Police Officers; Income Tax

Allows Honolulu police officers to exclude an amount on their
state personal income taxes equal to their base pay.

HOUSE OF REPRESENTATIVES                H.B. NO.           
TWENTIETH LEGISLATURE, 2000                                
STATE OF HAWAII                                            

                   A  BILL  FOR  AN  ACT



 1      SECTION 1.  The purpose of this Act is to exclude the
 2 regular base salary of sworn police officers of the city and
 3 county of Honolulu from calculation of state gross income,
 4 adjusted income, and taxable income.
 5      The caliber and training of Honolulu police officers have
 6 made the department a recruiting ground for mainland police
 7 departments.  Many experienced officers are leaving Honolulu for
 8 higher-paying jobs and a lower cost of living on the mainland.
 9 This loss of experienced officers and the lack of qualified
10 recruits to take their place has resulted in numerous vacancies
11 and staffing shortages in the Honolulu police department.
12      This Act temporarily provides a financial incentive intended
13 to retain police officers and attract qualified applicants until
14 a more permanent solution can be implemented.
15      SECTION 2.  Chapter 235-7, Hawaii Revised Statutes, is
16 amended by amending subsection (a) to read as follows:
17      "(a)  There shall be excluded from gross income, adjusted
18 gross income, and taxable income:
19      (1)  Income not subject to taxation by the State under the

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 1           Constitution and laws of the United States;
 2      (2)  Rights, benefits, and other income exempted from
 3           taxation by section 88-91, having to do with the state
 4           retirement system, and the rights, benefits, and other
 5           income, comparable to the rights, benefits, and other
 6           income exempted by section 88-91, under any other
 7           public retirement system;
 8      (3)  Any compensation received in the form of a pension for
 9           past services;
10      (4)  Compensation paid to a patient affected with Hansen's
11           disease employed by the State or the United States in
12           any hospital, settlement, or place for the treatment of
13           Hansen's disease;
14      (5)  Except as otherwise expressly provided, payments made
15           by the United States or this State, under an act of
16           Congress or a law of this State, which by express
17           provision or administrative regulation or
18           interpretation are exempt from both the normal and
19           surtaxes of the United States, even though not so
20           exempted by the Internal Revenue Code itself;
21      (6)  Any income expressly exempted or excluded from the
22           measure of the tax imposed by this chapter by any other

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 1           law of the State, it being the intent of this chapter
 2           not to repeal or supersede any such express exemption
 3           or exclusion;
 4      (7)  The first $1,750 received by each member of the reserve
 5           components of the Army, Navy, Air Force, Marine Corps,
 6           or Coast Guard of the United States of America, and the
 7           Hawaii national guard as compensation for performance
 8           of duty;
 9      (8)  Income derived from the operation of ships or aircraft
10           if the income is exempt under the Internal Revenue Code
11           pursuant to the provisions of an income tax treaty or
12           agreement entered into by and between the United States
13           and a foreign country, provided that the tax laws of
14           the local governments of that country reciprocally
15           exempt from the application of all of their net income
16           taxes, the income derived from the operation of ships
17           or aircraft which are documented or registered under
18           the laws of the United States;
19      (9)  The value of legal services provided by a prepaid legal
20           service plan to a taxpayer, the taxpayer's spouse, and
21           the taxpayer's dependents;
22     (10)  Amounts paid, directly or indirectly, by a prepaid

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 1           legal service plan to a taxpayer as payment or
 2           reimbursement for the provision of legal services to
 3           the taxpayer, the taxpayer's spouse, and the taxpayer's
 4           dependents;
 5     (11)  Contributions by an employer to a prepaid legal service
 6           plan for compensation (through insurance or otherwise)
 7           to the employer's employees for the costs of legal
 8           services incurred by the employer's employees, their
 9           spouses, and their dependents; [and]
10     (12)  Amounts received in the form of a monthly surcharge by
11           a utility acting on behalf of an affected utility under
12           section 269-16.3 shall not be gross income, adjusted
13           gross income, or taxable income for the acting utility
14           under this chapter.  Any amounts retained by the acting
15           utility for collection or other costs shall not be
16           included in this exemption[.]; and
17     (13)  The regular base salary received by sworn police
18           officers employed by the city and county of Honolulu."
19      SECTION 3.  The department of taxation shall report to the
20 legislature no later than twenty days before the convening of the
21 regular session of 2004 on the fiscal impact of extending this
22 Act.

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 1      SECTION 4.  Statutory material to be repealed is bracketed.
 2 New statutory material is underscored.
 3      SECTION 5.  This Act shall take effect upon its approval and
 4 shall apply to taxable years beginning after December 31, 1999
 5 and ending before January 1, 2004; provided that on January 1,
 6 2004, this Act shall be repealed, and section 235-7, Hawaii
 7 Revised Statutes, shall be reenacted in the form in which it read
 8 on the day before the approval of this Act.
10                           INTRODUCED BY:  _______________________