STAND. COM. REP. NO. 154

 

Honolulu, Hawaii

                  

 

RE:    S.B. No. 947

       S.D. 1

 

 

 

Honorable Colleen Hanabusa

President of the Senate

Twenty-Fifth State Legislature

Regular Session of 2009

State of Hawaii

 

Madam:

 

     Your Committee on Labor, to which was referred S.B. No. 947 entitled:

 

"A BILL FOR AN ACT RELATING TO UNEMPLOYMENT CONTRIBUTION RATES,"

 

begs leave to report as follows:

 

     The purpose of this measure is to conform Hawaii's unemployment insurance law to federal law to provide uniform application of unemployment insurance rate calculations for all experience rating transfers by employers.

 

     This measure also amends an Internal Revenue Code reference to clarify the definition of "person" in section 383‑66(b)(6)(C).

 

     This measure relates generally to state unemployment tax avoidance (SUTA) dumping.  Specifically, this measure amends the provisions in section 383‑66(b), Hawaii Revised Statutes, relating to the effective date of unemployment insurance rate calculations following transfers of trade or business so that the effective date is uniformly applied.  Currently, the rates are effective beginning with the calendar year immediately following the transfer according to section 383‑66(a), Hawaii Revised Statutes, and the quarter immediately following the transfer according to section 383‑66(b), Hawaii Revised Statutes.  If enacted, this measure would apply retroactively to June 9, 2005, which is the date legislation was enacted to conform state laws to federal law (Act 114, Session Laws of Hawaii 2005).

 

     Testimony in support of this measure was submitted by the Department of Labor and Industrial Relations.  Copies of written testimony are available for review on the Legislature's website.

 

     Your Committee finds that this measure is necessary because the discrepancy in the effective date of rate calculations means that there could be multiple calculations of rates within a year.  The Department of Labor and Industrial Relations estimates that modifying the unemployment insurance tax system to accommodate mid-year tax rate changes can cost the Department approximately $23 million.  In addition to saving costs to the Department, your Committee finds that this measure would also save employers accounting-related costs that would be incurred to accommodate mid-year rate changes.

 

     Your Committee has amended this measure by making technical, nonsubstantive changes for the purposes of clarity and consistency.

 

     As affirmed by the record of votes of the members of your Committee on Labor that is attached to this report, your Committee is in accord with the intent and purpose of S.B. No. 947, as amended herein, and recommends that it pass Second Reading in the form attached hereto as S.B. No. 947, S.D. 1, and be referred to the Committee on Ways and Means.

 

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

 

 

 

____________________________

DWIGHT Y. TAKAMINE, Chair