HONOLULU (HawaiiNewsNow) - SB2554 is a Constitutional Amendment on the ballot this year. It authorizes the Legislature to take alternative actions when the State has an "excess" general fund balance after two fiscal years. This applies only when the general fund balance at the end of two successive fiscal years exceeds five per cent of general fund revenues for each of the two fiscal years.
At present, whenever an excess general fund balance occurs, the Legislature is limited to providing a tax refund or credit to taxpayers or making a deposit into an emergency reserve fund.
Approving SB2554 would allow the Legislature another financial tool to tackle the state's huge liabilities and debt service for general obligation bonds that must be paid. (General obligation bonds are basically money borrowed by the state to pay for facilities and infrastructure. Pension or other post-employment benefits (OPEB) are the liabilities of the State for future pension or health insurance cost for State retirees.)
A tax refund or credit must be given to ALL taxpayers in order to comply with the constitutional requirement. In reality, the refund probably would be relatively small when broken down per person and wouldn't have the long-term savings for the State as pre-paying debt service or pension or OPEB liabilities.
Funding the Emergency Reserve Fund may not be necessary. A recent check of the state coffers shows the fund currently has a balance of $301.6 million. In addition, the Hurricane Reserve Fund currently has a balance of $182.4 million.
Constitutional Amendment SB2554 is a fiscally responsible amendment that not only provides options for paying down the state's liabilities, but it also means more money will be available for other important programs in the future.
On paper, the State did have a general fund balance of about $1 billion as reported by the media on June 30, 2016. In reality, much of that $1 billion already had been appropriated for expenditure during the current fiscal year 2016-2017, that started on July 1, 2016.
During this last legislative session, the Legislature prospectively approved certain substantial one-time general fun appropriations which were deemed affordable because of the expected large balance. The money went to fund crucial areas that would help the State of Hawaii. Just some of the appropriations included: $100 million for public school heat abatement programs, $37 million into the State Highway Fund for maintenance and emergency roadwork, $103.2 million for the Kapalama Military Reservation project and Hawaii Health Systems Corporation.
Currently, these appropriations and others leave us with an estimated general fund ending balance at the end of the fiscal year on June 30, 2017 of about $600 million.