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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

RELATING TO AN EMERGENCY AND BUDGET RESERVE FUND.



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

 1      SECTION 1.  The legislature finds that the establishment of
 
 2 an emergency and budget reserve fund is necessary to provide the
 
 3 State with a mechanism to build a financial reserve to be used
 
 4 when there is an emergency or economic downturn, or when there is
 
 5 an unforeseen reduction in revenues.
 
 6      SECTION 2.  Chapter 37, Hawaii Revised Statutes, is amended
 
 7 by adding a new part to be appropriately designated and to read
 
 8 as follows:
 
 9                  "PART   .  EMERGENCY AND BUDGET
 
10                           RESERVE FUND
 
11      37-  Establishment of fund; deposits; maximum size.(a)
 
12 There is established in the treasury of the State the emergency
 
13 and budget reserve fund which shall be a special fund
 
14 administered by the director of finance.  Whenever the general
 
15 fund balance at the close of a fiscal year exceeds five per cent
 
16 of the total revenues received in the general fund for that
 
17 fiscal year, including any beginning balance, the legislature in
 
18 the next regular session shall appropriate to the emergency and
 
19 budget reserve fund an amount not less than fifty per cent of the
 

 
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 1 general fund balance in excess of the five per cent level.  When
 
 2 the balance in the fund reaches an amount equal to ten per cent
 
 3 of total revenues in the general fund at the close of a fiscal
 
 4 year, no further appropriations from the excess balance shall be
 
 5 made into the fund except for the purpose of restoring the
 
 6 balance in the fund to the ten per cent level.
 
 7      (b)  For the purpose of this section, the general fund
 
 8 balance at the close of a fiscal year shall be the unreserved
 
 9 fund balance computed on the budgetary basis as reported by the
 
10 comptroller.  "Total revenues" means all moneys actually received
 
11 by the general fund as reported by the comptroller.
 
12      (c)  The legislature may also deposit funds from other
 
13 sources to the emergency and budget reserve fund.
 
14      (d)  All interest earned from moneys in the emergency and
 
15 budget reserve fund shall accumulate and accrue to the general
 
16 fund.
 
17      37-  Appropriations required; purposes; prohibitions.
 
18 (a)  Expenditures from the emergency and budget reserve fund are
 
19 meant to be a temporary supplemental source of funding during
 
20 times of emergency, economic downturn, or unforeseen reduction in
 
21 revenues.  No expenditures shall be made from the emergency and
 
22 budget reserve fund except pursuant to appropriations.  The
 
23 general appropriations bill or the supplemental appropriations
 

 
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 1 bill, as defined in section 9 of article VII of the Constitution
 
 2 of the State of Hawaii, shall not be used to appropriate moneys
 
 3 from the emergency and budget reserve fund.  The governor,
 
 4 through an appropriations bill, may recommend expenditures from
 
 5 the emergency and budget reserve fund by setting forth the
 
 6 purposes, consistent with the purposes listed in subsection (b),
 
 7 the amounts, and the reasons why the appropriations are
 
 8 necessary.
 
 9      (b)  The legislature may make appropriations from the fund
 
10 for the following purposes:
 
11      (1)  To maintain levels of programs determined to be
 
12           essential to the public health, safety, and welfare;
 
13      (2)  To provide for counter cyclical economic and employment
 
14           programs in periods of economic downturn;
 
15      (3)  To restore facilities destroyed or damaged or services
 
16           disrupted by disaster in any county; and
 
17      (4)  To meet other emergencies when declared by the governor
 
18           or determined to be urgent by the legislature.
 
19      Any act making appropriations from the emergency and budget
 
20 reserve fund shall include a declaration of findings and purposes
 
21 setting forth the purposes, the amounts, and the reasons why the
 
22 appropriations are necessary and shall require a three-fourths
 
23 majority vote of each house of the legislature.
 

