Posted on: Monday, February 18, 2002

EDITORIAL
House rightly rejects hurricane fund refund

Lawmakers are far from finishing their discussion of what to do with the Hawai'i Hurricane Relief Fund and the inseparably joined-at-the-hip issue of how to balance the state budget.

But the House has advanced the discussion substantially in the right direction by voting not to return the money to the homeowners who contributed the fund.

That may seem counterintuitive to many homeowners who dutifully sent their annual payments to the fund, observed that no hurricanes have necessitated any damage payments and so conclude that the money should be returned to them.

They may not be aware that much of their money, in the years when private insurers fled the market after Hurricane 'Iniki, went to purchase reinsurance that, in the event of a hurricane, would have provided minimal payments for the repair of structural damage and thus protected their mortgages.

That money, like their current insurance premiums, is gone. The $213 million now in the fund is excess — money collected above what the state used to buy reinsurance.

The difficulty in returning that money is in the complexity of how it was accumulated — some from homeowners, some from businesses, some from surcharges on property transactions and more. Democratic lawmakers may exaggerate when they suggest developing a formula for returning the money would be a "nightmare," but they have a point.

There's also the legitimate argument that the fund should be kept whole in anticipation of the day when another hurricane hits the Islands — as it certainly will — and we are once again deserted by the insurance industry.

Those who argue either for preservation or return of the fund, however, have an absolute obligation to do so in the context of the extreme difficulties the state faces this year in balancing its budget.

Gov. Ben Cayetano has made a relatively strong case that the state budget cannot possibly be balanced without the infusion of a substantial amount of money at the level of what's in the hurricane fund. If lawmakers feel the arguments either for preservation or return of the fund are persuasive, then they are duty-bound to find an alternative source of the money.

It is on this point that Cayetano last week roundly denounced House Republicans for pandering in their insistence on returning the money to homeowners.

"We sincerely believe," said House Minority Floor Leader Charles Djou, "that this money doesn't belong to us, it doesn't belong to the Legislature, it belongs to the people, it should be returned to the people and it has the collateral benefit to stimulate the economy."

Sincerity, however, won't balance the budget; and it's irresponsible of Republicans to advocate returning the money without finding an alternative.

To those lawmakers who say the hurricane fund should be returned or kept whole, we demand: Show us the money.