REPORT TITLE:


DESCRIPTION:



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


                   A  BILL  FOR  AN  ACT

MAKING AN EMERGENCY APPROPRIATION FOR THE DEPARTMENT OF
   AGRICULTURE.
 


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

 1      SECTION 1. This Act is recommended by the governor for
 
 2 immediate passage in accordance with section 9 of article VII of
 
 3 the Constitution of the State of Hawaii.
 
 4      SECTION 2.  The Hawaii Community Development Authority in
 
 5 its redevelopment of Kakaako will be displacing the Measurement
 
 6 Standards and Plant Quarantine programs of the Department of
 
 7 Agriculture.  The Measurements Standards program of the Quality
 
 8 Assurance Division will be the first program displaced to
 
 9 accommodate the widening of Ilalo Street from Ward Avenue to
 
10 South and Punchbowl Streets.  The widening project includes
 
11 improvements to the roadway, drainage, sewer, water, electrical,
 
12 telephone and cable systems and is part of the overall plan to
 
13 create a waterfront that stimulates economic and educational
 
14 uses.
 
15      The purpose of this Act is to provide the necessary
 
16 statutory authorization and appropriations to relocate the
 
17 Measurement Standards program and to construct a new building to
 
18 accommodate both the Measurement Standards and Commodities
 

 
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 1 programs of the Quality Assurance Division.
 
 2      SECTION 3.  There is appropriated out of the general
 
 3 revenues of the State of Hawaii the sum of $500,000 or so much
 
 4 thereof as may be necessary for fiscal year 2000-01 to cover all
 
 5 expenses related to temporarily relocating the Measurement
 
 6 Standards program and its personnel.
 
 7      SECTION 4.  The director of finance is authorized to issue
 
 8 general obligation bonds in the sum of $3,800,000, or so much
 
 9 thereof as may be necessary.  There is appropriated the sum of
 
10 $3,800,000 in general obligation bond funds, or so much thereof
 
11 as may be necessary for fiscal year 1999-2000 to finance the cost
 
12 of planning, design, construction, and equipping a new building
 
13 for the Measurement Standards and Commodities programs on Oahu
 
14      SECTION 5.  The sums appropriated shall be expended by the
 
15 department of agriculture for the purposes of this Act. Any
 
16 unexpended or unencumbered balance of any appropriation made by
 
17 this Act as of the close of business on June 30, 2001 shall
 
18 lapse.
 
19      SECTION 6.  With approval of the governor, the designated
 
20 expending agencies for capital improvement projects authorized in
 
21 this Act may delegate to another state agency the implementation
 
22 of such projects when it is determined by all involved agencies
 
23 and parties that it is advantageous to do so.
 

 
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 1      SECTION 7.  Any law to the contrary notwithstanding, the
 
 2 appropriation under Act 328, Session Laws of Hawaii, section
 
 3 140A, as amended by Act 116, Session Laws of Hawaii 1998, section
 
 4 5, in the amount indicated or balance thereof, unallotted,
 
 5 allotted, encumbered, and unrequired is hereby lapsed:
 
 6      Item No.                  Amount(MOF)
 
 7      H-17                      $280,000 C
 
 8      SECTION 8.  Declaration of findings with respect to the
 
 9 general obligation bonds authorized by this Act.  Pursuant to the
 
10 clause in section 13 of article VII of the State Constitution
 
11 which states:  "Effective July 1, 1980, the legislature shall
 
12 include a declaration of findings in every general law
 
13 authorizing the issuance of general obligation bonds that the
 
14 total amount of principal and interest, estimated for such bonds
 
15 and for all bonds authorized and unissued and calculated for all
 
16 bonds issued and outstanding, will not cause the debt limit to be
 
17 exceeded at the time of issuance," the legislature finds and
 
18 declares as follows:
 
19      (1)  Limitation on general obligation debt.  The debt limit
 
20           of the state is set forth in section 13 of article VII
 
21           of the State Constitution, which states in part:
 
22           "General obligation bonds may be issued by the State;
 
23           provided that such bonds at the time of issuance would
 

 
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 1           not cause the total amount of principal and interest
 
