STAND. COM. REP. NO. 1255

                                   Honolulu, Hawaii
                                                     , 1999

                                   RE:  H.B. No. 854
                                        S.D. 1




Honorable Norman Mizuguchi
President of the Senate
Twentieth State Legislature
Regular Session of 1999
State of Hawaii

Sir:

     Your Committee on Ways and Means, to which was referred H.B.
No. 854, S.D. 1, entitled:

     "A BILL FOR AN ACT RELATING TO EDUCATION,"

begs leave to report as follows:

     The purpose of this bill is to reduce the maximum amount of
general excise tax revenues that, by statute, must be deposited
into the state educational facilities improvement special fund
from $90,000,000 per fiscal year to an unspecified amount.

     Your Committee finds that section 237-31, Hawaii Revised
Statutes, presently requires the sum of general excise tax
revenues that represents the difference between $90,000,000 and
the proceeds from general obligation bond sales authorized for
the purposes of the state educational facilities improvement
special fund to be deposited to the credit of the special fund.
In other words, if the State sells $90,000,000 in general
obligation bonds for the purposes of the special fund, then $0 in
general excise tax revenues need to be deposited to the credit of
the special fund.  On the other hand, if the State sells $0 in
general obligation bonds for the purposes of the special fund,
then $90,000,000 in general excise tax revenues need to be
deposited to the credit of the special fund.

     While well intentioned, your Committee finds that the
$90,000,000 base established by section 237-31, Hawaii Revised

 
a                                                     HB854 SD1
 
 
                                   STAND. COM. REP. NO. 1255
                                   Page 2


Statutes, substantially limits the State's cashflow at a time
when every available tax dollar must be used to maintain
essential government services.  In addition, your Committee finds
that the State cannot go on borrowing money without giving
serious consideration to how it will eventually pay this money
back with interest.

     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.
854, S.D. 1, and recommends that it pass Third Reading.

                                 Respectfully submitted on behalf
                                 of the members of the Committee
                                 on Ways and Means,



                                 ________________________________
                                 CAROL FUKUNAGA, Co-Chair



                                 ________________________________
                                 ANDREW LEVIN, Co-Chair

 
a                                                     HB854 SD1