REPORT TITLE:
Federal Revenue Maximization


DESCRIPTION:
Establishes a program for federal revenue maximization within the
department of business, economic development, and tourism to
secure eligible federal funds and grants for state programs.
Makes permanent the interagency federal revenue maximization
revolving fund.  (SD2)

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
                                                        426
THE SENATE                              S.B. NO.           S.D. 2
TWENTIETH LEGISLATURE, 1999                                
STATE OF HAWAII                                            
                                                             
________________________________________________________________
________________________________________________________________


                   A  BILL  FOR  AN  ACT

RELATING TO FUNDS.



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

 1      SECTION 1.  The legislature finds that there is a need for
 
 2 the creation of a program within state government to aggressively
 
 3 seek federal dollars on behalf of state programs.  For many of
 
 4 these programs, including various child welfare and other social
 
 5 services programs, there is a very limited time frame to secure
 
 6 assistance and other funding available under applicable federal
 
 7 laws, such as the Social Security Act, much of which is available
 
 8 on a matching basis with state funds.  Moreover, some of these
 
 9 federal funds are limited not only in terms of the time in which
 
10 they may be sought but also in amount, as Congress has considered
 
11 imposing an upper limit on the amount of certain funds available
 
12 to the states, as well as setting other restrictions on fund
 
13 availability.
 
14      In addition, the legislature finds that the current
 
15 piecemeal approach to obtaining new federal funds and grants is
 
16 often counterproductive.  Some departments, acting individually,
 
17 are unable to compete with their mainland counterparts, which
 
18 either serve larger population bases or have pooled their
 
19 resources to maximize the target populations that they serve.
 

 
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 1 The legislature finds that departments in Hawaii should similarly
 
 2 pool together their resources and grant applications to
 
 3 strengthen their positions relative to these mainland
 
 4 departments.  Multi-agency grant applications will prevent
 
 5 Hawaii's agencies from competing among themselves and avoid a
 
 6 piecemeal approach to obtaining federal funding.
 
 7      In the 1995 special session, the legislature created an
 
 8 interagency federal revenue maximization revolving fund, codified
 
 9 as section 29-24, Hawaii Revised Statutes, to be used to
 
10 aggressively pursue, collect, and distribute additional federal
 
11 fund reimbursements.  That fund, which allowed for the retention
 
12 of the services of certified public accountants and other
 
13 consultants to pursue and collect federal fund reimbursements,
 
14 will be repealed on June 30, 1999, and all unobligated,
 
15 unencumbered, or unexpended funds remaining in the fund as of
 
16 that date are to revert to the state general fund.  Upon the
 
17 termination of that fund, there will be no statutorily authorized
 
18 interagency effort to pursue federal funds.
 
19      The legislature finds that there is a need for the
 
20 establishment of a permanent executive department program to
 
21 serve this important function.  The creation of such  a program
 
22 will have several advantages over the current system.  First, it
 

 
 
 
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 1 will consolidate the time-consuming but necessary functions of
 
 2 applying for federal funds by integrating and unifying all
 
 3 administrative and paperwork requirements into one agency that
 
 4 has already established an expertise in seeking grant funding.
 
 5 In addition, it will allow persons to draw on the knowledge of
 
 6 persons in program areas from various state departments and
 
 7 agencies in Hawaii to quickly identify which federal and private
 
 8 funds are available for these programs and to actively pursue
 
 9 these funds on a timely basis.  
 
10      The legislature further finds that there is a need to better
 
11 coordinate Hawaii's interests in Washington, D.C., in pursuing
 
12 federal funding, to follow up on applications to federal agencies
 
13 on behalf of the respective departments, and to provide an early
 
14 alert on opportunities to appropriate agencies.  A program for
 
15 federal revenue maximization will improve this coordination, will
 
16 assist Hawaii's congressional delegation's efforts, and will
 
17 provide greater cost-efficiency in coordinating the routine
 
18 paperwork and miscellaneous functions associated with pursuing
 
19 federal grants.
 