 2           payable in the current or any future fiscal year,
 
 3           whichever is higher, on such bonds and on all
 
 4           outstanding general obligation bonds to exceed: a sum
 
 5           equal to twenty percent of the average of the general
 
 6           fund revenues of the State in the three fiscal years
 
 7           immediately preceding such issuance until June 30,
 
 8           1982; and thereafter, a sum equal to eighteen and one-
 
 9           half percent of the average of the general fund
 
10           revenues of the State in the three fiscal years
 
11           immediately preceding such issuance."  Article VII,
 
12           section 13, also provides that in determining the power
 
13           of the State to issue general obligation bonds, certain
 
14           bonds are excludable, including "reimbursable general
 
15           obligation bonds issued for a public undertaking,
 
16           improvement or system but only to the extent that
 
17           reimbursements to the general fund are in fact made
 
18           from the net revenue, or net user tax receipts, or
 
19           combination of both, as determined for the immediately
 
20           preceding fiscal year" and bonds constituting
 
21           instruments of indebtedness under which the State
 
22           incurs a contingent liability as a guarantor, but only
 
23           to the extent the principal amount of such bonds does
 

 
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 1           not exceed seven percent of the principal amount of
 
 2           outstanding general obligation bonds not otherwise
 
 3           excluded under said article VII, section 13.
 
 4      (2)  Actual and estimated debt limits.  The limit on
 
 5           principal and interest of general obligation bonds
 
 6           issued by the State, actual for fiscal year 1999-2000
 
 7           and estimated for each fiscal year from 2000-2001 to
 
 8           2002-2003, is as follows:
 
 9           Fiscal            Net General
 
10           Year              Fund Revenues             Debt Limit
 
11           1996-1997         3,115,264,737
 
12           1997-1998         3,195,967,036
 
13           1998-1999         3,254,256,686
 
14           1999-2000         3,109,421,000            $589,871,788
 
15           2000-2001         3,154,165,000            $589,511,425
 
16           2001-2002         3,233,534,000            $586,933,632
 
17           2002-2003         (Not Applicable)         $585,655,733
 
18           For fiscal years 1999-2000, 2000-2001, 2001-2002, and
 
19           2002-2003, respectively, the debt limit is derived by
 
20           multiplying the average of the net general fund
 
21           revenues for the three preceding fiscal years by
 
22           eighteen and one-half per cent. The net general fund
 
23           revenues for fiscal years 1996-1997, 1997-1998, and
 

 
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 1           1998-1999 are actual, as certified by the director of
 
 2           finance in the Statement of the Debt Limit of the State
 
 3           of Hawaii as of July 1, 1999, dated November 24, 1999.
 
 4           The net general fund revenues for fiscal years 1999-
 
 5           2000 to 2001-2002 are estimates, based on general fund
 
 6           revenue estimates made December 20, 1999, by the
 
 7           council on revenues, the body assigned by section 7 of
 
 8           article VII of the State Constitution to make such
 
 9           estimates, and based on estimates made by the
 
10           department of budget and finance of those receipts
 
11           which cannot be included as general fund revenues for
 
12           the purpose of calculating the debt limit, all of which
 
13           estimates the legislature finds to be reasonable.
 
14      (3)  Principal and interest on outstanding bonds applicable
 
15           to the debt limit.  (A) According to the department of
 
16           budget and finance, the total amount of principal and
 
17           interest on outstanding general obligation bonds, after
 
18           the exclusions permitted by section 13 of article VII
 
19           of the State Constitution, for determining the power of
 
20           the State to issue general obligation bonds within the
 
21           debt limit as of December 1, 1999 is as follows for
 
22           fiscal year 2000-2001 to fiscal year 2006-2007:
 

 
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 1            Fiscal                               Principal
 
 2             Year                               and Interest
 
 3           2000-2001                            $352,508,780
 
 4           2001-2002                            $367,994,493
 
 5           2002-2003                            $411,701,970
 
 6           2003-2004                            $378,223,219
 
 7           2004-2005                            $373,053,164
 
 8           2005-2006                            $347,383,328
 
 9           2006-2007                            $344,154,560
 
10           The department of budget and finance further reports
 
11           that the amount of principal and interest on
 
12           outstanding bonds applicable to the debt limit
 
13           generally continues to decline each year from fiscal
 
14           year 2007-2008 to fiscal year 2019-2020 when the final
 
15           installment of $27,612,984 shall be due and payable.
 
16           (B) The department of budget and finance further
 
17           reports that the outstanding principal amount of bonds
 
18           constituting instruments of indebtedness under which
 
19           the State may incur a contingent liability as a
 
20           guarantor is $191,000,000, all or part of which is
 
21           excludable in determining the power of the State to
 
22           issue general obligation bonds, pursuant to section 13
 
23           of article VII of the State Constitution.
 

