STAND. COM. REP. NO. 2741

                                   Honolulu, Hawaii
                                                     , 2000

                                   RE:  S.B. No. 2542
                                        S.D. 1




Honorable Norman Mizuguchi
President of the Senate
Twentieth State Legislature
Regular Session of 2000
State of Hawaii

Sir:

     Your Committee on Ways and Means, to which was referred S.B.
No. 2542 entitled:

     "A BILL FOR AN ACT RELATING TO STATE BONDS,"

begs leave to report as follows:

     The purpose of this bill is to authorize the issuance of
general obligation bonds.

     In particular, the bill serves as a "shell" for the issuance
of general obligation bonds to finance project appropriations
contained in legislative Acts for which the means of funding are
designated as general obligation bond funds or reimbursable
general obligation bond funds.  The bill also includes a
declaration of findings with respect to these authorizations as
mandated by the Hawaii Constitution.

     Your Committee received informational testimony on the
proposed S.D. 1 from the state Director of Finance.

     Your Committee has amended this bill by deleting its
contents and adding the Attorney General's suggested language to
exempt state bonds from the requirement of perfecting security
interests in government collateral.

     According to the State's bond counsel, proposed changes to
Article 9 of the Uniform Commercial Code relating to secured

 
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                                   STAND. COM. REP. NO. 2741
                                   Page 2


transactions would require governments or governmental
subdivisions to perfect security interests in government
collateral.  Accordingly, there would be a need to file and
record UCC-1 Financing Statements for current and outstanding
bonds issued by the State and its agencies.

     Your Committee agrees with the intent of the bill, and finds
that without the exemption for state bonds from the requirements
proposed by the Uniform Commercial Code as provided in part II of
the bill, the State would incur costs and exposure to the risk of
noncompliance with the Code without any real additional benefit
to bondholders.

     As affirmed by the record of votes of the members of your
Committee on Ways and Means that is attached to this report, your
Committee is in accord with the intent and purpose of S.B. No.
2542, as amended herein, and recommends that it pass Second
Reading in the form attached hereto as S.B. No. 2542, S.D. 1, and
be placed on the calendar for Third Reading.

                                 Respectfully submitted on behalf
                                 of the members of the Committee
                                 on Ways and Means,



                                 ________________________________
                                 CAROL FUKUNAGA, Co-Chair



                                 ________________________________
                                 ANDREW LEVIN, Co-Chair

 
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