REPORT TITLE:
Rainy Day Fund


DESCRIPTION:
Establishes an emergency and budget reserve fund. (HB1040 HD1)

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

RELATING TO AN EMERGENCY AND BUDGET RESERVE FUND.



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

 1      SECTION 1. The legislature finds that the establishment of
 
 2 an emergency and budget reserve fund is necessary to provide the
 
 3 State with a mechanism to build a financial reserve to be used
 
 4 when there is an emergency or economic downturn, or when there is
 
 5 an unforeseen reduction in revenues.
 
 6      SECTION 2.  Chapter 37, Hawaii Revised Statutes, is amended
 
 7 by adding a new part to be appropriately designated and to read
 
 8 as follows:
 
 9           "PART   .  EMERGENCY AND BUDGET RESERVE FUND
 
10      §37-  Establishment of fund; deposits; maximum size.(a)
 
11 There is established in the treasury of the State the emergency
 
12 and budget reserve fund which shall be a special fund
 
13 administered by the director of finance.  Whenever the general
 
14 fund balance at the close of a fiscal year exceeds five per cent
 
15 of the total revenues received in the general fund for that
 
16 fiscal year, including any beginning balance, the legislature in
 
17 the next regular session shall appropriate to the emergency and
 
18 budget reserve fund an amount not more than fifty per cent of the
 
19 general fund balance in excess of the five per cent level.  When
 
20 the balance in the fund reaches an amount equal to ten per cent
 

 
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 1 of total revenues in the general fund at the close of a fiscal
 
 2 year, no further appropriations from the excess balance shall be
 
 3 made into the fund except for the purpose of restoring the
 
 4 balance in the fund to the ten per cent level.
 
 5      (b)  The legislature may also deposit funds from other
 
 6 sources to the emergency and budget reserve fund.
 
 7      (c)  All interest earned from moneys in the emergency and
 
 8 budget reserve fund shall accumulate and accrue to the general
 
 9 fund.
 
10      (d)  As used in this section:
 
11      "General fund balance at the close of a fiscal year" means
 
12 the unreserved fund balance computed on the budgetary basis as
 
13 reported by the comptroller.
 
14      "Total revenues" means all moneys actually received by the
 
15 general fund as reported by the comptroller.
 
16      §37-  Appropriations required; purposes; prohibitions.
 
17 (a)  Expenditures from the emergency and budget reserve fund are
 
18 meant to be a temporary supplemental source of funding during
 
19 times of emergency, economic downturn, or unforeseen reduction in
 
20 revenues.  No expenditures shall be made from the emergency and
 
21 budget reserve fund except pursuant to appropriations.  The
 
22 general appropriations bill or the supplemental appropriations
 
23 bill, as defined in section 9 of article VII of the Constitution
 

 
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 1 of the State of Hawaii, shall not be used to appropriate moneys
 
 2 from the emergency and budget reserve fund.  The governor,
 
 3 through an appropriations bill, may recommend expenditures from
 
 4 the emergency and budget reserve fund by setting forth the
 
 5 purposes, consistent with the purposes listed in subsection (b),
 
 6 the amounts, and the reasons why the appropriations are
 
 7 necessary.
 
 8      (b)  The legislature may make appropriations from the fund
 
 9 for the following purposes:
 
10      (1)  To maintain levels of programs determined to be
 
11           essential to the public health, safety, and welfare;
 
12      (2)  To maintain current services for federally-assisted
 
13           state programs when federal funds for such programs are
 
14           reduced or are less than anticipated;
 
15      (3)  To meet debt service payments when interest costs are
 
16           higher than anticipated; 
 
17      (4)  To meet capital investment costs when high interest
 
18           rates prevent the State from borrowing at reasonable
 
19           rates in the long-term borrowing market;
 
20      (5)  To provide for countercyclical economic and employment
 
21           programs in periods of economic downturn or slowdown;
 
22      (6)  To restore facilities destroyed or damaged, or services
 
23           disrupted by disaster in any county; and
 

 
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 1      (7)  To meet other emergencies when declared by the governor
 
 2           or determined to be urgent by the legislature.
 