20      Finally, the legislature finds that the new program created
 
21 by this Act should be placed within the department of business,
 
22 economic development, and tourism, or in any comparable agency,
 

 
 
 
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 1 and exempted from the state procurement code, civil service and
 
 2 compensation laws, and other relevant laws under section 307-4,
 
 3 Hawaii Revised Statutes.  The program for federal revenue
 
 4 maximization may receive up to five per cent of the amount of new
 
 5 federal funds obtained with the assistance of their efforts as
 
 6 processing fees.
 
 7      The purpose of this Act is therefore to establish a program
 
 8 for federal revenue maximization to be placed within the
 
 9 department of business, economic development, and tourism or
 
10 comparable agency, in order to secure both federal reimbursements
 
11 and new moneys and grants for any applicable state program.  In
 
12 addition, this Act makes permanent the interagency federal
 
13 revenue maximization revolving fund.
 
14      SECTION 2.  Chapter 307, Hawaii Revised Statutes, is amended
 
15 as follows:
 
16      1.  By designating sections 307-1 to 307-10 as part I and
 
17 inserting a title before section 307-1 to read:
 
18                   "PART I.  GENERAL PROVISIONS"
 
19      2.  By adding a new part to be appropriately designated and
 
20 to read as follows:
 
21        "PART  .  PROGRAM FOR FEDERAL REVENUE MAXIMIZATION
 
22      307-A  Definitions.  As used in this part, unless the
 

 
 
 
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 1 context otherwise requires:
 
 2      "Agency" means a state department, board, commission,
 
 3 office, or other state entity, including the judicial branch of
 
 4 state government.
 
 5      "Director" means the director of the program for federal
 
 6 revenue maximization.
 
 7      "Federal funds" means new assistance that is provided or
 
 8 potentially available to state agencies from the federal
 
 9 government, in the form of grants, matching funds,
 
10 reimbursements, contracts, loans, loan guarantees, property,
 
11 cooperative agreements, interest subsidies, insurance, direct
 
12 appropriations, or any other method of disbursement pursuant to
 
13 any federal act, regulation, order, or other federal law, after
 
14 the effective date of this Act.
 
15      "Program" means the program for federal revenue maximization
 
16 established by this part.
 
17      307-B  Program for federal revenue maximization
 
18 established.(a)  There is established the program for federal
 
19 revenue maximization within the department of business, economic
 
20 development, and tourism; provided that the governor may transfer
 
21 the program to a comparable agency that is fully capable of
 
22 carrying out the purposes of the program.  The program shall have
 

 
 
 
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 1 staff in Washington, District of Columbia, to:  allow for the
 
 2 active pursuit of federal funding; serve as a liaison between
 
 3 state and federal agencies; and facilitate the development of a
 
 4 conduit for timely and accurate information in pursuing federal
 
 5 grants.
 
 6      (b)  The governor shall appoint, without regard to chapters
 
 7 76 and 77, a director of the program who shall serve at the
 
 8 pleasure of the governor.  The director's salary shall be within
 
 9 the range of salaries paid to deputy directors of the departments
 
10 of the state government.  The director shall be a member of the
 
11 state employees' retirement system and shall be eligible to
 
12 receive the benefits of any state or federal employee benefit
 
13 program generally applicable to officers and employees of the
 
14 State.
 
15      (c)  The director shall have expertise in applying for
 
16 federal funds for state programs.  The director shall hire,
 
17 without regard to chapter 76 and 77, persons having an expertise
 
18 in applying for federal grant funding.  Personnel from other
 
19 agencies may be temporarily transferred to the program pursuant
 
20 to section 307-F as may be needed to assist the program.
 
21      (d)  The director, by contracts entered into without regard
 
22 to chapter 103D, may retain the services of certified public
 

 
 
 
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 1 accountants and other consultants, including a pool of
 
 2 professional grant writers pursuant to sections 307-I and 307-J,
 
 3 to pursue and collect federal funds, and perform other duties
 
 4 necessary to administer this part.  At the option of the
 
 5 director, consultants retained by contract under this subsection
 
 6 may be compensated:
 
 7      (1)  On a fixed-price basis;
 
 8      (2)  On an hourly rate basis with or without a fixed cap; or
 
 9      (3)  Through a contingent fee arrangement specified in the
 
10           contract.
 
