House Bill 1345, signed as Act 78, appropriates $900,000 in general funds to help cover Department of Defense operational expenses for support they have provided in assisting the victims of the earthquake.

The remaining $24 million is the state share required to obtain federal emergency funds for structural and nonstructural earthquake mitigation projects, and for repairing irrigation water systems, school facilities, hospitals and healthcare facilities.

Lingle noted in a news release issued this morning that the bill has some "significant flaws," which she will ask the Legislature to correct in 2008. Most notably, she said, the bill uses almost half of the State Emergency and Budget Reserve Fund to pay the state's share of Federal Emergency Management Agency (FEMA) assistance. The Budget Reserve Fund, also known as the Rainy Day Fund, is the state's only fund set aside to weather adverse fiscal situations.

"The fund is already too low according to nationally recognized agencies such as Standard and Poor's, Moody's and Fitch," Lingle said in the release.

"Using the Budget Reserve Fund is not fiscally prudent and my administration will seek legislation in 2008 to change the matching funds back to the State's general fund where we have enjoyed surpluses."

Additionally, the bill uses some of the reserve funds for projects that may not meet the FEMA disaster assistance criteria, Lingle said.