Honolulu, Hawaii
                                                   , 1999

                                 RE: H.B. No. 143
                                     H.D. 1

Honorable Calvin K.Y. Say
Speaker, House of Representatives
Twentieth State Legislature
Regular Session of 1999
State of Hawaii


     Your Committee on Labor and Public Employment, to which was
referred H.B. No. 143 entitled: 


begs leave to report as follows:

     The purpose of this measure is to allow state and county
officials to contract with private entities to provide goods,
services, or construction to be financed by public funds when
they can be provided at lower costs and in equivalent or better
quality than that which could be provided by a government entity.

     The Department of Education, the Maui County Council, the
Office of the Corporation Counsel of the County of Hawaii, the
Construction Industry Legislative Organization, the Small
Business Economical Revival, the Libertarian Party of Hawaii, the
General Contractors Association of Hawaii, and the National
Federation of Small Business testified in support of this
measure.  The Department of the Corporation Counsel of the City
and County of Honolulu testified in support of the intent of this
measure with recommended amendments.  The United Public Workers,
the Hawaii Government Employees Association, and the Hawaii State
AFL-CIO opposed this measure.  

     Upon further consideration, your Committee has amended this
measure by:

     (1)  Adding another annual report due to the Legislature
          before the 2002 Regular Session, by the committee that

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                                 Page 2

          transforms the state's accounting, procurement, and
          budgeting systems, pursuant to part II of Act 230,
          Session Laws of Hawaii (SLH) 1998;

     (2)  Extending the reporting deadline to 2002 for the
          committee that develops a managed process to implement
          public-private competition, pursuant to part III of Act
          230, SLH 1998;

     (3)  Specifying that if the managed process committee does
          not meet its mandated responsibilities, then part I of
          the bill, dealing with privatization, will be enacted
          into law; and

     (4)  Making technical, nonsubstantive amendments for
          purposes of style, clarity, and consistency.

     Your Committee finds that Act 230, SLH 1998, was enacted
only seven months ago and the two committees created by this Act
have not had adequate time to fulfill their mandated duties and
responsibilities.  The two committees are charged with critical
and complex responsibilities and your Committee believes that it
is essential to allocate adequate lead time to the committees.
As such, this measure extends the annual reporting deadlines for
both committees to 2002.

     However, your Committee also finds that it is critical that
the committee charged with developing a managed process for
public-private competition, pursuant to part III of Act 230, SLH
1998, produces a viable privatization plan to the Legislature by
its mandated deadline.  The State's economy, bureaucracy, and
citizens are all relying on this committee to bring Hawaii state
government into the next century.  This measure provides the
State with a means to privatize current public functions in the
event that the committee does not responsibly live up to its

     It is your Committee's intent to pass this measure to
encourage further discussion about:

     (1)  Transforming the State's accounting, procurement, and
          budgeting systems; and

     (2)  Developing a managed process for public-private

     As affirmed by the record of votes of the members of your
Committee on Labor and Public Employment that is attached to this
report, your Committee is in accord with the intent and purpose

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                                 Page 3

of H.B. No. 143, as amended herein, and recommends that it pass
Second Reading in the form attached hereto as H.B. No. 143, H.D.
1, and be referred to the Committee on Finance.

                                   Respectfully submitted on
                                   behalf of the members of the
                                   Committee on Labor and Public

                                   TERRY NUI YOSHINAGA, Chair