 
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 1      (c)  Appropriations from the fund for the following purposes
 
 2 are specifically prohibited:
 
 3      (1)  To meet expenses of the legislature;
 
 4      (2)  To provide for salary adjustments for officials
 
 5           appointed pursuant to Article V, section 6 or Article
 
 6           VI, section 3 of the Hawaii Constitution and for others
 
 7           whose salaries are directly related to salaries of
 
 8           these officials; and
 
 9      (3)  To fund cost items in any collective bargaining
 
10           contract unless the general fund or the applicable
 
11           special fund is or is projected to be in a deficit
 
12           position and cannot fund the cost items approved by the
 
13           legislature.
 
14      37-  Compliance with expenditure ceiling.  The general
 
15 fund expenditure ceiling requirement shall not apply to
 
16 appropriations made to the emergency and budget reserve fund but
 
17 shall apply to appropriations authorized from the emergency and
 
18 budget reserve fund.
 
19      37-  Deposits from tobacco settlement.  Of the annual
 
20 proceeds from the 1998 settlement between the attorney general of
 
21 the State of Hawaii and the various tobacco companies, fifty per
 
22 cent shall be deposited into the emergency and budget reserve
 
23 fund.
 

 
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 1      37-  Report.  At least twenty days prior to the convening
 
 2 of each regular session, the director of finance shall submit to
 
 3 the legislature a report of the condition of the emergency and
 
 4 budget reserve fund, including:
 
 5      (1)  For the previous fiscal year:  the beginning balance;
 
 6           the amount deposited into the fund; the appropriations
 
 7           made from the fund; the expenditure and encumbrances
 
 8           for each appropriation; the amount, if any, lapsed for
 
 9           each appropriation; and the closing balance; and
 
10      (2)  For the fiscal year in progress:  the beginning
 
11           balance; the amount deposited into the fund; the
 
12           appropriations made from the fund; expenditures for
 
13           each appropriation for the first quarter; estimated
 
14           expenditures for the remaining three quarters; and the
 
15           estimated closing balance."
 
16      SECTION 3.  Section 36-27, Hawaii Revised Statutes, is
 
17 amended to read as follows:
 
18      "36-27  Transfers from special funds for central service
 
19 expenses.  Except as provided in this section, and
 
20 notwithstanding any other law to the contrary, from time to time
 
21 the director of finance, for the purpose of defraying the
 
22 prorated estimate of central service expenses of government in
 
23 relation to all special funds, except the:
 

 
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 1      (1)  Special summer school and intersession fund under
 
 2           section 302A-1310;
 
 3      (2)  School cafeteria special funds of the department of
 
 4           education;
 
 5      (3)  Special funds of the University of Hawaii;
 
 6      (4)  State educational facilities improvement special fund;
 
 7      (5)  Convention center capital special fund under section
 
 8           206X-10.5 and the convention center operations special
 
 9           fund under section 206X-10.6;
 
10      (6)  Special funds established by section 206E-6;
 
11      (7)  Housing loan program revenue bond special fund;
 
12      (8)  Housing project bond special fund;
 
13      (9)  Aloha Tower fund created by section 206J-17;
 
14     (10)  Domestic violence prevention special fund under section
 
15           321-1.3;
 
16     (11)  Spouse and child abuse special account under section
 
17           346-7.5;
 
18     (12)  Spouse and child abuse special account under section
 
19           601-3.6;
 
20     (13)  Funds of the employees' retirement system created by
 
21           section 88-109;
 
22     (14)  Unemployment compensation fund established under
 
23           section 383-121;
 

 
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 1     (15)  Hawaii hurricane relief fund established under chapter
 
 2           431P;
 
 3     (16)  Hawaii health systems corporation special funds;
 
 4     (17)  Boiler and elevator safety revolving fund established
 
 5           under section 397-5.5;
 
 6     (18)  Tourism special fund established under section 201B-11;
 
 7           [and]
 
 8     (19)  Department of commerce and consumer affairs' special
 
 9           funds; and
 
10     (20)  Emergency and budget reserve fund established under
 
11           section 37-   ;
 
12 shall deduct five per cent of all receipts of all other special
 
13 funds, which deduction shall be transferred to the general fund
 
14 of the State and become realizations of the State.  All officers
 
15 of the State and other persons having power to allocate or
 
16 disburse any special funds shall cooperate with the director in
 
17 effecting these transfers.  To determine the proper revenue base
 
18 upon which the central service assessment is to be calculated,
 
19 the director shall adopt rules pursuant to chapter 91 for the
 
20 purpose of suspending or limiting the application of the central
 
21 service assessment of any fund.  No later than twenty days prior
 
22 to the convening of each regular session of the legislature, the
 
23 director shall report all central service assessments made during
 

 
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 1 the preceding fiscal year."
 
