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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

RELATING TO THE 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      Act 304, Session Laws of Hawaii 1999, established the
 
 7 emergency and budget reserve fund in chapter 328L, Hawaii Revised
 
 8 Statutes, to receive forty per cent of the proceeds from the
 
 9 tobacco settlement.  While this is a good beginning, the
 
10 legislature finds that it is important to establish a mechanism
 
11 for the State to regularly save a portion of excess general fund
 
12 revenues, apart from the moneys that may be set aside from time
 
13 to time in the emergency and budget reserve fund by the
 
14 legislature.
 
15      The purpose of this Act is to move the emergency and budget
 
16 reserve fund from chapter 328L and establish it under chapter 37,
 
17 Hawaii Revised Statutes.  Chapter 37, which addresses state
 
18 budgetary matters, is a more appropriate chapter for the
 
19 emergency and budget reserve fund.
 

 
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 1      SECTION 2.  Chapter 37, Hawaii Revised Statutes, is amended
 
 2 by adding a new part to be appropriately designated and to read
 
 3 as follows:
 
 4          "PART     .  EMERGENCY AND BUDGET RESERVE FUND
 
 5      §37-     Establishment of fund; deposits.(a)  There is
 
 6 established in the treasury of the State the emergency and budget
 
 7 reserve fund which shall be a special fund administered by the
 
 8 director of finance.  Whenever the general fund balance at the
 
 9 close of a fiscal year exceeds five per cent of the total
 
10 revenues received in the general fund for that fiscal year,
 
11 including any beginning balance, the legislature in the next
 
12 regular session shall appropriate to the emergency and budget
 
13 reserve fund an amount not less than fifty per cent of the
 
14 general fund balance in excess of the five per cent level.
 
15      (b)  For the purpose of this section, the general fund
 
16 balance at the close of a fiscal year shall be the unreserved
 
17 fund balance computed on the budgetary basis as reported by the
 
18 comptroller.  "Total revenues" means all moneys actually received
 
19 by the general fund as reported by the comptroller.
 
20      (c)  The legislature may also deposit funds from other
 
21 sources to the emergency and budget reserve fund.
 
22      (d)  All interest earned from moneys in the emergency and
 
23 budget reserve fund shall be credited to the general fund.
 

 
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 1      §37-     Appropriations required; purposes; prohibitions.
 
 2 (a)  Expenditures from the emergency and budget reserve fund are
 
 3 meant to be a temporary supplemental source of funding during
 
 4 times of emergency, economic downturn, or unforeseen reduction in
 
 5 revenues.  No expenditures shall be made from the emergency and
 
 6 budget reserve fund except pursuant to appropriations.  The
 
 7 general appropriations bill or the supplemental appropriations
 
 8 bill, as defined in section 9 of article VII of the Constitution
 
 9 of the State of Hawaii, shall not be used to appropriate moneys
 
10 from the emergency and budget reserve fund.  The governor,
 
11 through an appropriations bill, may recommend expenditures from
 
12 the emergency and budget reserve fund by setting forth the
 
13 purposes, consistent with the purposes listed in subsection (b),
 
14 the amounts, and the reasons why the appropriations are
 
15 necessary.
 
16      (b)  The legislature may make appropriations from the fund
 
17 for the following purposes:
 
18      (1)  To maintain levels of programs determined to be
 
19           essential to the public health, safety, and welfare;
 
20      (2)  To provide for counter cyclical economic and employment
 
21           programs in periods of economic downturn;
 
22      (3)  To restore facilities destroyed or damaged or services
 
23           disrupted by disaster in any county; and
 

 
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 1      (4)  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 section
 
13           3 of article VI of the Hawaii Constitution and for
 
14           others whose salaries are directly related to salaries
 
15           of these officials; and
 
16      (3)  To fund cost items in any collective bargaining
 
17           contract.
 
18      §37-     Compliance with expenditure ceiling.  The general
 
19 fund expenditure ceiling requirement shall not apply to
 
20 appropriations made to the emergency and budget reserve fund but
 
21 shall apply to appropriations authorized from the emergency and
 
22 budget reserve fund.
 
23      §37-     Deposits from tobacco settlement.  Of the annual
 

 
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 1 proceeds from the 1998 settlement between the attorney general of
 
 2 the State of Hawaii and the various tobacco companies, forty per
 
 3 cent shall be deposited into the emergency and budget reserve
 
 4 fund.
 