 
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 1      (4)  Amount of authorized and unissued general obligation
 
 2           bonds and guaranties and proposed bonds and guaranties.
 
 3           (A) As calculated from the state comptroller's bond
 
 4           fund report as of October 31, 1999, adjusted for (i)
 
 5           appropriations to be funded with general obligation
 
 6           bonds and reimbursable general obligation bonds as
 
 7           provided in Act 99, Session Laws of Hawaii 1999
 
 8           (General Appropriations Act of 1999), to be expended in
 
 9           the fiscal year 2000-2001; (ii) appropriations to be
 
10           funded by reimbursable general obligation bonds as
 
11           provided in Act 151, Session Laws of Hawaii 1999
 
12           (Relating to Hawaii Hurricane Relief Fund Bonds) to be
 
13           expended in the fiscal year 2000-2001; (iii) Act 156,
 
14           Session Laws of Hawaii 1999, (the Judiciary
 
15           Appropriations Act of 1999) to be expended in the
 
16           fiscal year 2000-2001; and (iv) lapses totaling
 
17           $280,000 proposed in this Act, the total amount of
 
18           authorized but unissued general obligation bonds, is
 
19           $1,396,114,543.  The total amount of general obligation
 
20           bonds authorized in this Act is $3,800,000.  The total
 
21           amount of general obligation bonds previously
 
22           authorized and unissued and the general obligation
 
23           bonds authorized in this Act is $1,399,914,543. (B) As
 

 
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 1           reported by the department of budget and finance, the
 
 2           outstanding principal amount of bonds constituting
 
 3           instruments of indebtedness under which the State may
 
 4           incur a contingent liability as a guarantor is
 
 5           $191,000,000, all or part of which is excludable in
 
 6           determining the power of the State to issue general
 
 7           obligation bonds, pursuant to section 13 of article VII
 
 8           of the State Constitution.  The total amount of
 
 9           guaranties authorized by     Bill No.     (Relating to
 
10           Hawaii Health Systems Corporation) is $47,500,000 and
 
11           are herein validated.  The total amount of guaranties
 
12           previously authorized and validated by this Act is
 
13           $238,500,000.
 
14      (5)  Proposed general obligation bond issuance.  As reported
 
15           therein for fiscal years 1998-1999, 1999-2000, 2000-
 
16           2001, 2001-2002 and 2002-2003, the State proposes to
 
17           issue $200,000,000 during the remainder of fiscal year
 
18           1999-2000, $350,000,000 during the first half of fiscal
 
19           year 2000-2001, $150,000,000 during the second half of
 
20           fiscal year 2000-2001, $150,000,000 during the first
 
21           half of fiscal year 2001-2002, $150,000,000 during the
 
22           second half of fiscal year 2001-2002, $100,000,000
 
23           during the first half of fiscal year 2002-2003, and
 

 
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 1           $300,000,000 during the second half of fiscal year
 
 2           2002-2003.  It has been the practice of the State to
 
 3           issue twenty-year serial bonds with principal
 
 4           repayments beginning the third year, the bonds payable
 
 5           in substandtially equal annual installments of
 
 6           principal and interest payment with interest payments
 
 7           commencing six months from the date of issuance and
 
 8           being paid semiannually thereafter.  It is assumed that
 
 9           this practice will be applied to the bonds which are
 
10           proposed to be issued except that principal repayments
 
11           will begin in the fourth year.
 
12      (6)  Sufficiency of proposed general obligation bond
 
13           issuance to meet the requirements of authorized and
 
14           unissued bonds, as adjusted, and bonds authorized by
 
15           this Act.  From the schedule reported in paragraph (5),
 
16           the total amount of general obligation bonds which the
 
17           State proposes to issue during the fiscal years 1999-
 
18           2000 to 2002-2003 is $1,000,000,000.  An additional
 
19           $400,000,000 is proposed to be issued in fiscal year
 
20           2002-2003.  The total amount of $1,000,000,000 which is
 
21           proposed to be issued through fiscal year 2001-2002 is
 
22           sufficient to meet the requirements of the authorized
 
23           and unissued bonds, as adjusted, and the bonds
 

 
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 1           authorized by this Act, the total amount of which is
 
