EXECUTIVE CHAMBERS

HONOLULU

June 20, 2003

STATEMENT OF OBJECTIONS TO HOUSE BILL NO. 968

Honorable Members

Twenty-Second Legislature

State of Hawaii

Pursuant to Section 16 of Article III of the Constitution of the State of Hawaii, I am returning herewith, without my approval, House Bill No. 968, entitled "A Bill for an Act Relating to Unemployment Benefits."

The purpose of this bill is to allow unemployment insurance (UI) claimants to receive their weekly benefit amount without regard to earnings received from current employment.

This bill is objectionable because the unemployment system was established to provide jobless workers with a means of getting through a temporary period of unemployment and not as an entitlement that should continue to be paid in full even after a job has been found.

This bill also is objectionable because it would apply retroactively to weeks beginning January 1, 2003 and cost approximately $800,000 per month in benefits expended from the UI trust fund, or a seven percent increase from current levels. Employers in Hawaii have already been subject to higher tax assessments because the contribution rate schedule increased from Schedule C in 2002 to Schedule D in 2003, due to a lower trust fund balance. By permanently drawing from trust fund reserves, this measure would put upward pressure on the unemployment tax rate and thereby make it more difficult to hold down the costs of doing business in Hawaii.

For the foregoing reasons, I am returning House Bill No. 968 without my approval.