REPORT TITLE:
Emergency and Budget Reserve Fund


DESCRIPTION:
Proposes a constitutional amendment to:
(1)  Distribute excess revenues equally: half to taxpayers in the
form of a tax refund or credit and half to a "rainy day fund" to
be known as the Emergency and Budget Reserve Fund; and
(2)  Apply the general fund expenditure ceiling to expenditures
authorized from the emergency and budget reserves fund?"  (HB1039
HD1)

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
                                                        1039
HOUSE OF REPRESENTATIVES                H.B. NO.           H.D. 1
TWENTIETH LEGISLATURE, 1999                                
STATE OF HAWAII                                            
                                                             
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                   A  BILL  FOR  AN  ACT

PROPOSING AMENDMENT OF ARTICLE VII OF THE HAWAII CONSTITUTION TO
   ESTABLISH AN EMERGENCY AND BUDGET RESERVE FUND.



BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF HAWAII:

 1      SECTION 1. The purpose of this Act is to propose an
 
 2 amendment to Article VII, sections 6 and 9 of the Constitution of
 
 3 the State of Hawaii to establish a mechanism for the State to
 
 4 build a financial reserve to be used when there is an emergency
 
 5 or economic downturn, or when there is an unforeseen reduction in
 
 6 revenues.
 
 7      The proposal would:
 
 8      (1)  Change the distribution of excess state general fund
 
 9           revenues as follows:
 
10           (A)  Half to taxpayers in the form of a tax refund or
 
11                credit; and
 
12           (B)  Half to an emergency and budget reserve fund to be
 
13                established by law;
 
14           and
 
15      (2)  Clarify when the general fund expenditure ceiling shall
 
16           apply to certain appropriations of State funds.
 
17      SECTION 2.  Article VII, section 6, of the Constitution of
 
18 the State of Hawaii is amended to read as follows:
 

 
Page 2                                                     1039
                                     H.B. NO.           H.D. 1
                                                        
                                                        

 
 1                  "DISPOSITION OF EXCESS REVENUES
 
 2      Section 6.  There shall be established by law an emergency
 
 3 and budget reserve fund.  Whenever the state general fund balance
 
 4 at the close of each of two successive fiscal years exceeds five
 
 5 percent of general fund revenues for each of the two fiscal
 
 6 years, the legislature in the next regular session shall
 
 7 [provide]:
 
 8      (1)  Deposit no more than fifty per cent of the balance into
 
 9           the emergency and budget reserve fund; and
 
10      (2)  Provide for a tax refund or tax credit to the taxpayers
 
11           of the State, as provided by law.
 
12      The legislature may also deposit funds from other sources to
 
13 the emergency and budget reserve fund.
 
14      Expenditures from the emergency and budget reserve fund
 
15 shall be a temporary supplemental source of funding during times
 
16 of emergency, economic downturn or unforeseen reduction in
 
17 revenues.  No expenditures shall be made from the emergency and
 
18 budget reserve fund except pursuant to appropriations approved by
 
19 a three-fourths vote of the members of each house of the
 
20 legislature."
 
21      SECTION 3.  Article VII, section 9, of the Constitution of
 
22 the State of Hawaii is amended to read as follows:
 

 
 
 
Page 3                                                     1039
                                     H.B. NO.           H.D. 1
                                                        
                                                        

 
 1             "LEGISLATIVE APPROPRIATIONS; PROCEDURES;
 
 2                        EXPENDITURE CEILING
 
 3      Section 9.  In each regular session in an odd-numbered year,
 
 4 the legislature shall transmit to the governor an appropriation
 
 5 bill or bills providing for the anticipated total expenditures of
 
 6 the State for the ensuing fiscal biennium.  In such session, no
 
 7 appropriation bill, except bills recommended by the governor for
 
 8 immediate passage, or to cover the expenses of the legislature,
 
 9 shall be passed on final reading until the bill authorizing
 
10 operating expenditures for the ensuing fiscal biennium, to be
 
11 known as the general appropriations bill, shall have been
 
12 transmitted to the governor.
 
13      In each regular session in an even-numbered year, at such
 
14 time as may be provided by law, the governor may submit to the
 
15 legislature a bill to amend any appropriation for operating
 
16 expenditures of the current fiscal biennium, to be known as the
 
17 supplemental appropriations bill, and bills to amend any
 
18 appropriations for capital expenditures of the current fiscal
 
19 biennium, and at the same time the governor shall submit a bill
 
20 or bills to provide for any added revenues or borrowings that
 
21 such amendments may require.  In each regular session in an even-
 
22 numbered year, bills may be introduced in the legislature to
 
23 amend any appropriation act or bond authorization act of the
 

 
Page 4                                                     1039
                                     H.B. NO.           H.D. 1
                                                        
                                                        

 
 1 current fiscal biennium or prior fiscal periods.  In any such
 
 2 session in which the legislature submits to the governor a
 
 3 supplemental appropriations bill, no other appropriation bill,
 
 4 except bills recommended by the governor for immediate passage,
 
 5 or to cover the expenses of the legislature, shall be passed on
 
 6 final reading until such supplemental appropriations bill shall
 
 7 have been transmitted to the governor.
 
 8                 GENERAL FUND EXPENDITURE CEILING
 
 9      Notwithstanding any other provision to the contrary, the
 
10 legislature shall establish a general fund expenditure ceiling
 
11 which shall limit the rate of growth of general fund
 
12 appropriations, excluding appropriations to the emergency and
 
13 budget reserve fund and federal funds received by the general
 
14 fund, to the estimated rate of growth of the State's economy as
 
15 provided by law.  No appropriations in excess of such ceiling
 
16 shall be authorized during any legislative session unless the
 
17 legislature shall, by a two-thirds vote of the members to which
 
18 each house of the legislature is entitled, set forth the dollar
 
19 amount and the rate by which the ceiling will be exceeded and the
 
20 reasons therefor.
 
21      The general fund expenditure ceiling shall also apply to
 
22 expenditures authorized from the emergency and budget reserve
 
23 fund."
 

 
Page 5                                                     1039
                                     H.B. NO.           H.D. 1
                                                        
                                                        

 
 1      SECTION 4.  The question to be printed on the ballot shall
 
 2 be as follows:
 
 3      "Should the State Constitution be amended so that:
 
 4      (1)  The distribution of excess state general fund revenues
 
 5           be changed so that:
 
 6           (a)  Half goes to an emergency and budget reserve fund,
 
 7                which would enable the State to build a financial
 
 8                reserve to be used during times of emergency,
 
 9                economic downturn, or unforeseen reduction in
 
10                revenues; and 
 
11           (b)  The remainder may be returned to taxpayers in the
 
12                form of a tax refund or credit; 
 
13           and
 
14      (2)  The general fund expenditure ceiling will also apply to
 
15           expenditures authorized from the emergency and budget
 
16           reserves fund?"
 
17      SECTION 5.  Constitutional material to be repealed is
 
18 bracketed.  New constitutional material is underscored.
 
19      SECTION 6.  This Act shall take effect upon compliance with
 
20 article XVII, section 3, of the Constitution of the State of
 
21 Hawaii.