Honorable Calvin K.Y. Say

Speaker, House of Representatives

Twenty-First State Legislature

Regular Session of 2001

State of Hawaii

Sir:

Your Committee on Judiciary and Hawaiian Affairs, to which was referred H.B. No. 575 entitled:

begs leave to report as follows:

The purpose of this bill is to require, by constitutional provision, the establishment of an emergency and budget reserve fund (Fund). Additionally, this bill would:

Supportive testimony was submitted by the Department of Budget and Finance. Comments were also submitted by the Tax Foundation of Hawaii.

By way of background, as part of legislation enacted to establish the statutory framework for the receipt and expenditure of tobacco settlement moneys (Act 304, Session Laws of Hawaii 1999), the Fund was created for use as a temporary supplemental source of State funding during times of emergency, economic downturn, or unforeseen reductions in revenues.

Your Committee asserts that recent budget difficulties elucidate the need for the State to save and build a "rainy day" financial reserve. Your Committee believes the enactment of a constitutional requirement will ensure the health, welfare, and safety of the general public while providing lawmakers with greater flexibility to deal with future emergency situations.

Since the Fund's inception, State administrators have questioned whether appropriations to and expenditures from the Fund would apply to the general fund expenditure ceiling. This has made uncertain the determination of the general fund expenditure ceiling for all other appropriations. Accordingly, your Committee believes this bill will eliminate confusion by clarifying the conditions in which moneys are to be counted toward the expenditure ceiling.

Although your Committee agrees that a super-majority vote should be required for the expenditure of moneys from the Fund, your Committee questions whether the mandate of a three-fourths vote is appropriate in light of other laws that require more than simple majority approval by the Legislature.

For example, your Committee notes that:

Your Committee chooses not to address the issue of whether a two-thirds or three-fourths majority vote would suffice for all "super-majority" requirements since the title of this vehicle would prohibit the insertion of language to amend other references.

In light of this, your Committee has amended the bill by:

As affirmed by the record of votes of the members of your Committee on Judiciary and Hawaiian Affairs that is attached to this report, your Committee is in accord with the intent and purpose of H.B. No. 575, as amended herein, and recommends that it pass Second Reading in the form attached hereto as H.B. No. 575, H.D. 1, and be referred to the Committee on Finance.