State finance chief warns against raiding funds

By Kevin Dayton
Advertiser Capitol Bureau Chief

House and Senate leaders are working on a plan to drain more than $120 million from dozens of special funds, but Gov. Ben Cayetano's administration is warning that such transfers may cripple state housing and other programs.

A memo from state Director of Finance Neal Miyahira to lawmakers Wednesday warned that they are taking too much from some of the special funds, which are essentially accounts where money is parked for specific purposes.

The accounts are often replenished by fees or repayments from people who borrow or benefit from the funds. For example, a portion of the gasoline tax goes into the highway fund, which pays for road maintenance.

Miyahira warned that taking $5 million from a fund to finance high-tech startups or transferring $24 million from a fund to finance affordable housing projects could wipe out those programs.

He also told lawmakers in a separate memo that their draft financial plans spent too much and do not do enough to raise more money through new taxes or other sources. Cayetano has also proposed spending $213 million from the state hurricane fund to help balance the budget, but the Senate so far has refused to touch the hurricane money.

Miyahira warned that lawmakers are considering a number of proposals for the film industry, renewable energy and construction tax credits that may cut too deeply into future tax collections.

"We feel that the Legislature must exercise extreme caution at this time because, based on our financial projections, we cannot afford all the proposals that are being considered," Miyahira wrote.

Senate Ways and Means Chairman Brian Taniguchi, D-11th (McCully, Mo'ili'ili, Manoa), said the Senate wouldn't want Cayetano to veto the budget, so lawmakers will study his concerns.

House Finance Chairman Dwight Takamine said the administration has had a chance to point out which special funds can be tapped and which must be protected. He said the latest plans take those concerns into account.

As for the effort to balance the budget with adequate cash reserves, "I think as we proceed with out budget deliberations, those considerations are going to be taken into account," said Takamine, D-1st (Hamakua, N. Kohala).

Reach Kevin Dayton at kdayton@honoluluadvertiser.com or 525-8070.