11      307-C  Duties of the program.  The purpose of the program
 
12 shall be to secure federal funds for any applicable state
 
13 program.  To achieve this purpose, the program shall:
 
14      (1)  Serve as the principal program in state government
 
15           responsible for applying for and maximizing federal
 
16           funds;
 
17      (2)  Serve as the State's clearinghouse for information on
 
18           federal funds;
 
19      (3)  Serve as an "early alert" on opportunities for
 
20           obtaining federal funds to appropriate state agencies
 
21           by monitoring the federal register and other federal
 
22           publications to identify federal funding opportunities,
 

 
 
 
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 1           with special emphasis on discretionary grants or other
 
 2           funding opportunities that the State is not pursuing;
 
 3      (4)  Develop procedures to formally notify appropriate state
 
 4           and county agencies of the availability of federal
 
 5           funds;
 
 6      (5)  Coordinate state efforts in applying for federal funds;
 
 7      (6)  Pool resources of all applicable state departments and
 
 8           agencies, as necessary;
 
 9      (7)  Monitor federal compliance, including following-up with
 
10           applicable federal agencies on behalf of state
 
11           departments;
 
12      (8)  Serve as liaison between the state and federal
 
13           governments with respect to federal funds;
 
14      (9)  Work with county agencies and local communities in
 
15           determining local needs;
 
16     (10)  Periodically review the funding strategies and methods
 
17           of those states that rank significantly above the
 
18           national average in the per capita receipt of federal
 
19           funds to determine whether those strategies and methods
 
20           could be successfully employed by this State;
 
21     (11)  Analyze proposed and pending federal and state
 
22           legislation to determine whether the legislation would
 

 
 
 
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 1           have a significant negative effect on the State's
 
 2           ability to receive an equitable share of federal funds;
 
 3     (12)  Adopt rules pursuant to chapter 91 as may be necessary
 
 4           to implement this part; and
 
 5     (13)  Do all other things necessary or proper to carry out
 
 6           the purposes of this part.
 
 7      307-D  Consortium of agencies; multi-agency applications.
 
 8 The program, as appropriate, shall provide for the pooling of all
 
 9 applicable agency applications for federal funds into one or more
 
10 multi-agency applications to maximize the target populations that
 
11 are served by those agencies in applying for federal funds.
 
12      307-E  Cooperation with the program; incentives;
 
13 expenditure of federal funds.(a)  All agencies shall cooperate
 
14 with the program in providing such information as the program
 
15 deems necessary for the effective discharge of its duties.
 
16      (b)  All agencies, to the greatest extent feasible, shall
 
17 work with the program to actively seek all federal funds
 
18 available to the State.  Federal funds obtained by the program
 
19 with or without the assistance of the departments shall be
 
20 deposited into a special account in the interagency federal
 
21 revenue maximization revolving fund.  The agency may expend
 
22 federal funds so received for the purposes of the program or
 

 
 
 
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 1 programs administered by that agency, except as otherwise
 
 2 provided by law.
 
 3      (c)  Before an agency may expend federal funds as provided
 
 4 in subsection (b), the head of the department of which the agency
 
 5 is a part or attached to for administrative purposes shall
 
 6 certify to the comptroller that the funds to be expended are
 
 7 federal funds.
 
 8      (d)  Notwithstanding any law to the contrary, federal funds
 
 9 obtained by any state agency shall not be used and are not
 
10 intended to supplant any other moneys previously allocated to the
 
11 agency for any existing agency programs, or regularly
 
12 appropriated to the agency for such purposes.
 
13      (e)  The program may receive, as processing fees, up to five
 
14 per cent of the amount of the federal funds, as defined in this
 
15 part, that are obtained with the assistance of the program's
 
16 efforts.
 
17      307-F  Temporary transfer of government personnel.(a)  In
 
18 order to take advantage of the expertise in various program areas
 
19 in applying for federal funds, which may be needed by the program
 
20 from time to time and which is available within various state
 
21 government agencies, the director may arrange for temporary
 
22 transfers for personnel from other state agencies into the
 

 
 
 
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 1 program for periods not exceeding one year.  These employees
 
 2 shall receive their regular salary from the program during the
 
 3 transfer period and shall have the right to return to their
 
 4 position at the termination of the transfer period.
 