 3      Any act making appropriations from the emergency and budget
 
 4 reserve fund shall include a declaration of findings and purposes
 
 5 setting forth the purposes, the amounts, and the reasons why the
 
 6 appropriations are necessary and shall require a three-fourths
 
 7 majority vote of each house of the legislature.
 
 8      (c)  Appropriations from the fund for the following purposes
 
 9 are specifically prohibited:
 
10      (1)  To meet expenses of the legislature;
 
11      (2)  To provide for salary adjustments for officials
 
12           appointed pursuant to section 6 of article V, or
 
13           section 3 of article VI, of the State Constitution and
 
14           for others whose salaries may be directly related to
 
15           the salaries of such officials; and
 
16      (3)  To fund cost items in any collective bargaining
 
17           contract unless the general fund or the applicable
 
18           special fund is or is projected to be in a deficit
 
19           position and cannot fund the cost items approved by the
 
20           legislature.
 
21      §37-  Compliance with expenditure ceiling.  The general
 
22 fund expenditure ceiling requirement shall not apply to
 
23 appropriations made to the emergency and budget reserve fund but
 

 
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 1 shall apply to appropriations authorized from the emergency and
 
 2 budget reserve fund.
 
 3      §37-  Report.  At least twenty days prior to the convening
 
 4 of each regular session, the director of finance shall submit to
 
 5 the legislature a report of the condition of the emergency and
 
 6 budget reserve fund, including:
 
 7      (1)  For the previous fiscal year:
 
 8           (A)  The beginning balance;
 
 9           (B)  The amount transferred to the fund;
 
10           (C)  The appropriations made from the fund;
 
11           (D)  The expenditures and encumbrances for each
 
12                appropriation;
 
13           (E)  The amount, if any, lapsed for each appropriation;
 
14                and
 
15           (F)  The closing balance;
 
16           and
 
17      (2)  For the fiscal year in progress:
 
18           (A)  The beginning balance;
 
19           (B)  The amount transferred to the fund;
 
20           (C)  The appropriations made from the fund;
 
21           (D)  Expenditures for each appropriation for the first
 
22                quarter;
 

 
 
 
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 1           (E)  Estimated expenditures for the remaining three
 
 2                quarters; and
 
 3           (F)  The estimated closing balance."
 
 4      SECTION 3.  Section 36-27, Hawaii Revised Statutes, is
 
 5 amended to read as follows:
 
 6      "§36-27  Transfers from special funds for central service
 
 7 expenses.  Except as provided in this section, and
 
 8 notwithstanding any other law to the contrary, from time to time
 
 9 the director of finance, for the purpose of defraying the
 
10 prorated estimate of central service expenses of government in
 
11 relation to all special funds, except the:
 
12      (1)  Special summer school and intersession fund under
 
13           section 302A-1310;
 
14      (2)  School cafeteria special funds of the department of
 
15           education;
 
16      (3)  Special funds of the University of Hawaii;
 
17      (4)  State educational facilities improvement special fund;
 
18      (5)  Convention center capital special fund under section
 
19           206X-10.5 and the convention center operations special
 
20           fund under section 206X-10.6;
 
21      (6)  Special funds established by section 206E-6;
 
22      (7)  Housing loan program revenue bond special fund;
 
23      (8)  Housing project bond special fund;
 

 
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 1      (9)  Aloha Tower fund created by section 206J-17;
 
 2     (10)  Domestic violence prevention special fund under section
 
 3           321-1.3;
 
 4     (11)  Spouse and child abuse special account under section
 
 5           346-7.5;
 
 6     (12)  Spouse and child abuse special account under section
 
 7           601-3.6;
 
 8     (13)  Funds of the employees' retirement system created by
 
 9           section 88-109;
 
10     (14)  Unemployment compensation fund established under
 
11           section 383-121;
 
12     (15)  Hawaii hurricane relief fund established under chapter
 
13           431P;
 
14     (16)  Hawaii health systems corporation special funds;
 
