Friday, December 28, 2001

Hawaii State Seal

State hears hurricane
relief fund debate

Cayetano wants the money to
balance the budget, while Realtors
say it should stay put

By Pat Omandam

Gov. Ben Cayetano is proposing two financial plans to deal with the projected $315 million shortfall in state tax revenue over the next two years -- one using the $213 million Hawaii Hurricane Relief Fund, the other without it.

While using the hurricane fund would balance the state budget over the next six years, Realtors and others want to keep the money in the fund to meet reinsurance needs when the next hurricane hits Hawaii.

"The real estate industry and homeowners want to see adequate insurance protection when the next hurricane will inevitably hit our islands," said Mary Begier, chairwoman of the Hawaii Association of Realtors.

"We would be negligent in our duties if we allowed the (fund) to be depleted for any purpose other than protecting homeownership," said Begier last night in testimony to state lawmakers.

At the first of four statewide budget hearings, lawmakers heard from state Budget Director Neal Miyahira, who noted that the Cayetano administration views the current economic downturn as temporary and expects the economy will rebound by the end of 2002.

Miyahira said the state government is the right size based on public expectations, so if the state were to make massive cuts to deal with the shortfall, it would shake public confidence and delay economic recovery.

As a result, the goal of the governor's financial plan was twofold: address the state Council on Revenues' projected $315 million tax shortfall with minimum disruption to government services, and focus on the deficit over the long term.

Miyahira said the governor's financial plan increases state coffers to its $3.6 billion budget by transferring the $213 million in the hurricane fund to the general fund and raising $40 million by doubling the liquor tax.

To cut costs, Cayetano proposes to restructure debt and impose budget cuts of 1 percent and 2 percent for all state agencies over the next two years.

Miyahira said the governor also wants to send 200 more prisoners to mainland prisons because costs are substantially less than if they continued to be housed here.

Under this plan the state could balance its budget for each of the next six years.

"With those adjustments we're able to balance this budget during this period," Miyahira said.

The second plan, which does not use the hurricane fund, leaves the state with a deficit starting from fiscal year 2003 through 2007. That will mean further cuts in later years, Miyahira said.

The fund was established by the state Legislature in 1993 to provide coverage to homeowners after private insurers bailed out of the hurricane insurance market after Hurricane Iniki in 1992. After insurers returned to the local hurricane coverage market, the state stopped writing hurricane policies last year.

State Web Site

E-mail to City Desk

Text Site Directory:
[News] [Business] [Features] [Sports] [Editorial] [Do It Electric!]
[Classified Ads] [Search] [Subscribe] [Info] [Letter to Editor]

© 2001 Honolulu Star-Bulletin