Posted on: Friday, March 1, 2002

THE 2002 LEGISLATURE
Democrats would tap state hurricane fund for $100M

By Kevin Dayton
Advertiser Capitol Bureau Chief

Democratic Rep. Felipe "Jun" Abinsay, at left, is visited by Republican Rep. Chris Halford during the House session. Republican Rep. William Stonebraker, is in background. Bruce Asato • The Honolulu Advertiser

House Democrats plan to make up the state's budget shortfall by spending about half of the money in the hurricane fund, and by tapping another $100 million that is tucked away in various funds scattered throughout state government.

Lawmakers are scheduled to vote on a proposed budget today that would also trim about $83 million from next year's spending. However, if the House Democrats' spending plan wins approval, overall the state would still spend more next year than this year.

Tonight at midnight is the deadline for positioning bills in the House and Senate for preliminary approval. Measures that clear tonight's deadline and are approved in floor votes next week will then cross to the other chamber for further consideration.

In an effort to outmaneuver House members who oppose spending the hurricane fund money, the House Finance Committee yesterday approved a bill that combines $80 million in spending on public schools and human services with the authorization to tap into the hurricane fund.

That means if lawmakers vote down the bill to spend $100 million from the fund, they automatically impose $80 million in spending cuts on the education and human services programs, triggering layoffs of more than 100 state workers.

Republican opposition

The Finance Committee approved the measure with only Republicans Jim Rath and Charles Djou voting against it. Djou, R-47th (Kahalu'u, Kane'ohe), said the maneuver will probably allow Democratic leaders in the House to overcome resistance to spending the hurricane money.

"It's a good, deft, Machiavellian move," Djou said. "It certainly does not win my support. I don't think it wins the support of the majority of the Republican members, but I think it makes it easier for a lot of the Democrats to now go in and steal the hurricane relief money."

House Finance Chairman Dwight Takamine, the principal architect of the bill, said the committee is trying to shelter the most important state programs from deep cuts.

"We are looking at, number one, what are essential and clear priorities," said Takamine, D-1st (Hamakua, N. Kohala). "Listening to the public, education is clearly one."

What to do with the $213 million surplus in the Hawai'i Hurricane Relief Fund has emerged as one of the most controversial issues of the session.

Gov. Ben Cayetano proposed that the state spend that money to help make up a $300 million budget shortfall for next year that was caused by a drop in business activity and a projected decline in state tax collections in the wake of the Sept. 11 terrorist attacks.

Republicans in the Legislature contend the hurricane fund money should be refunded to people who paid the mortgage recording fees or insurance premiums that financed the fund. Others suggest the money be banked to prepare for any future hurricane damage.

The House bill that won preliminary approval yesterday would move $100 million from the fund to the general treasury, leaving $113 million.

The bill would also establish a three-year test program to subsidize homeowners who retrofit their homes to make them hurricane-resistant. That retrofitting program would cost $5 million a year, Takamine said.

If lawmakers reject the bill, they would in effect eliminate money for 150 state jobs, at least 100 of which are now filled. Class sizes would be increased in kindergarten through the second grade; general assistance welfare payments to disabled people would be cut; and $7.5 million for the state AIDS and tuberculosis control programs would be eliminated, according to an outline distributed by the House Finance Committee staff.

Programs threatened

Other examples of cuts that would be imposed if the bill fails include the loss of $1.9 million for Hawaiian immersion programs and Hawai'ian studies; $2 million earmarked for school repairs and maintenance; $400,000 for veterans' counseling; $3 million for public school vocational education; and $3.6 million for programs for students whose first language is not English.

Djou said many other less important things could be cut to save money, but the Democrats in effect are threatening to chop critical state programs if they aren't allowed to spend the hurricane money.

The bill now goes to the full House for a floor vote, where Djou predicted it will probably win approval. If approved, it will advance to the state Senate.

In other action:

• The House approved a bill that would create a state-backed system of long-term care insurance paid for with a monthly $10 tax on all employees and self-employed people starting in 2004. The tax would increase by 5 percent a year until 2009, and starting in 2008 the program would provide up to $70 per day for long-term care for up to a year.

• The House approved a bill to authorize the state Public Utilities Commission to regulate oil companies, with supporters noting Hawai'i has the highest gasoline prices in the nation. Republican House Majority Leader Galen Fox opposed the bill along with other members of the GOP, arguing it might drive companies out of the state when what is needed is more competition. Another bill to cap wholesale gas prices based on a benchmark of average crude oil prices also won House approval. Both bills now go to the Senate.

• The Senate Ways and Means Committee passed a bill that would raise the liquor tax by 50 percent.

Advertiser reporter Lynda Arakawa contributed to this report. Reach Kevin Dayton at kdayton@honoluluadvertiser.com or 525-8070.