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HOUSE OF REPRESENTATIVES                H.B. NO.           
TWENTIETH LEGISLATURE, 1999                                
STATE OF HAWAII                                            
                                                             
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                   A  BILL  FOR  AN  ACT

PROPOSING AMENDMENT OF ARTICLE VII OF THE HAWAII CONSTITUTION TO
   ESTABLISH AN EMERGENCY AND BUDGET RESERVE FUND.



BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF HAWAII:

 1      SECTION 1.  The purpose of this Act is to propose an
 
 2 amendment to article VII, section 6 and section 9 of the
 
 3 Constitution of the State of Hawaii in order to establish a
 
 4 mechanism for the State to build a financial reserve to be used
 
 5 when there is an emergency or economic downturn, or when there is
 
 6 an unforeseen reduction in revenues.  The proposal is a) to
 
 7 repeal the excess revenues tax refund and, in its place,
 
 8 establish an emergency and budget reserve fund; and b) to clarify
 
 9 when the general fund expenditure ceiling shall apply to certain
 
10 appropriations of State funds.
 
11      SECTION 2.  Article VII, section 6 of the Constitution of
 
12 the State of Hawaii is amended to read as follows:
 
13                  "DISPOSITION OF EXCESS REVENUES
 
14      Section 6.  [Whenever the state general fund balance at the
 
15 close of each of two successive fiscal years exceeds five percent
 
16 of general fund revenues for each of the two fiscal years, the
 
17 legislature in the next regular session shall provide for a tax
 
18 refund or tax credit to the taxpayers of the State, as provided
 
19 by law.]  There shall be established by law an emergency and
 

 
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 1 budget reserve fund to receive moneys set aside as financial
 
 2 reserves for the State.  Whenever the state general fund balance
 
 3 exceeds five percent of general fund revenues at the close of a
 
 4 fiscal year, the legislature in the next regular session shall
 
 5 deposit into the emergency and budget reserve fund an amount not
 
 6 less than fifty percent of the general fund balance in excess of
 
 7 the five percent level, up to the maximum size of the emergency
 
 8 and budget reserve fund as provided by law.
 
 9      The legislature may also deposit funds from other sources to
 
10 the emergency and budget reserve fund.
 
11      Expenditures from the emergency and budget reserve fund are
 
12 meant to be a temporary supplemental source of funding during
 
13 times of emergency, economic downturn, or unforeseen reduction in
 
14 revenues.  No expenditures shall be made from the emergency and
 
15 budget reserve fund except pursuant to appropriations approved by
 
16 a three-fourths vote of the members of each house of the
 
17 legislature."
 
18      SECTION 3.  Appropriations of moneys into the emergency and
 
19 budget reserve fund should be regarded as measures to save for a
 
20 rainy day, rather than spending measures, and thus should be
 
21 excluded from the general fund expenditure ceiling as stipulated
 
22 in article VII, section 9 of the Constitution.  When the reserves
 
23 are actually used to fund programs, such expenditures should then
 

 
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 1 be counted against the expenditure ceiling.
 
 2      SECTION 4.  Article VII, section 9 of the Constitution of
 
 3 the State of Hawaii is amended to read as follows:
 
 4                 "GENERAL FUND EXPENDITURE CEILING
 
 5      Notwithstanding any other provision to the contrary, the
 
 6 legislature shall establish a general fund expenditure ceiling
 
 7 which shall limit the rate of growth of general fund
 
 8 appropriations, excluding appropriations to the emergency and
 
 9 budget reserve fund and federal funds received by the general
 
10 fund, to the estimated rate of growth of the State's economy as
 
11 provided by law.  No appropriations in excess of such ceiling
 
12 shall be authorized during any legislative session unless the
 
13 legislature shall, by a two-thirds vote of the members to which
 
14 each house of the legislature is entitled, set forth the dollar
 
15 amount and the rate by which the ceiling will be exceeded and the
 
16 reasons therefor.
 
17      The general fund expenditure ceiling shall also apply to
 
18 expenditures authorized from the emergency and budget reserve
 
19 fund."
 
20      SECTION 5.  The question to be printed on the ballot shall
 
21 be as follows:
 
22      "Shall the tax refund due to excess revenues be eliminated
 
23 and replaced with an emergency and budget reserve fund, shall the
 

 
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 1 legislature be required to deposit into this fund an amount not
 
 2 less than fifty percent of the general fund balance in excess of
 
 3 five percent of general fund revenues at the close of a fiscal
 
 4 year, and shall each house of the legislature be required to have
 
 5 a three-fourths vote in authorizing expenditures from this fund?
 
 6 Furthermore, shall appropriations to the emergency and budget
 
 7 reserve fund be excluded from the general fund expenditure
 
 8 ceiling, and shall the general fund expenditure ceiling apply
 
 9 also to expenditures authorized from the emergency and budget
 
10 reserve fund?"
 
11      SECTION 6.  Constitutional material to be repealed is
 
12 bracketed.  New constitutional material is underscored.
 
13      SECTION 7.  This Act shall take effect upon compliance with
 
14 article XVII, section 3 of the Constitution of the State of
 
15 Hawaii.
 
16 
 
17                           INTRODUCED BY:  _______________________
 

 
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