 5      (b)  No officer or employee of the State having tenure shall
 
 6 suffer any loss of salary, seniority, prior service credit,
 
 7 vacation, sick leave, or other employee benefit or privilege as a
 
 8 consequence of being temporarily transferred to the program.
 
 9      (c)  In the event that an office or position held by an
 
10 officer or employee having tenure is abolished prior to the
 
11 officer's or employee's return to their former position, the
 
12 officer or employee shall not thereby be separated from public
 
13 employment, but shall remain in the employment of the State with
 
14 the same pay and classification and shall be transferred to some
 
15 other office or position for which the officer or employee is
 
16 eligible under the personnel laws of the State as determined by
 
17 the head of the department or the governor.
 
18      307-G Report.  The program shall annually prepare a
 
19 comprehensive report to the legislature on the effectiveness of
 
20 the State's efforts to ensure receipt of an equitable share of
 
21 federal funds for the preceding federal fiscal year.  The report
 
22 shall include:
 

 
 
 
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 1      (1)  An executive summary that provides an overview of the
 
 2           major findings and recommendations included in the
 
 3           report;
 
 4      (2)  A comparative analysis of the State's receipt of
 
 5           federal funds relative to other states, prepared using
 
 6           the best available sources of data;
 
 7      (3)  An analysis of federal funding trends that may have a
 
 8           significant effect on resources available to the State;
 
 9      (4)  A description of any instances in which the State or a
 
10           state agency has not pursued available opportunities to
 
11           receive federal funds or earned federal funds and the
 
12           reason for the failure to pursue the opportunity; and
 
13      (5)  Recommendations, developed in consultation with the
 
14           director, for any state legislative or administrative
 
15           action necessary to increase the State's receipt of
 
16           federal funds, enhance the recovery of indirect costs,
 
17           or otherwise improve the State's management of federal
 
18           funds.
 
19      307-H Federal funds coordinators; agency reports.(a)
 
20 Each state agency shall designate an employee on the management
 
21 or senior staff level to serve as the agency's federal funds
 
22 coordinator.  An agency's designation of a federal funds
 

 
 
 
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 1 coordinator shall not require the agency to create a new staff
 
 2 position; provided that an agency may convert a current position
 
 3 by redescribing the position's duties as provided in this
 
 4 section.  Each federal funds coordinator shall:
 
 5      (1)  Oversee and coordinate the agency's efforts in
 
 6           acquiring federal funds;
 
 7      (2)  Send the program a quarterly report listing the grants
 
 8           for which the agency has applied and listing the
 
 9           catalogue of federal domestic assistance number and
 
10           giving a short description of the grant; and
 
11      (3)  Notify the program of the award or denial of a federal
 
12           grant to the agency.
 
13      (b)  Each state agency or institution shall file an annual
 
14 report with the program concerning the agency's efforts in
 
15 acquiring available federal funds during the preceding state
 
16 fiscal year.  The program shall establish guidelines for
 
17 information included in the annual report required by this
 
18 section.  The program shall evaluate the effectiveness of each
 
19 agency in acquiring federal funds and shall report to the
 
20 governor and the legislature.
 
21      307-I Grant writing team.  The director shall establish a
 
22 grant writing team in the program, which shall:
 

 
 
 
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 1      (1)  Develop a plan for increased access by the State to
 
 2           available federal funds; and
 
 3      (2)  Coordinate with other state agencies to develop a plan
 
 4           for the use of federal grant funds.
 
 5      307-J Grant information.  The program may:
 
 6      (1)  Establish a clearinghouse of information relating to
 
 7           the availability of federal funds;
 
 8      (2)  Establish an automated information system data base for
 
 9           grant information and make it available for use by
 
10           state agencies and counties;
 
11      (3)  Provide counseling to state agencies, counties,
 
12           nonprofit charitable institutions, educational
 
13           institutions, and residents of the State relating to
 
14           the availability and means of obtaining federal funds;
 
15      (4)  Provide or enter contracts without regard to chapter
 
16           103D with appropriate entities to provide assistance in
 
17           writing grant proposals to individuals and through
 
18           workshops and institutional assistance;
 
