STAND. COM. REP. NO.  544-12

Honolulu, Hawaii

                , 2012

RE:   H.B. No. 2254

      H.D. 1

Honorable Calvin K.Y. Say

Speaker, House of Representatives

Twenty-Sixth State Legislature

Regular Session of 2012

State of Hawaii

Sir:

     Your Committees on Labor & Public Employment and Transportation, to which was referred H.B. No. 2254 entitled:

"A BILL FOR AN ACT RELATING TO THE PRETAX TRANSPORTATION BENEFIT,"

beg leave to report as follows:

The purpose of this measure is to increase the use of alternative modes of transportation while providing cost savings to both employees and employers by requiring the Director of the Department of Human Resources Development to:

     (1)  Make the Pre-Tax Transportation Benefit Pilot Program for Oahu State employees permanent;

     (2)  Extend the Program to all islands that have a public transit system; and

     (3)  Extend the Program to employees of the Legislature residing in counties having a population of over 500,000 persons.

Two concerned individuals testified in support of this measure.  The Department of Human Resources Development testified in opposition to this measure.

The Pre-Tax Transportation Benefit Pilot Program is currently offered to eligible Oahu employees of the State Executive Branch. The Program is a tax savings benefit program which is authorized under the Federal Transportation Equity Act for the 21st Century, Section 132(f) of the Internal Revenue Code, that allows employees to pay for qualified transportation expenses before federal, State, and Federal Insurance Contributions Act taxes are computed.  Under the current Program, eligible employees may authorize their employer to have their designated transportation expenses deducted from their paycheck on a pre-tax basis saving the employee money on certain forms of transportation.

     While the Program has proven to be successful on Oahu, your Committees find that the transportation needs of each county are different and the chief executive of each county should be granted the authority and flexibility to develop a pretax transportation benefit program that meets the needs of their respective jurisdictions.  As such, your Committees have amended this measure by deleting its contents and replacing it with language that:

     (1)  Allows the chief executive of certain jurisdictions of the state, including the counties, to establish a wage and salary reduction benefit program which qualifies as a pretax transportation benefit program within the meaning of Section 132 of the Internal Revenue Code; and

     (2)  Authorizes the chief executive to enter into all contracts necessary to establish, administer, and maintain a pretax transportation benefit program.

     Technical, nonsubstantive amendments have also been made for clarity, consistency, and style.

     As affirmed by the records of votes of the members of your Committees on Labor & Public Employment and Transportation that are attached to this report, your Committees are in accord with the intent and purpose of H.B. No. 2254, as amended herein, and recommend that it pass Second Reading in the form attached hereto as H.B. No. 2254, H.D. 1, and be referred to the Committee on Finance.

Respectfully submitted on behalf of the members of the Committees on Labor & Public Employment and Transportation,

____________________________ JOSEPH M. SOUKI, Chair

____________________________ KARL RHOADS, Chair