Court takes fun out of giving special funds

Want to see a legislator shake in fear? Tell him or her you are taking away their power to create special funds. Last week the state's Intermediate Court of Appeals seriously hinted that special funds would be off limits.

To critics, special funds are the crack cocaine of pandering legislators. To supporters, special funds mean you never have to say you are sorry when yet another interest group comes begging.

Here's the 10-second guide to special funds: A special fund is money in the state budget dedicated for a specific purpose, and that cannot be used for other purposes. Money goes into the special funds usually from fees charged to the people or entities receiving the special service.

"You start creating these special sub-accounts and lose the trail of where the money is," complains Republican Sen. Sam Slom, who has spent 12 years voting "no" to every new special fund request.

When Gov. George Ariyoshi ran things, there were no special funds. When his successor, John Waihee, became governor and started tucking state money into special funds, legislators loved it.

Teachers, nurses, insurance companies, barbers, elevator mechanics, anyone who comes wanting something, you give them a special fund. Money for your program goes into the fund, and no one else can touch it.

By 2001, there were more than 200 special funds with $1.2 billion stashed away, according to legislative auditor Marion Higa, who suggested that the Legislature might need a bit more adult supervision around the state checkbook.

The other problem with those funds happens when they become too successful. The excess money goes into the general fund and is spent, spent, spent.

But wait, did the state tell the barbers or the elevator mechanics or the insurance companies to just give money to the state? No, that's called a tax and the Legislature has to pass a law saying someone is getting taxed.

So the insurance companies filed suit eight years ago complaining about how the money collected in their special fund was going into the general fund.

Last week the Intermediate court said, yes, that's a tax, an illegal and unconstitutional tax.

The reason your legislator is now a bit twitchy around the money belt is that if the insurance fund is illegal, then so are the other 199 special funds, and Intermediate Court of Appeals Justice Corrine Watanabe, a former state attorney general, said just that.

Glum-faced lawmakers spent this week considering whether they could tell their "special" friends they would have to tax them.

The next time a legislator says "you are special" you might want to say "thanks, but no thanks."

Richard Borreca writes on politics for the Star-Bulletin. He can be reached by e-mail at rborreca@starbulletin.com.