 2           $1,399,914,543, as reported in paragraph (4), except
 
 3           for $399,914,543.  It is assumed that the
 
 4           appropriations to which an additional $399,914,543 in
 
 5           bond issuance needs to be applied will have been
 
 6           encumbered as of June 30, 2002.  The $400,000,000 which
 
 7           is proposed to be issued in fiscal year 2002-2003 will
 
 8           be sufficient to meet the requirements of the June 30,
 
 9           2002 encumbrances in the amount of $399,914,543.  The
 
10           amount of assumed encumbrances as of June 30, 2002 is
 
11           reasonable and conservative, based upon an inspection
 
12           of June 30 encumbrances of the general obligation bond
 
13           fund as reported by the state comptroller.  Thus,
 
14           taking into account the amount of previously authorized
 
15           and unissued bonds and bonds proposed in this Act
 
16           versus the amount of bonds which is proposed to be
 
17           issued by June 30, 2002, and the amount of June 30,
 
18           2002 encumbrances versus the amount of bonds which is
 
19           proposed to be issued in fiscal year 2002-2003, the
 
20           legislature finds that in the aggregate, the amount of
 
21           bonds which is proposed to be issued is sufficient to
 
22           meet the requirements of all authorized and unissued
 
23           bonds and the bonds authorized by this Act.
 

 
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 1      (7)  Bonds excludable in determining the power of the State
 
 2           to issue bonds.  As noted in paragraph (1), certain
 
 3           bonds are excludable in determining the power of the
 
 4           State to issue general obligation bonds.  (A) General
 
 5           obligation reimbursable bonds can be excluded under
 
 6           certain conditions.  It is not possible to make a
 
 7           conclusive determination as to the amount of
 
 8           reimbursable bonds which are excludable from the amount
 
 9           of each proposed bond issued because:
 
10           (i)  It is not known exactly when projects for which
 
11                reimbursable bonds have been authorized in prior
 
12                acts and in this Act will be implemented and will
 
13                require the application of proceeds from a
 
14                particular bond issue; and
 
15           (ii) Not all reimbursable general obligation bonds may
 
16                qualify for exclusion.
 
17           However, the legislature notes that with respect to the
 
18           principal and interest on outstanding general
 
19           obligation bonds, according to the department of budget
 
20           and finance, the average proportion of principal and
 
21           interest which is excludable each year from calculation
 
22           against the debt limit is 6.97 percent for the ten
 
23           years from fiscal year 2000-2001 to fiscal year 2009-
 

 
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 1           2010.  For the purpose of this declaration, the
 
 2           assumption is made that five percent of each bond issue
 
 3           will be excludable from the debt limit, an assumption
 
 4           which the legislature finds to be reasonable and
 
 5           conservative.  (B) Bonds constituting instruments of
 
 6           indebtedness under which the State incurs a contingent
 
 7           liability as a guarantor can be excluded but only to
 
 8           the extent the principal amount of such guaranties does
 
 9           not exceed seven percent of the principal amount of
 
10           outstanding general obligation bonds not otherwise
 
11           excluded under subparagraph (A) of paragraph (7) and
 
12           provided that the State shall establish and maintain a
 
13           reserve in an amount in reasonable proportion to the
 
14           outstanding loans guaranteed by the State as provided
 
15           by law.  According to the department of budget and
 
16           finance and the assumptions presented herein, the total
 
17           principal amount of outstanding general obligation
 
18           bonds and general obligation bonds proposed to be
 
19           issued, which are not otherwise excluded under section
 
20           13 of article VII of the State Constitution for the
 
21           fiscal years 1999-2000, 2000-2001, 2001-2002 and 2002-
 
22           2003 are as follows:
 

 
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 1                                            Total amount of
 
 2                                       General Obligation Bonds
 
 3                                       not otherwise excluded by
 
 4                                       section 13 of article VII
 
 5           Fiscal year                of the State Constitution
 
 6           1999-2000                      $3,309,433,537
 
 7           2000-2001                      $3,600,550,972
 
 8           2001-2002                      $3,677,655,955
 
 9           2002-2003                      $3,843,443,582
 
10           Based on the foregoing and based on the assumption that
 
11           the full amount of a guaranty is immediately due and
 
12           payable when such guaranty changes from a contingent
 
13           liability to an actual liability, the aggregate
 
14           principal amount of the portion of the outstanding
 
15           guaranties and the guaranties proposed to be incurred,
 
16           which does not exceed seven percent of the average
 
17           amount set forth in the last column of the above table
 
18           and for which reserve funds have been or will have been
 
19           established as heretofore provided, can be excluded in
 
20           determining the power of the State to issue general
 
21           obligation bonds.  As it is not possible to predict
 
22           with a reasonable degree of certainty when a guaranty
 
23           will change from a contingent liability to an actual
 

 
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 1           liability, it is assumed in conformity with fiscal
 
 2           conservatism and prudence, that all guaranties not
 
 3           otherwise excluded pursuant to section 13 of article
 
 4           VII of the State Constitution will become due and
 
 5           payable in the same fiscal year in which the greatest
 
 6           amount of principal and interest on general obligation
 
 7           bonds, after exclusions, occurs.  Thus, based on such
 
 8           assumptions and on the determination in paragraph (8),
 
 9           all of the outstanding quaranties can be excluded.
 
