SB2057.DOC

SECTION 1. In August and September 2009, a senate ad hoc committee conducted five informational briefings to gather information on the potential impacts of the anticipated reduction in services for the department of agriculture's plant quarantine branch and commodities branch throughout the State.

Nearly ninety per cent of Hawaii's consumer goods are imported and ships alone bring in 500,000 sea containers carrying 25,000,000 cartons – inspectors at harbors and airports are the first line of defense in stopping invasive species. In addition, the export value of agricultural products is in excess of $160,000,000 and the scheduled layoffs will have a severe impact on Hawaii businesses due to the resulting reduction in exports. California already imposes strict guidelines for importation of Hawaii agricultural products, and any decline in meeting those requirements may result in an embargo by the State of California. Small businesses in particular are vulnerable, as any additional difficulty in achieving nursery certifications has a proportionately larger financial impact on smaller operations.

The plant quarantine branch's biosecurity program is responsible for controlling the introduction and interisland spread of invasive species in Hawaii. Initially, the plant quarantine branch listed seventy-two general funded positions and forty special funded positions, with fifty-two of the general funded positions scheduled for layoffs. As a result of the briefings and increased community attention, on September 24, 2009, the department of agriculture announced temporary restoration of twenty-two of the plant quarantine inspector positions slated for layoffs to support core inspection services at ports statewide. The $1,800,000 funding for the twenty-two positions includes $600,000 earmarked for the Hawaii invasive species council and $1,200,000 from fees collected in the pest inspection, quarantine, and eradication fund. Income to the special fund comes from maritime and airline companies that bring in cargo to Hawaii and pay 50 cents per 1,000 pounds of cargo for inspection, quarantine, and eradication of invasive species that may be transported into the State.

The department's commodities branch provides fee-for-service certification and auditing; enforces laws regarding the quality and condition of agricultural products; issues licenses for dealers in farm produce; conducts feed registration, sampling, and enforcement for label guarantees; and administers the milk control section. The branch is also responsible for seafood inspections, seed certification, federal-state certification of eggs, and food safety.

The commodities branch is projected to lose fifty per cent of its full time staff. On the island of Hawaii, the layoffs will directly impact the papaya and coffee industries and increase certification times from days to weeks. Statewide, over 1,800,000 pounds of papaya were checked and over 6,300,000 pounds of coffee certified in fiscal year 2009.

The informational briefings raised a number of concerns regarding the potential impacts of the reduction in services for the department of agriculture's plant quarantine branch and commodities branch throughout the State, including the economic impacts.

For example, agriculture is a $4,720,000,000 industry in Hawaii and accounts for 38,000 jobs or five per cent of the statewide total. The proposed layoffs affect not only growers, but have a substantial "trickle down" effect on other related industries, such as packaging, fertilizer producers, etc. Larger agribusinesses may be able to pay for private inspectors, but small farmers will not be able to afford this alternative.

In addition, aquaculture is one of the fastest growing industry segments – valued at $34,700,000 in 2008 – and cuts in inspector services will impact both imports and exports. Seafood inspections account for nearly the same volume as florals, and play a vital role in the stability of the restaurant industry. Hawaii's seed industry – valued at $250,000,000 in annual spending and currently the leading commodity in the agricultural industry – faces a possible shutdown if inspectors are not available to process research imports and exports.

The purpose of this Act is to direct the legislative reference bureau to analyze and report on the economic impacts on businesses and communities, as a result of the reduction in services for the department of agriculture's plant quarantine branch and commodities branch.

SECTION 2. (a) The legislative reference bureau shall analyze the economic impacts on businesses and communities, as a result of the reduction in services for the department of agriculture's plant quarantine branch and commodities branch throughout the State, including:

(1) The number and types of inspections, certification and auditing, registration and enforcement, and other services directly affected by the layoffs;

(2) The estimated annual dollar value of the loss to businesses and other entities;

(3) The estimated dollar value of the impact on other businesses and other providers of secondary goods and services;

(4) Other economic impacts, such as higher unemployment and reduced levels of services;

(5) The adequacy of the workforce prior to the current reductions;

(6) The impact on smaller areas, such as Kauai where the department is scheduled to lose the only office person, leaving farmers without a point of contact in order to schedule and coordinate inspections and other services and obtain information;

(7) Layoffs of aquaculture branch staff, and the resulting impacts on the industry; and

(8) Other financial impacts, particularly on communities and businesses that previously relied on these services.

(b) The legislative reference bureau shall consult with, at minimum, the department of agriculture; the department of business, economic development, and tourism; the counties; and other government and private sector agencies as deemed appropriate by the legislative reference bureau; and legislators.

(c) The legislative reference bureau shall submit a report of its findings, recommendations, and any proposed legislation to the legislature no later than twenty days prior to the convening of the regular session of 2011.

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

INTRODUCED BY:	_____________________________

THE SENATE	S.B. NO.	2057
TWENTY-FIFTH LEGISLATURE, 2010
STATE OF HAWAII