STAND. COM. REP. NO. 1211

Honolulu, Hawaii

RE:    H.B. No. 1364

       H.D. 1

       S.D. 1

Honorable Colleen Hanabusa

President of the Senate

Twenty-Fifth State Legislature

Regular Session of 2009

State of Hawaii

Madam:

     Your Committee on Ways and Means, to which was referred H.B. No. 1364, H.D. 1, entitled:

"A BILL FOR AN ACT RELATING TO THE BUDGET,"

begs leave to report as follows:

     The purpose of this measure is to require the Governor or Director of Finance to submit a report to the Legislature for each restriction placed on any appropriation authorized by the Legislature.

Your Committee received one written comment from a state agency on this measure.  The written comment may be reviewed on the Legislature's website.

     Your Committee finds that many unprecedented events have converged to create an economic, financial, and fiscal environment that threatens the very foundation of our national economy.  For state governments, the financial crisis and economic downturn have adversely affected tax revenues and operating budgets.  The impact on Hawaii has been a severe reduction in projected general fund revenues for fiscal year 2008‑2009 through fiscal biennium 2009‑2011 by $2.1 billion over the period of one year.  Based on the Council on Revenues' March 2009 projections, the State is faced with a general fund revenue shortfall of $430,500,000 in fiscal year 2008‑2009 if corrective action is not taken.

     Your Committee further finds that the federal American Recovery and Reinvestment Act of 2009, Pub. L. 111-5, was enacted to help the states by providing federal funds to replace state general revenues for education and Medicaid.  In addition, Title V, State Fiscal Relief, of the Recovery Act temporarily increases the federal medical assistance percentage that permits states to reduce their share of Medicaid costs.

     The Recovery Act also temporarily increases federal support to states for energy initiatives, water systems development, unemployment insurance, vocational rehabilitation, transportation, social services, public housing, Native Hawaiian homesteads, support for elders, and education.

     The federal Deficit Reduction Act of 2005 authorizes an enhanced level of federal Temporary Aid for Needy Families funding if a state qualifies, as Hawaii does, as a "needy state" in terms of high food stamp case loads.  However, federal regulations require that the State appropriate the Temporary Aid for Needy Families funds before the federal funding can be used.  The increased federal medical assistance percentage funding for Medicaid correspondingly reduces general fund costs thereby freeing some general funds in fiscal year 2008‑2009 for use to address increased program requirements in the adult mental health ‑ outpatient program and the Hawaii health systems corporation program.

     Accordingly, your Committee has amended this measure by:

(1)  Funding various programs that are expected to receive funding during fiscal year 2008-2009 under the American Recovery and Reinvestment Act of 2009;

(2)  Reducing general fund appropriations for certain programs that receive offsetting federal funding;

(3)  Providing additional federal Temporary Assistance for Needy Families funds for fiscal year 2008-2009 under the federal Deficit Reduction Act of 2005;

(4)  Providing additional general funds for fiscal year 2008-2009 to the adult mental health outpatient program; and

(5)  Providing additional general funds for fiscal year 2008-2009 to the Hawaii Health Systems Corporation.

Your Committee finds that this measure is necessary to:

(1)  Promote openness and transparency in the use of federal Recovery Act funds for fiscal year 2008‑2009;

(2)  Address the general fund revenue shortfall for fiscal year 2008‑2009;

(3)  Authorize Temporary Aid for Needy Families funds for fiscal year 2008‑2009 as required by federal regulations; and

(4)  Meet fiscal year 2008‑2009 program requirements of the adult mental health ‑ outpatient program and the Hawaii health systems corporation program.

     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 H.B. No. 1364, H.D. 1, as amended herein, and recommends that it pass Second Reading in the form attached hereto as H.B. No. 1364, H.D. 1, 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,

____________________________

DONNA MERCADO KIM, Chair