 5      §37-   Report.  At least twenty days prior to the
 
 6 convening of each regular session, the director of finance shall
 
 7 submit to the legislature a report of the condition of the
 
 8 emergency and budget reserve fund, including:
 
 9      (1)  For the previous fiscal year:  the beginning balance;
 
10           the amount deposited into the fund; the appropriations
 
11           made from the fund; the expenditure and encumbrances
 
12           for each appropriation; the amount, if any, lapsed for
 
13           each appropriation; and the closing balance; and
 
14      (2)  For the fiscal year in progress:  the beginning
 
15           balance; the amount deposited into the fund; the
 
16           appropriations made from the fund; expenditures for
 
17           each appropriation for the first quarter; estimated
 
18           expenditures for the remaining three quarters; and the
 
19           estimated closing balance."
 
20      SECTION 3.  Section 36-27, Hawaii Revised Statutes, is
 
21 amended to read as follows:
 
22      "§36-27  Transfers from special funds for central service
 
23 expenses.  Except as provided in this section, and
 

 
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 1 notwithstanding any other law to the contrary, from time to time
 
 2 the director of finance, for the purpose of defraying the
 
 3 prorated estimate of central service expenses of government in
 
 4 relation to all special funds, except the:
 
 5      (1)  Special summer school and intersession fund under
 
 6           section 302A-1310;
 
 7      (2)  School cafeteria special funds of the department of
 
 8           education;
 
 9      (3)  Special funds of the University of Hawaii;
 
10      (4)  State educational facilities improvement special fund;
 
11      (5)  Convention center capital and operations special fund
 
12           under section 206X-10.5;
 
13      (6)  Special funds established by section 206E-6;
 
14      (7)  Housing loan program revenue bond special fund;
 
15      (8)  Housing project bond special fund;
 
16      (9)  Aloha Tower fund created by section 206J-17;
 
17     (10)  Domestic violence prevention special fund under section
 
18           321-1.3;
 
19     (11)  Spouse and child abuse special account under section
 
20           346-7.5;
 
21     (12)  Spouse and child abuse special account under section
 
22           601-3.6;
 
23     (13)  Funds of the employees' retirement system created by
 

 
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 1           section 88-109;
 
 2     (14)  Unemployment compensation fund established under
 
 3           section 383-121;
 
 4     (15)  Hawaii hurricane relief fund established under chapter
 
 5           431P;
 
 6     (16)  Hawaii health systems corporation special funds;
 
 7     (17)  Boiler and elevator safety revolving fund established
 
 8           under section 397-5.5;
 
 9     (18)  Tourism special fund established under section 201B-11;
 
10     (19)  Department of commerce and consumer affairs' special
 
11           funds;
 
12     (20)  Compliance resolution fund established under section
 
13           26-9;
 
14     (21)  Universal service fund established under chapter 269;
 
15     (22)  Integrated tax information management systems special
 
16           fund under section 231-3.2;
 
17     (23)  Insurance regulation fund under section 431:2-215;
 
18     (24)  Hawaii tobacco settlement special fund under section
 
19           328L-2; and
 
20     (25)  Emergency budget and reserve fund under section [328L-
 
21           3] 37-  ;
 
22 shall deduct five per cent of all receipts of all other special
 
23 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 302A-
 
18           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 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 and operations special fund
 
15           established under section 206X-10.5;
 
16     (15)  Hawaii health systems corporation special funds;
 
17     (16)  Tourism special fund established under section 201B-11;
 
18     (17)  Compliance resolution fund established under section
 
19           26-9;
 
20     (18)  Universal service fund established under chapter 269;
 
21     (19)  Integrated tax information management systems special
 
22           fund;
 
23     (20)  Insurance regulation fund under section 431:2-215;
 

 
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 1     (21)  Hawaii tobacco settlement special fund under section
 
 2           328L-2; and
 
 3     (22)  Emergency and budget reserve fund under section [328L-
 
 4           3] 37-  ;
 
 5 shall be responsible for its pro rata share of the administrative
 
 6 expenses incurred by the department responsible for the
 
 7 operations supported by the special fund concerned."
 
 8      SECTION 5.  Section 328L-2, Hawaii Revised Statutes, is
 
 9 amended to read as follows:
 
10      "§328L-2  Hawaii tobacco settlement special fund.(a)
 
11 There is established in the state treasury the Hawaii tobacco
 
12 settlement special fund into which shall be deposited:
 
13      (1)  All tobacco settlement moneys; and
 
14      (2)  All interest and earnings accruing from the investment
 
15           of moneys in the fund.
 