19      (5)  Publicize the services and activities of the grant
 
20           writing team through chambers of commerce, councils of
 
21           government, department newsletters, county governments,
 
22           state agencies, institutions of higher education,
 

 
 
 
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 1           business organizations, private philanthropic
 
 2           organizations, and other appropriate entities and
 
 3           methods;
 
 4      (6)  Maintain a list of approved grant managers for grant
 
 5           projects that require grant managers; and
 
 6      (7)  Analyze the criteria for grants for which state
 
 7           agencies are denied access because of state law or
 
 8           rules or agency organization and suggest to an affected
 
 9           state agency changes in rules or organization that
 
10           would increase the probability of the agency's
 
11           receiving federal or other grants.
 
12      307-K Fees.  When appropriate, the program shall charge
 
13 and collect fees from persons, other than state or county
 
14 agencies, who use the grant writing team's services and who
 
15 receive a grant.  The fees shall be set in amounts necessary to
 
16 cover all or a part of the costs of carrying out this part."
 
17      SECTION 3.  Section 29-14, Hawaii Revised Statutes, is
 
18 amended to read as follows:
 
19      "29-14  Boards, etc., may accept funds, comply with federal
 
20 acts.  Except as provided in chapter 307, part  , and as
 
21 otherwise provided by law, any board, commission, department, or
 
22 officer of the State may accept and receive on behalf of the
 

 
 
 
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 1 State, and receipt for, any and all grants or allotments of
 
 2 federal-aid moneys made available to the State by or pursuant to
 
 3 an act of Congress, and enter into or make such plan, agreement,
 
 4 or other arrangement with the agency designated by the act of
 
 5 Congress as is necessary to carry out the purposes of the Act;
 
 6 provided that if as a condition to receiving the federal-aid
 
 7 moneys it is necessary to match all or any part of the grant or
 
 8 allotment with state moneys no plan, agreement, or arrangement
 
 9 may be entered into unless the board, commission, department, or
 
10 officer has under its or the officer's control moneys which may
 
11 be expended lawfully for the purpose.
 
12      [The governor may transfer funds from the department of
 
13 health to the department of human services and from the
 
14 department of human services to the department of labor and
 
15 industrial relations to obtain additional federal funds for
 
16 medical assistance under Title XIX of the Social Security Act, as
 
17 amended, and the work incentive program.]  The governor may
 
18 [also] transfer funds from one department to another for the
 
19 purpose of obtaining federal matching grants and allotments;
 
20 provided that the state moneys have been appropriated for the
 
21 purpose for which federal grants and allotments may be obtained."
 
22      SECTION 4.  Section 29-24, Hawaii Revised Statutes, is
 

 
 
 
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 1 amended to read as follows:
 
 2      "29-24  Interagency federal revenue maximization revolving
 
 3 fund.  (a)  There is established in the state treasury an
 
 4 interagency federal revenue maximization revolving fund into
 
 5 which shall be deposited all proceeds collected from the federal
 
 6 government and third-party payors for reimbursable costs not
 
 7 previously claimed by the State, with the exception of proceeds
 
 8 collected for services provided by the Hawaii health systems
 
 9 corporation, for reimbursement by federally-funded state
 
10 programs[.], including any federal funds for any applicable state
 
11 program secured by the program for federal revenue maximization
 
12 pursuant to part     of chapter 307.  For purposes of this
 
13 chapter, federally-funded state programs include but shall not be
 
14 limited to those federally-funded programs within the departments
 
15 of human services, education, and health.
 
16      (b)  Expenditures and transfers from the fund shall be made
 
17 by the [comptroller] director in proportional allocations
 
18 established by the [comptroller] director and the director of
 
19 finance.  Transfers shall be made to the department claiming the
 
20 reimbursement for expenses incurred related to federal fund
 
21 reimbursement claims and to the general fund of the State[.];
 
22 provided that if federal funds are earmarked for more than one
 

 
 
 
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 1 agency, as defined in section 307-A, these funds shall be:
 
 2      (1)  Allocated to the departments or agencies in accordance
 
 3           with a joint expenditure plan to be approved by the
 
 4           director prior to the expenditure of any federal funds;
 
 5           or
 
 6      (2)  In the absence of such a plan, divided equally among
 
 7           the respective departments or agencies.
 