10      (8)  Determination whether the debt limit will be exceeded
 
11           at the time of issuance.  From the foregoing and on the
 
12           assumption that all of the bonds identified in
 
13           paragraph (5) will be issued at an interest rate of 6.0
 
14           percent, it can be determined from the following
 
15           schedule that the bonds which are proposed to be
 
16           issued, which include all authorized and unissued bonds
 
17           previously authorized, as adjusted, general obligation
 
18           bonds and instruments of indebtedness under which the
 
19           State incurs a contingent liability as a guarantor
 
20           authorized in this Act, will not cause the debt limit
 
21           to be exceeded at the time of such issuance:
 

 
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 1                                        Greatest Amount
 
 2 Time of Issuance                       and Year of
 
 3 and Amount to be         Debt Limit    Highest Principal
 
 4 Counted Against          at Time of    and Interest on
 
 5   Debt Limit             Issuance      Bonds and Guaranties
 
 6 Remainder FY 1999-2000
 
 7 $190,000,000             589,871,788   423,100,970 (2002-2003)
 
 8 1st half FY 2000-2001
 
 9 $332,500,000             589,511,425   443,051,970 (2002-2003)
 
10 2nd half FY 2000-2001
 
11 $142,500,000             589,511,425   451,601,970 (2002-2003)
 
12 1st half FY 2001-2002
 
13 $142,500,000             586,933,632   455,876,970 (2002-2003)
 
14 2nd half FY 2001-2002
 
15 $142,500,000             586,933,632   464,426,970 (2002-2003)
 
16 1st half FY 2002-2003
 
17 $95,000,000              585,655,733   549,374,614 (2004-2005)
 
18 2nd half FY 2002-2003
 
19 $285,000,000             585,655,733   479,324,614 (2004-2005)
 
20      (9)  Overall and concluding finding.  From the facts,
 
21           estimates, and assumptions stated in this declaration
 
22           of findings, the conclusion is reached that the total
 
23           amount of principal and interest estimated for the
 

 
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 1           general obligation bonds authorized in this Act, and
 
 2           for all bonds authorized and unissued, and calculated
 
 3           for all bonds issued and outstanding, and all
 
 4           guaranties, will not cause the debt limit to be
 
 5           exceeded at the time of issuance.
 
 6      SECTION 9.  The legislature finds the bases for the
 
 7 declaration of findings set forth in this Act reasonable.  The
 
 8 assumptions set forth in this Act with respect to the principal
 
 9 amount of general obligation bonds which will be issued, the
 
10 amount of principal and interest on reimbursable general
 
11 obligation bonds which are assumed to be excludable, and the
 
12 assumed maturity structure shall not be deemed to be binding, it
 
13 being the understanding of the legislature that such matters must
 
14 remain subject to substantial flexibility.
 
15      SECTION 10.  Authorization for issuance of general
 
16 obligation bonds.  General obligation bonds may be issued as
 
17 provided by law in an amount that may be necessary to finance the
 
18 project authorized in this Act provided that the sum total of
 
19 general obligation bonds issued shall not exceed $3,800,000.
 
20      Any law to the contrary notwithstanding, general obligation
 
21 bonds may be issued from time to time in accordance with Section
 
22 39-16, Hawaii Revised Statutes, in such principal amount as may
 
23 be required to refund any general obligation bonds of the State
 

 
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 1 of Hawaii heretofore or hereafter issued pursuant to law.
 
 2      SECTION 11.  The provisions of this Act are declared to be
 
 3 severable and if any portion thereof is held to be invalid for
 
 4 any reason, the validity of the remainder of this Act shall not
 
 5 be affected.
 
 6      SECTION 12.  In printing this Act, the revisor of statutes
 
 7 shall substitute in section 8 the corresponding act numbers for
 
 8 bills identified therein.
 
 9      SECTION 13.  This Act shall take effect upon its approval. 
 
10 
 
11                           INTRODUCED BY:_________________________
 

 
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