Report Title:

Pretax Transportation Benefit; Statewide

Description:

Requires director of human resources development to expand the pretax transportation benefit pilot program statewide and to make the program permanent.

THE SENATE	S.B. NO.	1087
TWENTY-FIFTH LEGISLATURE, 2009
STATE OF HAWAII

A BILL FOR AN ACT

relating to pretax transportation benefit.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF HAWAII:

     SECTION 1.  The legislature finds that the department of human resources development currently operates a pretax transportation benefit pilot program in the city and county of Honolulu for any employee of the state government who:

     (1)  Is an employee of the state executive branch (excluding the department of education) who is eligible to participate in the State of Hawaii employees' retirement system;

     (2)  Lives and works on Oahu; and

     (3)  Does not have parking in a state-controlled lot with a parking payroll deduction.

The pilot program is operated under the State's qualified transportation fringe benefit plan, in accordance with section 132(f) of the Internal Revenue Code, and authorized under the federal Transportation Equity Act for the 21st Century for eligible State of Hawaii executive branch employees.  This means that eligible employees may purchase public bus passes, Handi-Van fare coupons, and vouchers for the cost of their vanpool Hawaii seat fees through payroll deduction before federal, State, and FICA taxes are withheld, thereby increasing their take-home pay.  In other words, an eligible employee on Oahu may authorize the State to have the employee's bus pass expense, the cost of a preset amount of Handi-Van fare coupons, or vanpool Hawaii seat fees deducted from the employee's paycheck on a pretax basis.  The State, as employer, will purchase bus passes, Handi-Van fare coupons, or vouchers redeemable with vanpool Hawaii to cover seat fees for eligible employees and distribute them to eligible employees on a monthly basis.  As of June 2008, enrollment for senior and disability annual bus passes is also included in the pilot program.

     The duration of the pilot program is determined by the director of human resources development, and as of 2008, the maximum allowable per month for combined commuter highway vehicle transportation and transit pass expenses is $115.

     The savings for each employee will vary depending on the employee's tax bracket.  For example, based on an annual salary of $24,000, a tax savings of $138.24, $253.68, or $181.53 can be gained through participation in the pilot transportation benefit plan for eligible employees who buy bus passes, ride the Handi-Van, or carpool via vanpool Hawaii, respectively.

     The legislature finds that the pilot program is an obvious success.  The purpose of this Act is to require the director of human resources development to expand the pilot program to all counties of the State and to make the pilot program permanent.

     SECTION 2.  Pretax transportation benefit program; permanent; statewide; reports.  (a)  The director of human resources development shall adopt rules in accordance with chapter 91, Hawaii Revised Statutes, to:

     (1)  Expand the pilot pretax transportation benefit program to operate in all counties of the State; and

     (2)  Make the pretax transportation benefit program permanent.

     (b)  No later than December 31, 2009, the director of human resources development shall submit an interim report to the legislature detailing the department's progress in implementing subsection (a).  No later than December 31 of each year thereafter, the director of human resources development shall report findings and recommendations to the legislature regarding the operation of the permanent pretax transportation benefit program for eligible employees.

     SECTION 3.  This Act shall take effect upon its approval.

INTRODUCED BY:

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