STAND. COM. REP. NO. 2506

Honolulu, Hawaii

RE:    S.B. No. 2732

Honorable Ronald D. Kouchi

President of the Senate

Twenty-Eighth State Legislature

Regular Session of 2016

State of Hawaii

Sir:

     Your Committees on Commerce, Consumer Protection, and Health and Ways and Means, to which was referred S.B. No. 2732 entitled:

"A BILL FOR AN ACT RELATING TO THE HAWAII HURRICANE RELIEF FUND,"

beg leave to report as follows:

     The purpose and intent of this measure is to:

     (1)  Require the interest earned on the balance of the hurricane reserve trust fund to be retained in the trust fund;

     (2)  Require the Board of Directors of the Hawaii Hurricane Relief Fund to conduct a study of the acquisition of a catastrophic hurricane loss financing arrangement with all or a portion of the interest earned in the hurricane reserve trust fund; and

     (3)  Appropriate monies from the hurricane reserve trust fund for the study.

     Your Committees received testimony in support of this measure from the Department of Defense; Hawaii Emergency Management Agency; Hawai‘i Association of REALTORS; Ho‘omana Pono, LLC; and one individual.  Your Committees received comments on this measure from the Board of Directors of the Hawaii Hurricane Relief Fund.

     Your Committees find that since 2002, the interest earned on the balance of the hurricane reserve trust fund has been transferred and deposited into the general fund.  This transfer to the general fund helped mitigate the revenue shortfalls that affected the State during the Great Recession.  However, now that the economy of Hawaii has improved and general fund revenues from tax sources have and are projected to increase at fairly healthy annual rates, your Committees further find that the general fund no longer needs the interest transferred from the hurricane reserve trust fund.  Accordingly, this measure requires the interest earned on the balance of the hurricane reserve trust fund to be retained in the trust fund.

     Your Committees note that the Board of Directors has previously indicated that the acquisition of a hurricane loss financing arrangement would be a valuable option for the Board to consider.  However, your Committees also note that whether this type of financing arrangement would be feasible, practical, affordable, and in the public interest cannot be determined without some kind of exploration.  Accordingly, this measure requires the Board of Directors to conduct a study of the acquisition of a catastrophic hurricane loss financing arrangement with all or a portion of the interest earned in the hurricane reserve trust fund.  Your Committees additionally find that this study could lead to other avenues to fund the State's overall recovery after a devastating hurricane.

     As affirmed by the records of votes of the members of your Committees on Commerce, Consumer Protection, and Health and Ways and Means that are attached to this report, your Committees are in accord with the intent and purpose of S.B. No. 2732 and recommend that it pass Second Reading and be placed on the calendar for Third Reading.

Respectfully submitted on behalf of the members of the Committees on Commerce, Consumer Protection, and Health and Ways and Means,

________________________________ JILL N. TOKUDA, Chair

________________________________ ROSALYN H. BAKER, Chair