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The Honolulu Advertiser
Posted on: Thursday, April 3, 2003

Senate committee to vote on special fund transfer bill

By Gordon Y.K. Pang
Advertiser Capitol Bureau

The Senate Ways and Means Committee wants to increase the amount of excess cash to be transferred from special funds to help balance the state financial plan, a move that drew opposition from a slew of state agency chiefs and others.

Yesterday was Day 45 of the 60-day session.
Ways and Means Chairman Brian Taniguchi, D-10th (Manoa, McCully), delayed a vote on the measure until this morning, promising to look closely at the concerns raised and make any necessary changes.

In a related move, the committee advanced to the Senate floor its version of the $7.9 billion general fund budget, a plan that would be about $15 million less in 2004 and $13 million less in 2005 than the budget submitted by Gov. Linda Lingle.

Besides taking more money from special funds, Taniguchi said additional savings can be achieved by deleting an unspecified number of vacant but financed job positions. The Senate proposal, however, rejects at least part of Lingle's plan to place more stringent restrictions on high-tech tax credits.

Lingle cabinet members testified against House Bill 1152, a measure that has been amended to reflect an estimated $26.4 million more in transfers from special funds than the $42.7 million the administration had proposed to help balance the budget.

"The proposed additional amounts of selected special and revolving funds to be transferred to the general fund may have a serious impact on program operations supported by those funds," Budget Director Georgina Kawamura told senators.

The Department of Commerce and Consumer Affairs, which operates strictly on special fund revenues, would take the biggest hit, losing about $28.5 million over the next two years.

The administration had proposed $12.7 million be taken but DCCA Director Mark Recktenwald said the additional transfers would cripple his agency's ability to operate. "It appears to be the bill's intent that the department begin operations in July 2004 with no cash reserves," he said. The loss would result in layoffs and major reductions in services, he said.

There was little discussion by committee members on House Bill 200, the state's general fund budget bill, before it moved out of the committee unanimously.

In response to the Council on Revenues' lowered projections, the Senate proposal uses some of the recommendations made by the Lingle administration to help deal with the reduced revenues, Taniguchi said.

The positions proposed to be cut are ones that have been vacant for at least 18 months. Those now being actively recruited are not part of that cut, he said. "I'm not real happy but with the kinds of numbers we're facing, I think we kind of have to do that," Taniguchi said.

Taniguchi told reporters afterward that his plan may not include portions of Lingle's plan to scale back on high tech investment tax credits that would net $55.5 million. Expected to be voted on today is a Senate plan to increase the state excise tax to 4.5 percent that is anticipated to net $80 million to be earmarked for the Department of Education's budget and may bring additional money to the general fund, Taniguchi said. Cuts to the University of Hawai'i's budget may also be restored if the excise tax proposal is approved, he said.

Separate legislation, also up for a committee vote today, giving the counties taxing authority in exchange for their share of hotel taxes, also would net state coffers some additional revenues, he said.

Taniguchi said about $12 million in cuts made to health and human services programs also may be restored, possibly with some help from the Rainy Day Fund. The Senate version would reject Lingle's plan to take away $2 million from the adult education program.

The Senate plan also restores some $5 million annually cut from the Department of Education budget. The administration had been widely criticized for taking away $31 million over three years from DOE coffers.

Reach Gordon Y.K. Pang at gpang@honoluluadvertiser.com or 525-8070.