Honorable Calvin K.Y. Say

Speaker, House of Representatives

Twenty-Third State Legislature

Regular Session of 2006

State of Hawaii

Sir:

Your Committee on Labor & Public Employment, to which was referred H.R. No. 47 entitled:

begs leave to report as follows:

The purpose of this measure is to urge the United States Office of Personnel Management to treat federal employees employed in Hawaii, with regard to pay and retirement benefits, in the same manner as it does federal employees in the forty-eight contiguous states.

The measure states that the Legislature supports congressional efforts to ensure that:

Testimony in support of the measure was received from the Hawaii State AFL-CIO and twenty-eight private citizens. The State Department of Defense testified in opposition to the measure.

Your Committee finds that the cost of living in Hawaii ranks consistently among the highest in the nation. Although federal employees who reside in Hawaii do receive non-foreign area cost of living adjustments in their pay, the federal government fails to credit non-foreign area cost of living allowances to "basic pay" for retirement purposes of federal employees residing in Hawaii and Alaska.

Your Committee also finds that, with the exception of those residing in Hawaii and Alaska, federal employees throughout the United States receive locality pay in addition to their salaries in amounts varying between twelve per cent to twenty-eight per cent. Federal employees who reside in Hawaii and Alaska are denied these payments solely because they reside in these states, outside the contiguous United States.

Your Committee further finds that locality pay received by federal employees is counted as "basic pay" for retirement purposes, resulting in federal employees in the contiguous United States receiving retirement pay in amounts between twelve per cent and twenty-eight per cent greater than federal employees who worked and resided in Hawaii and Alaska. This practice denies residents of Hawaii and Alaska substantial pay and benefits for no other reason than that their residence is outside the contiguous United States.

Your Committee declares that, with its recommendation to adopt this measure, it in no way endorses the diminishment, reduction, or abolishment of the existing federal cost of living allowance already provided to federal employees who are Hawaii residents, should the federal government extend locality pay benefits to Hawaii's federal employees. Your Committee believes that locality pay benefits should augment the existing federal cost of living allowances provided to federal employees who are Hawaii residents.

As affirmed by the record of votes of the members of your Committee on Labor & Public Employment that is attached to this report, your Committee concurs with the intent and purpose of H.R. No. 47 and recommends its adoption.