Posted on: Friday, April 12, 2002

The 2002 Legislature
Senate OKs tapping into service accounts

By Lynda Arakawa
Advertiser Capitol Bureau

The Senate yesterday passed a bill touted as an alternative to taking money from the hurricane relief fund, although some senators are skeptical the proposal will work.

House Bill 2827 would require Gov. Ben Cayetano's administration to return to the general fund excess money in accounts set up to pay for various service contracts. Proponents said they believe there is enough available money in those accounts to help balance the budget without having to use the hurricane relief fund or raise taxes.

The Senate on Tuesday rejected proposals to use $55 million from the hurricane relief fund and raise the liquor tax by 25 percent, which state officials said would have raised an additional $10 million.

House and Senate lawmakers will consider these issues as they work to finalize the budget in conference committee. To make the budget squeeze even worse, the state Tax Department has released statistics showing that state tax collections appear to be dropping more sharply than expected. If that trend continues, the Legislature may have $43 million less to spend than lawmakers believed when the House and Senate drafted their budget proposals.

Tax collections for the first nine months of the fiscal year have been 2.1 percent less than the same period last year. Lawmakers had expected a more modest decline of about one-half of 1 percent.

Senate Ways and Means Committee chairman Brian Taniguchi, D-11th (McCully, Mo'ili'ili, Manoa), said his staff is looking into the House Bill 2827 proposal, but that he doesn't think there will be enough money.

"I made a promise to the caucus that we would look at all the funding alternatives they got and we're open to them," he said. "But everything I've heard so far is not going to replace" using the hurricane relief fund and the liquor tax.

Also yesterday, an estimated 1,500 teachers, some wearing T-shirts from the 2001 strike, rallied in the Capitol atrium to express their displeasure at proposed cuts to the Department of Education budget and a law affecting their health plan.

Teachers packed the House gallery in an unsuccessful attempt to convince lawmakers to reverse a law approved last year to cut the cost of public employee health benefits. The teachers want to continue their own union-sponsored health plan, but a law approved last year will put an end to union-sponsored plans.

That law was prompted by the increasing cost of public worker and retiree health insurance, which if current trends continue is expected to top $1 billion a year by 2013.

Lawmakers believed the union plans aggravated the increases in health insurance costs by siphoning off younger and healthier public workers who cost little to insure, leaving the state to cover retirees and others who cost more to insure.

The Senate approved a measure that would permit the teachers' union health plan and others like it to continue, but moved the bill to the House long after the House deadline for considering such bills.

Rep. Terry Nui Yoshinaga questioned House Speaker Calvin Say at length about how the House might consider and vote on the measure, but House members finally voted down a proposal to waive the House rules to consider the bill.

Advertiser staff writers Kevin Dayton and Jennifer Hiller contributed to this report.

Reach Lynda Arakawa at larakawa@honoluluadvertiser.com or 525-8070.