16 The Hawaii tobacco settlement special fund shall be administered
 
17 by the department.
 
18      (b)  The fund shall be used for the purpose of receiving and
 
19 appropriating the tobacco settlement moneys as follows:
 
20      (1)  Forty per cent shall be appropriated into the emergency
 
21           and budget reserve fund as established under [section
 
22           328L-3;] chapter 37;
 
23      (2)  Thirty-five per cent shall be appropriated to the
 

 
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 1           department for purpose of section 328L-4; and
 
 2      (3)  Twenty-five per cent shall be appropriated into the
 
 3           Hawaii tobacco prevention and control trust fund under
 
 4           section 328L-5."
 
 5      SECTION 6.  Section 328L-3, Hawaii Revised Statutes, is
 
 6 repealed.
 
 7      ["§328L-3  Emergency and budget reserve fund.(a)  There is
 
 8 established in the state treasury the emergency budget and
 
 9 reserve fund which shall be a special fund administered by the
 
10 director of finance, into which shall be deposited:
 
11      (1)  Forty per cent of the moneys received from the tobacco
 
12           settlement moneys under section   -2(b)(1);
 
13      (2)  Appropriations made by the legislature to the fund.
 
14      (b)  All interest earned from moneys in the emergency and
 
15 budget reserve fund shall be credited to the general fund.
 
16      (c)  Expenditures from the emergency and budget reserve fund
 
17 shall be a temporary supplemental source of funding for the State
 
18 during times of emergency, economic downturn, or unforeseen
 
19 reduction in revenues.  No expenditure shall be made from the
 
20 emergency and budget reserve fund except pursuant to
 
21 appropriations.  The general appropriations bill or the
 
22 supplemental appropriations bill, as defined in section 9 of
 
23 article VII of the Constitution of the State of Hawaii, shall not
 

 
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 1 be used to appropriate moneys from the emergency and budget
 
 2 reserve fund.  The governor, through an appropriations bill, may
 
 3 recommend expenditures from the emergency and budget reserve fund
 
 4 by setting forth the purposes of the expenditures consistent with
 
 5 subsection (d), the amounts, and the reasons justifying the
 
 6 necessity for the appropriations.
 
 7      (d)  The legislature may make appropriations from the fund
 
 8 for the following purposes:
 
 9      (1)  To maintain levels of programs determined to be
 
10           essential to the public health, safety, and welfare;
 
11      (2)  To provide for counter cyclical economic and employment
 
12           programs in periods of economic downturn;
 
13      (3)  To restore facilities destroyed or damaged or services
 
14           disrupted by disaster in any county; and
 
15      (4)  To meet other emergencies when declared by the governor
 
16           or determined to be urgent by the legislature.
 
17      Any act making appropriations from the emergency and budget
 
18 reserve fund shall include a declaration of findings and purposes
 
19 setting forth the purposes, the amounts, and the reasons why the
 
20 appropriations are necessary and shall require a two-thirds
 
21 majority vote of each house of the legislature.
 
22      (e)  Appropriations for the following purposes from the
 
23 emergency and budget reserve fund are specifically prohibited:
 

 
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 1      (1)  To meet expenses of the legislature;
 
 2      (2)  To provide for salary adjustments for officials
 
 3           appointed pursuant to article V, section 6 or article
 
 4           VI, section 3 of the Constitution of the State of
 
 5           Hawaii and for others whose salaries are directly
 
 6           related to salaries of these officials; and
 
 7      (3)  To fund cost items in any collective bargaining
 
 8           contract."]
 
 9      SECTION 7.  Act 304, Session Laws of Hawaii 1999, is amended
 
10 by amending section 5 to read as follows:
 
11      "SECTION 5.  There is appropriated out of the Hawaii tobacco
 
12 settlement special fund the sum of [$5,777,903,] $22,562,714, or
 
13 so much thereof as may be necessary, for fiscal year 1999-2000,
 
14 and the sum of [$15,436,031,] $18,167,078, or so much thereof as
 
15 may be necessary, for fiscal year 2000-2001, to be deposited into
 
16 the emergency and budget reserve fund."
 
17      SECTION 8.  Statutory material to be repealed is bracketed.
 
18 New statutory material is underscored.
 
19      SECTION 9.  This Act shall take effect upon its approval.
 
20 
 
21                           INTRODUCED BY:_________________________
 

 
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