Honorable Calvin K.Y. Say

Speaker, House of Representatives

Twenty-Third State Legislature

Regular Session of 2005

State of Hawaii

Sir:

Your Committee on Public Safety & Military Affairs, to which was referred H.B. No. 1544 entitled:

begs leave to report as follows:

The purpose of this measure is to exempt all income derived from salaries and wages as a police officer from the imposition of the State's income tax.

Testimony in support of this measure was received from the State of Hawaii Organization of Police Officers. Testimony in opposition to the measure was received from the Department of Taxation and the Hawaii Government Employees Association, AFSCME Local 152. The Tax Foundation of Hawaii submitted comments.

Your Committee finds that, over the past decade, the counties of the State have been consistently plagued with the departure of experienced police officers to jurisdictions outside of the State. Often cited by police department recruiters as the primary reason for departure is the low salaries and wages paid to police officers in Hawaii.

While each county has tried to address this issue by attempting to negotiate fair salary and wage increases for police officers, the fact remains that, in many cases, these increases still do not equal what an experienced police officer can earn in similar sized metropolitan areas on the mainland. This fact, coupled with the lower cost of living in the majority of other communities on the mainland, equate to a higher purchasing power for officers and their families who choose to move out-of-state.

Your Committee believes that, because police officers provide a necessary public service that in effect benefits all residents of and visitors to the State, the State should assist the counties in providing incentives for police officers to stay in Hawaii.

To this end, your Committee further believes that providing police officers with an income tax exemption on salary and wages earned in the performance of police duties will provide the necessary financial incentive to retain Hawaii's experienced police officers.

As affirmed by the record of votes of the members of your Committee on Public Safety & Military Affairs that is attached to this report, your Committee is in accord with the intent and purpose of H.B. No. 1544 and recommends that it pass Second Reading and be referred to the Committee on Labor & Public Employment.