposed by the House of Representatives in S.B. No. 817, S.D. 2, H.D. 1, entitled:

having met, and after full and free discussion, has agreed to recommend and does recommend to the respective Houses the final passage of this bill in an amended form.

The purpose of this bill is to establish standards and procedures regarding the assignment of unemployment insurance contribution rates and the transfer of unemployment insurance experience when a change in employing unit occurs.

Pursuant to the State Unemployment Taxes Act (SUTA) Dumping Prevention Act of 2004, P.L. 108-295, the Social Security Act was amended with respect to the administration of unemployment taxes and benefits. The Act requires, as a condition of state eligibility for grants for unemployment compensation administration, changes to state unemployment compensation laws to prevent SUTA dumping. SUTA dumping involves employers and financial advisors using acquisitions or restructuring schemes, including shifting of workforce and payroll, in order to pay lower state unemployment taxes than their unemployment experience would normally allow. Therefore, in order to maintain federal certification and to continue to enjoy the benefits of the Federal Unemployment Tax Act tax offset credit and federal administrative grants for the state unemployment insurance program, changes in the current law must be made.

Upon further consideration, your Committee on Conference has amended this measure by changing the effective date of the Act from July 1, 2010 to be effective upon its approval.

As affirmed by the record of votes of the managers of your Committee on Conference that is attached to this report, your Committee on Conference is in accord with the intent and purpose of S.B. No. 817, S.D. 2, H.D. 1, as amended herein, and recommends that it pass Final Reading in the form attached hereto as S.B. No. 817, S.D. 2, H.D. 1, C.D. 1.