STAND. COM. REP. NO. 3005

Honolulu, Hawaii

RE:    H.B. No. 2264

       H.D. 2

       S.D. 1

Honorable Shan S. Tsutsui

President of the Senate

Twenty-Sixth State Legislature

Regular Session of 2012

State of Hawaii

Sir:

     Your Committee on Judiciary and Labor, to which was referred H.B. No. 2264, H.D. 2, entitled:

"A BILL FOR AN ACT RELATING TO EMPLOYMENT SECURITY,"

begs leave to report as follows:

     The purpose and intent of this measure is to increase the contribution rates of employers to the unemployment compensation fund up to a maximum of 6.6 percent.  Specifically, this measure:

     (1)  Increases the employer's maximum unemployment insurance contribution rates under section 383-68(d), Hawaii Revised Statutes, in twenty-one of the one hundred eighty tax rates in the tax schedule system on a graduated basis beginning on July 1, 2013; and

     (2)  Makes housekeeping amendments to section 383-66, Hawaii Revised Statutes, relating to the determination of the standard rate of employer contributions.

     Your Committee received testimony in support of this measure from the Department of Labor and Industrial Relations.

     Your Committee finds that the existing contribution rate schedule under section 383-68(d), Hawaii Revised Statutes, consists of eight tax schedules ranging from the lowest schedule at A to the highest schedule at H.  The maximum tax rate is 5.4 percent for each schedule.  This measure increases an employer's maximum unemployment insurance contribution rates in twenty-one of the one hundred eighty tax rates in the tax schedule system on a graduated basis up to a maximum rate of 6.6 percent.

     The Department of Labor and Industrial Relations indicated that it cannot perform mid-year rate recalculations without a complete redesign of the existing unemployment insurance tax system, including its software and web-based applications.  Accordingly, your Committee has amended this measure by adopting the suggestion made by the Department to change the effective date from July 1, 2013, to January 1, 2013, to avoid an expensive redesign of the unemployment insurance tax system.

     As affirmed by the record of votes of the members of your Committee on Judiciary and Labor that is attached to this report, your Committee is in accord with the intent and purpose of H.B. No. 2264, H.D. 2, as amended herein, and recommends that it pass Second Reading in the form attached hereto as H.B. No. 2264, H.D. 2, S.D. 1, and be referred to the Committee on Ways and Means.

Respectfully submitted on behalf of the members of the Committee on Judiciary and Labor,

____________________________

CLAYTON HEE, Chair