 8 The affected departments and agencies shall be held jointly
 
 9 accountable for all expenditures.  Moneys in the fund may be
 
10 expended for consultant services rendered under [subsection (b).]
 
11 section 307-B(d).
 
12      [(b)  Notwithstanding any other law to the contrary, the
 
13 comptroller, by contract, may retain the services of certified
 
14 public accountants and other consultants to pursue and collect
 
15 federal fund reimbursements, and perform other duties necessary
 
16 to administer this section.  At the option of the comptroller,
 
17 consultants retained by contract under this subsection may be
 
18 compensated on:
 
19      (1)  A fixed-price basis;
 
20      (2)  An hourly rate basis with or without a fixed cap; or
 
21      (3)  Through a contingent fee arrangement specified in the
 
22           contract.
 

 
 
 
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 1 Such compensation shall be payable out of all sums the consultant
 
 2 recovers for the State.
 
 3      (c)  All unobligated, unencumbered, or unexpended funds
 
 4 remaining in the interagency federal revenue maximization
 
 5 revolving fund as of June 30, 1999, shall revert to the general
 
 6 fund of the State.  Upon final disbursement of remaining balances
 
 7 to the general fund on June 30, 1999, the interagency federal
 
 8 revenue maximization revolving fund shall be terminated.
 
 9      (d)] (c)  No later than twenty days prior to the convening
 
10 of each regular session of the legislature, the [comptroller]
 
11 director shall submit to the legislature a report including the
 
12 following information:
 
13      (1)  Itemized amounts of all federal reimbursements[;] and
 
14           other federal funds;
 
15      (2)  Description and amounts of all expenses incurred by the
 
16           fund;
 
17      (3)  Method of compensation and amounts of compensation for
 
18           all certified public accountants and other consultants
 
19           retained by the [comptroller] director to pursue and
 
20           collect federal fund reimbursements and other federal
 
21           funds and perform other duties necessary to administer
 
22           this section;
 

 
 
 
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 1      (4)  Method of determining allocation of funds;
 
 2      (5)  Amounts allocated by the [comptroller;] director; and
 
 3      (6)  Fund balances."
 
 4      SECTION 5.  Act 11, Special Session Laws of Hawaii 1995, is
 
 5 amended by amending section 15 to read as follows:
 
 6      "SECTION 15.  This Act shall take effect on July 1, 1995;
 
 7 provided that:
 
 8      (1)  Section 10 shall take effect on June 29, 1995; and
 
 9      (2)  Sections 3, 4, and 8 shall take effect on July 1,
 
10           1996[; and
 
11      (3)  Section 2 shall be repealed on June 30, 1999]."
 
12      SECTION 6.  In codifying the new part added to chapter 307,
 
13 Hawaii Revised Statutes, by section 2 of this Act, the revisor of
 
14 statutes shall substitute appropriate section numbers for letters
 
15 used in the designation of new sections in that part.
 
16      SECTION 7.  It is the intent of this Act not to jeopardize
 
17 the receipt of any federal aid nor to impair the obligation of
 
18 the State or any agency thereof to the holders of any bond issued
 
19 by the State or by any such agency, and to the extent, and only
 
20 to the extent, necessary to effectuate this intent, the governor
 
21 may modify the strict provisions of this Act, but shall promptly
 
22 report any such modification with reasons therefor to the
 

 
 
 
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 1 legislature at its next session thereafter for review by the
 
 2 legislature.
 
 3      SECTION 8.  There is appropriated out of the general
 
 4 revenues of the State of Hawaii the sum of $          , or so
 
 5 much thereof as may be necessary for fiscal year 1999-2000, for
 
 6 the establishment of the program of federal revenue maximization
 
 7 as provided in this Act.  The sum appropriated shall be expended
 
 8 by the department of business, economic development, and tourism
 
 9 for the purposes of this Act.
 
10      SECTION 9.  Statutory material to be repealed is bracketed.
 
11 New statutory material is underscored.
 
12      SECTION 10.  This Act shall take effect on June 29, 1999.