15     (17)  Boiler and elevator safety revolving fund established
 
16           under section 397-5.5;
 
17     (18)  Tourism special fund established under section
 
18           [[]201B-11[]]; [and]
 
19     (19)  Department of commerce and consumer affairs' special
 
20           funds; and
 
21     (20)  Emergency and budget reserve fund established under
 
22           section 37-   ;
 
23 shall deduct five per cent of all receipts of all other special
 
24 funds, which deduction shall be transferred to the general fund
 

 
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 1 of the State and become general realizations of the State.  All
 
 2 officers of the State and other persons having power to allocate
 
 3 or disburse any special funds shall cooperate with the director
 
 4 in effecting these transfers.  To determine the proper revenue
 
 5 base upon which the central service assessment is to be
 
 6 calculated, the director shall adopt rules pursuant to chapter 91
 
 7 for the purpose of suspending or limiting the application of the
 
 8 central service assessment of any fund.  No later than twenty
 
 9 days prior to the convening of each regular session of the
 
10 legislature, the director shall report all central service
 
11 assessments made during the preceding fiscal year."
 
12      SECTION 4.  Section 36-30, Hawaii Revised Statutes, is
 
13 amended by amending subsection (a) to read as follows:
 
14      "(a)  Each special fund, except the:
 
15      (1)  Transportation use special fund established by section
 
16           261D-1;
 
17      (2)  Special summer school and intersession fund under
 
18           section 302A-1310;
 
19      (3)  School cafeteria special funds of the department of
 
20           education;
 
21      (4)  Special funds of the University of Hawaii;
 
22      (5)  State educational facilities improvement special fund;
 
23      (6)  Special funds established by section 206E-6;
 

 
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 1      (7)  Aloha Tower fund created by section 206J-17;
 
 2      (8)  Domestic violence prevention special fund under section
 
 3           321-1.3;
 
 4      (9)  Spouse and child abuse special account under section
 
 5           346-7.5;
 
 6     (10)  Spouse and child abuse special account under section
 
 7           601-3.6;
 
 8     (11)  Funds of the employees' retirement system created by
 
 9           section 88-109;
 
10     (12)  Unemployment compensation fund established under
 
11           section 383-121;
 
12     (13)  Hawaii hurricane relief fund established under chapter
 
13           431P;
 
14     (14)  Convention center capital special fund established
 
15           under section 206X-10.5 and the convention center
 
16           operations special fund established under section 206X-
 
17           10.6;
 
18     (15)  Hawaii health systems corporation special funds; [and]
 
19     (16)  Tourism special fund established under section
 
20           [[]201B-11[]]; and
 
21     (17)  Emergency and budget reserve fund established under
 
22           section 37-   ;
 

 
 
 
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 1 shall be responsible for its pro rata share of the administrative
 
 2 expenses incurred by the department responsible for the
 
 3 operations supported by the special fund concerned."
 
 4      SECTION 5.  There is transferred out of the general revenues
 
 5 of the State of Hawaii the sum of $        or so much thereof as
 
 6 may be necessary for fiscal year 1999-2000 to be deposited into
 
 7 the emergency and budget reserve fund for the purposes of this
 
 8 Act.
 
 9      SECTION 6.  Statutory material to be repealed is bracketed.
 
10 New statutory material is underscored.
 
11      SECTION 7.  This Act shall take effect upon its approval and
 
12 upon ratification of the amendment to article VII, sections 6 and
 
13 9 of the Hawaii Constitution to establish an emergency and budget
 
14 reserve fund; provided that:
 
15      (1)  The amendments made to sections 36-27 and 36-30, Hawaii
 
16           Revised Statutes, by this Act shall not be repealed
 
17           when those sections are reenacted on July 1, 2000,
 
18           pursuant to section 13 of Act 216, Session Laws of
 
19           Hawaii 1997; and
 
20      (2)  The amendments made to section 36-27, Hawaii Revised
 
21           Statutes, shall not be repealed when that section is
 
22           reenacted on July 31, 2003, pursuant to section 9 of
 
23           Act 142, Session Laws of Hawaii 1998.