 2      SECTION 4.  Section 36-30, Hawaii Revised Statutes, is
 
 3 amended to read as follows:
 
 4      "36-30  Special fund reimbursements for departmental
 
 5 administrative expenses.(a)  Each special fund, except the:
 
 6      (1)  Transportation use special fund established by section
 
 7           261D-1;
 
 8      (2)  Special summer school and intersession fund under
 
 9           section 302A-1310;
 
10      (3)  School cafeteria special funds of the department of
 
11           education;
 
12      (4)  Special funds of the University of Hawaii;
 
13      (5)  State educational facilities improvement special fund;
 
14      (6)  Special funds established by section 206E-6;
 
15      (7)  Aloha Tower fund created by section 206J-17;
 
16      (8)  Domestic violence prevention special fund under section
 
17           321-1.3;
 
18      (9)  Spouse and child abuse special account under section
 
19           346-7.5;
 
20     (10)  Spouse and child abuse special account under section
 
21           601-3.6;
 
22     (11)  Funds of the employees' retirement system created by
 
23           section 88-109;
 

 
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 1     (12)  Unemployment compensation fund established under
 
 2           section 383-121;
 
 3     (13)  Hawaii hurricane relief fund established under chapter
 
 4           431P;
 
 5     (14)  Convention center capital special fund established
 
 6           under section 206X-10.5 and the convention center
 
 7           operations special fund established under section
 
 8           206X-10.6;
 
 9     (15)  Hawaii health systems corporation special funds; [and]
 
10     (16)  Tourism special fund established under section 201B-11;
 
11           and
 
12     (17)  Emergency and budget reserve fund established under
 
13           section 37-   ;
 
14 shall be responsible for its pro rata share of the administrative
 
15 expenses incurred by the department responsible for the
 
16 operations supported by the special fund concerned.
 
17      (b)  Administrative expenses shall include:
 
18      (1)  Salaries;
 
19      (2)  Maintenance of buildings and grounds;
 
20      (3)  Utilities; and
 
21      (4)  General office expenses.
 
22      (c)  The pro rata share of each special fund shall be that
 
23 proportion of the administrative expenses of the department,
 

 
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 1 including those paid from all special funds administered by the
 
 2 department, which the expenditures of the special fund bear to
 
 3 the total expenditures of the department; provided that in
 
 4 determining the amount to be charged to each special fund for its
 
 5 pro rata share:
 
 6      (1)  Credit shall be given for any administrative expenses
 
 7           paid from the special fund concerned; and
 
 8      (2)  Other adjustments shall be made as necessary to achieve
 
 9           an equitable apportionment.
 
10      (d)  The director of finance may determine the amount to be
 
11 charged to each special fund and may cause the amounts to be
 
12 transferred to the general fund as reimbursements.
 
13      (e)  No later than twenty days prior to the convening of
 
14 each regular session of the legislature, the director shall
 
15 report all departmental administrative expenses assessments made
 
16 during the preceding fiscal year."
 
17      SECTION 5.  There is appropriated out of the state general
 
18 fund to the emergency and budget reserve fund an amount equal to
 
19 fifty per cent of the proceeds from the 1998 settlement between
 
20 the attorney general of the State of Hawaii and the various
 
21 tobacco companies.
 
22      SECTION 6.  Statutory material to be repealed is bracketed.
 
23 New statutory material is underscored.
 

 
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 1      SECTION 7.  This Act shall take effect upon ratification of
 
 2 the amendment to article VII, section 6 and section 9 of the
 
 3 Hawaii Constitution to establish an emergency and budget reserve
 
 4 fund.
 
 5 
 
 6                           INTRODUCED BY:  _______________________
 

 
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