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HOUSE OF REPRESENTATIVES                H.B. NO.           
TWENTIETH LEGISLATURE, 2000                                
STATE OF HAWAII                                            
                                                             
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                   A  BILL  FOR  AN  ACT

PROPOSING AMENDMENTS TO ARTICLE VII OF THE HAWAII CONSTITUTION
   REGARDING 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 amendments
 
 2 to article VII, section 6 and section 9 of the Constitution of
 
 3 the State of Hawaii in order to establish a mechanism for the
 
 4 State to build a financial reserve to be used when there is an
 
 5 emergency or economic downturn, or when there is an unforeseen
 
 6 reduction in revenues.  The proposal is (1) to repeal the excess
 
 7 revenues tax refund and, in its place, establish an emergency and
 
 8 budget reserve fund; and (2) to clarify when the general fund
 
 9 expenditure ceiling shall apply to certain appropriations of
 
10 state funds.
 
11      SECTION 2.  Article VII, section 6 of the Constitution of
 
12 the State of Hawaii is amended to read as follows:
 
13                  "DISPOSITION OF EXCESS REVENUES
 
14      Section 6.  [Whenever the state general fund balance at the
 
15 close of each of two successive fiscal years exceeds five percent
 
16 of general fund revenues for each of the two fiscal years, the
 
17 legislature in the next regular session shall provide for a tax
 
18 refund or tax credit to the taxpayers of the State, as provided
 

 
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 1 by law.]  There shall be established by law an emergency and
 
 2 budget reserve fund to receive moneys set aside as financial
 
 3 reserves for the State.  Whenever the state general fund balance
 
 4 exceeds five percent of general fund revenues at the close of a
 
 5 fiscal year, the legislature in the next regular session shall
 
 6 deposit into the emergency and budget reserve fund an amount not
 
 7 less than fifty percent of the general fund balance in excess of
 
 8 the five percent level.
 
 9      The legislature may also deposit funds from other sources to
 
10 the emergency and budget reserve fund.
 
11      Expenditures from the emergency and budget reserve fund are
 
12 meant to be a temporary supplemental source of funding during
 
13 times of emergency, economic downturn, or unforeseen reduction in
 
14 revenues.  No expenditures shall be made from the emergency and
 
15 budget reserve fund except pursuant to appropriations approved by
 
16 a three-fourths vote of the members of each house of the
 
17 legislature."
 
18      SECTION 3.  Appropriations of moneys into the emergency and
 
19 budget reserve fund should be regarded as measures to save for a
 
20 rainy day, rather than spending measures, and thus should be
 
21 excluded from the general fund expenditure ceiling as stipulated
 
22 in article VII, section 9 of the Constitution of the State of
 
23 Hawaii.  When the reserves are actually used to fund programs,
 

 
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 1 such expenditures should then be counted against the expenditure
 
 2 ceiling.
 
 3      SECTION 4.  Article VII, section 9 of the Constitution of
 
 4 the State of Hawaii is amended to read as follows:
 
 5             "LEGISLATIVE APPROPRIATIONS; PROCEDURES;
 
 6                        EXPENDITURE CEILING
 
 7      Section 9.  In each regular session in an odd-numbered year,
 
 8 the legislature shall transmit to the governor an appropriation
 
 9 bill or bills providing for the anticipated total expenditures of
 
10 the State for the ensuing fiscal biennium.  In such session, no
 
11 appropriation bill, except bills recommended by the governor for
 
12 immediate passage, or to cover the expenses of the legislature,
 
13 shall be passed on final reading until the bill authorizing
 
14 operating expenditures for the ensuing fiscal biennium, to be
 
15 known as the general appropriations bill, shall have been
 
16 transmitted to the governor.
 
17      In each regular session in an even-numbered year, at such
 
18 time as may be provided by law, the governor may submit to the
 
19 legislature a bill to amend any appropriation for operating
 
20 expenditures of the current fiscal biennium, to be known as the
 
21 supplemental appropriations bill, and bills to amend any
 
22 appropriations for capital expenditures of the current fiscal
 
23 biennium, and at the same time the governor shall submit a bill
 

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

 
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 1 reasons therefor.
 
 2      The general fund expenditure ceiling shall also apply to
 
 3 expenditures authorized from the emergency and budget reserve
 
 4 fund."
 
 5      SECTION 5.  The question to be printed on the ballot shall
 
 6 be as follows:
 
 7      "Shall Article VII, section 6 and Article VII, section 9 of
 
 8 the Constitution of the State of Hawaii be amended to:
 
 9      1.   Eliminate the tax refund due to excess revenues and
 
10           replace that with an emergency and budget reserve fund;
 
11      2.   Require the legislature to deposit into the emergency
 
12           and budget reserve fund an amount no less than fifty
 
13           percent of the general fund balance in excess of five
 
14           percent of general fund revenues at the close of each
 
15           fiscal year;
 
16      3.   Require each house of the legislature to have a three-
 
17           fourths vote to authorize expenditures from the
 
18           emergency and budget reserve fund;
 
19      4.   Exclude appropriations to the emergency and budget
 
20           reserve fund from the general fund expenditure ceiling;
 
21           and
 
22      5.   Have the general fund expenditure ceiling apply to
 
23           expenditures authorized from the emergency and budget
 

 
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 1           reserve fund?"
 
 2      SECTION 6.  Constitutional material to be repealed is
 
 3 bracketed.  New constitutional material is underscored.
 
 4      SECTION 7.  This Act shall take effect upon compliance with
 
 5 Article XVII, section 3 of the Constitution of the State of
 
 6 Hawaii.
 
 7 
 
 8                           INTRODUCED BY:_________________________
 

 
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