Posted on: Friday, October 19, 2001
The September 11th attack
House leader wants to hold construction spending to $150 million
By Kevin Dayton
Advertiser Capitol Bureau Chief
House Speaker Calvin Say said last night the House won't approve more than $150 million in new borrowing for Gov. Ben Cayetano because lawmakers are afraid the state will go too deep into debt at a time when tax collections are dropping.
However, the legislative leaders and Cayetano did agree last night to use money from the state's tobacco lawsuit settlement to finance a new medical school, cancer research center and research facility in Kaka'ako, Say said.
Cayetano wants legislators next week to authorize nearly $1 billion in new borrowing to finance construction projects and boost the state construction industry.
He argues this is a good time for the state to borrow money because interest rates are low.
An important part of Cayetano's plan is to transfer $213 million in cash reserves from the Hawai'i Hurricane Relief Fund to the budget reserve fund. The logic behind that shift is that holding that money in the budget reserve fund will show the state is in a sound financial position, and will encourage investors to lend the state money.
But Say, D-18th (Palolo, St. Louis, Kaimuki) said the House won't agree to the transfer because lawmakers want it held in the hurricane fund in case another hurricane hits Hawai'i.
Without that transfer, Say said he believes Cayetano will have to sharply limit his plans to borrow.
Cayetano's plan to borrow $974 million for new construction envisioned that the debt payments on that borrowing would be paid out of the general treasury. But Say argues that would commit too much general treasury spending to debt repayment.
Say said he will only agree to $150 million in borrowing that is to be repaid from the general treasury, but will agree to other types of borrowing. For example, he said the House did agree to finance $150 million of the cost of the new medical school from money flowing in from the tobacco settlement.
Lawmakers are expected to continue meeting today to try to finalize their plans for a special session next week to cope with the economic slump in the wake of the Sept. 11 terrorist attacks.
