Senate declines The state Senate said "no" yesterday to tapping the Hawaii Hurricane Relief Fund and raising the liquor tax to offset a projected $300 million shortfall to balance the state budget.
to tap hurricane fund
The Tax Department reports
Other bills in progress
the collections are down 2.1 percentBy Crystal Kua
ckua@starbulletin.comInstead, the Senate is proposing to use a portion of funds unspent by state agencies for contractual services, which totals up to $180 million.
"It would reduce the pressure on us to tap the Hawaii Hurricane Relief Fund to meet our budget shortfall," said Senate President Robert Bunda (D, Wahiawa).
A budget showdown is now expected in conference committee with the House, which has proposed using $100 million from the hurricane fund.
Yesterday's action comes on the heels of more bad news from the state Tax Department.
The department reported yesterday that tax collections for the first nine months of the fiscal year are down 2.1 percent. That is a significant drop, because the state Council on Revenues had predicted that the collections would decrease by 0.7 percent.
The biggest drop was a nearly 19 percent decrease for hotel room taxes.
Senate Ways and Means Chairman Brian Taniguchi said the lower-than-expected tax collections make the budget situation worse. "It certainly isn't good news."
Sixteen senators signed a letter saying they were opposed to using any of the $213 million hurricane fund to balance the budget. Taniguchi had recommended using $55 million of the fund.
"The members today indicated that they would like to look at other ways rather than Hurricane Relief Fund," Taniguchi said. "A number of them said that they're not convinced at this point in time that that's the only way we have left."
Taniguchi said that using the hurricane fund was part of his overall plan on balancing the budget.
"Without this bill, we have a significant hole in our budget. It'll mean additional cuts, certainly mean laying off people," Taniguchi (D, Manoa) said.
Taniguchi also pointed out that the hurricane bill includes funding for education programs, which aren't in the budget passed yesterday by the House.
But most senators did not back Taniguchi's proposal.
"We've gotten a lot closer to balancing this budget without having to tap hurricane funds. I believe we can get there," said Sen. Norman Sakamoto (D, Moanalua). "Cuts are not always bad."
The hurricane fund was started when insurance firms refused to insure local property against hurricane damage after Hurricane Iniki in 1992 because their insurance groups, called reinsurance firms, would not protect their liability.
Republican lawmakers have called for the money in the hurricane fund to be refunded to the people who paid into it.
Gov. Ben Cayetano's proposal calls for using all of the money.
The new budget proposal floated by the Senate calls for requiring state departments to return the unexpended appropriations for contracts that have lapsed to the general fund instead of keeping the excess funds.
Some appropriations go back to 1987 and the cash balances up to 2000 amount to $20 million. Including accounts up to last year would bring the estimate to $180 million. The Senate contends that up to half of the money could be used to balance the budget.
This new proposal, along with the Senate's plan to use $123 million in special funds, is scheduled for approval tomorrow.
The Senate, however, gave thumbs up to other ways to balance budget including raising the cigarette tax and cutting $73 million from the supplemental budget bill.
Meanwhile, the Senate also passed a bill that would allow the teachers union and other public employee unions to continue their own health plan through a voluntary employees' beneficiary association trust as an alternative to the required single state-run system.
The bill, which is backed by the Hawaii State Teachers Association, is now headed to the House where the reception so far has been cool.
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