STAND. COM. REP. NO. 941-00

                                 Honolulu, Hawaii
                                                   , 2000

                                 RE: S.B. No. 2873
                                     S.D. 1
                                     H.D. 1




Honorable Calvin K.Y. Say
Speaker, House of Representatives
Twentieth State Legislature
Regular Session of 2000
State of Hawaii

Sir:

     Your Committee on Health, to which was referred S.B. No.
2873, S.D. 1, entitled: 

     "A BILL FOR AN ACT RELATING TO HAWAII HEALTH SYSTEMS
     CORPORATION,"

begs leave to report as follows:

     The purpose of this bill is to authorize the Hawaii Health
Systems Corporation (HHSC) to issue $38,000,000 in revenue bonds.

     The Hawaii Government Employees Association, the Chamber of
Commerce of Hawaii, the Department of Budget and Finance (B&F),
and the Maui Memorial Medical Center submitted testimony in
support of this bill.

     B&F testified that due to HHSC's projected negative cash
flow, it was the opinion of their financing team that HHSC could
not issue revenue bonds on a stand-alone basis.  Therefore, it
was determined that the most feasible option was to request
authorization from the Legislature for a guaranty of $47,500,000
to cover the principal and estimated maximum interest on the
bonds.  Your Committee is concerned that even though the State's
guaranty will enhance the HHSC's ability to issue revenue bonds,
there is a possibility that the State may have to assume
liability for a portion or all of the outstanding debt if HHSC is
unable to repay the debt. 


 
 
 
                                 STAND. COM. REP. NO. 941-00
                                 Page 2

 
     Your Committee has amended this bill by replacing its
contents with the language of H.B. No. 2532, H.D. 1, a
substantially similar bill that was reported out earlier this
session by your Committee on Finance.  The only difference is
that this bill states that the HHSC is authorized to issue
$38,000,000 in revenue bonds under the Supplemental
Appropriations Act of 2000, as opposed to under Act 116 Hawaii
Session Laws 1998 (Item 13P, page 369).

     Your Committee has further amended this bill by making
technical, nonsubstantive amendments for purposes of clarity and
style. 

     As affirmed by the record of votes of the members of your
Committee on Health that is attached to this report, your
Committee is in accord with the intent and purpose of S.B. No.
2873, S.D. 1, as amended herein, and recommends that it pass
Second Reading in the form attached hereto as S.B. No. 2873, S.D.
1, H.D. 1, and be referred to the Committee on Finance.

                                   Respectfully submitted on
                                   behalf of the members of the
                                   Committee on Health,



                                   ______________________________
                                   ALEXANDER C. SANTIAGO, Chair