Honorable Calvin K.Y. Say

Speaker, House of Representatives

Twenty-Third State Legislature

Regular Session of 2005

State of Hawaii

Sir:

Your Committee on Finance, to which was referred S.B. No. 962, S.D. 2, H.D. 1, entitled:

begs leave to report as follows:

The purpose of this bill is to expand and improve fair labor practices to all projects in which the government is involved by specifying exactly what defines a public works project, thereby requiring payment of prevailing wages by the contractor and subcontractors to all laborers and mechanics working on the project.

The Hawaii Carpenters Union supported this bill. The Department of Accounting and General Services (DAGS), Department of Labor and Industrial Relations (DLIR), Department of Taxation (DOTAX), and Building Industry Association of Hawaii, opposed this bill.

Your Committee has amended this bill by:

1. Adding a new category of construction contracts: "indirect public works project";
2. Defining "indirect public works project" as those public works projects that receive a government benefit from:

1. A State tax credit over $5,000 per year;
2. A General Excise Tax exemption;
3. A county tax exemption;
4. Use of state or county land;
5. A lease to the State or county of part of the property provided:

1. Establishing a system of certification by state or county agency that a project is in fact an "indirect public works project" and that it meets the prevailing wage requirements;
2. Mandating the Department of Taxation to recapture 100 percent of tax credits paid or cancel payment on a claimed tax credit if prevailing wages are not paid and including a discretionary waiver of this provision when the lack of paying prevailing wages was unintentional and not wilful;
3. Establishing enforcement authority over indirect public works projects by the state or appropriate county agency;
4. Establishing monitoring by DLIR to ensure continued compliance with prevailing wage requirements;
5. Providing DLIR with the authority to terminate work on an indirect public works project based on failure to pay agreed wages, the same as for current public works projects; and
6. Stipulating that the contractor will be held liable for any excess costs incurred by DLIR due to the cancellation of the contract for violation of prevailing wages payment.

As affirmed by the record of votes of the members of your Committee on Finance that is attached to this report, your Committee is in accord with the intent and purpose of S.B. No. 962, S.D. 2, H.D. 1, as amended herein, and recommends that it pass Third Reading in the form attached hereto as S.B. No. 962, S.D. 2, H.D. 2.