State must use
hurricane fund
to avert cuts in
budget, gov says

A legislator says it should
not be depleted or eliminated

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By Richard Borreca
rborreca@starbulletin.com

The state must use the $231 million left in the state hurricane relief fund if it is going to spare state agencies from massive budget cuts, according to Gov. Ben Cayetano.

In an informal news conference yesterday, Cayetano said his administration is preparing a budget that assumes the state will be able to spend the $231 million.

Cayetano said he has halted state hiring so far, except for emergency hires needed to comply with federal court orders regarding prisons and state schools.

Cayetano also warned that he considers the state Council on Revenues' projections of a 5 percent growth in tax revenues next year to be "optimistic."

Sen. Brian Taniguchi (D, Manoa), Ways and Means Committee chairman, said some of the money from the hurricane relief fund may be needed, but he thinks the fund should not be depleted or eliminated.

The state created the fund after most private insurance companies stopped offering coverage because of Hurricane Iniki. Since companies have come back, the fees on mortgages recorded in the state that swelled the fund are no longer charged.

Cayetano said: "The legislators are a bit concerned about the political ramifications of using (the hurricane relief fund) because some people are concerned that they should get the money back. But they are going to have to come to grips with the fact that we have to use it."

He added that the state would have to make major reductions in public school and University of Hawaii budgets if the hurricane money is not used.

Taniguchi believes the state budget is not in as much trouble as Cayetano thinks because the state has a carry-over balance of more than $300 million.

But he added that if nothing is done, the state would have a $100 million deficit by 2003.

"We will probably have to do some budget cutting," Tani-guchi said.

While stressing that he has not seen the state budget plan under consideration by the administration, Taniguchi thinks the state will propose spending more money because of the plan to use the hurricane relief funds.

But he does not expect that the state would return the money to ratepayers, as some have suggested.

"We have already gone through the pain of setting up the fund, and there is certainly a possibility that we will have another hurricane," Taniguchi said.