The Major Raid that Wasn’t

by Tom Yamachika, President, Tax Foundation Hawaii

It’s around this time in our legislative session when surprises start happening.  Some are good, some not so great.  But you, the taxpaying public, are not alone when it comes to surprises.  Sometimes it’s the government itself that is on the receiving end.

House Bill 1153, Relating to Funding Adjustments for State Programs, is an example.  It is an Administration bill introduced by the Department of Transportation to remedy a technical problem in prior appropriations bills.  It sailed through the House Finance Committee and the Government Operations Committee in the Senate.  Then it hit the Senate Committee on Ways and Means.

Apparently the WAM committee was intrigued by the bill’s title, and it was looking for a few more dollars to put into the general fund.  So, it added language to raid special funds.  By “raid” I mean that the bill proposed to take money out of various special funds, finding that the current balance in the funds exceeded the funds’ current requirements, and transfer that money to the general fund.

And WAM didn’t fool around.  We are talking major raid.  Senate Draft 2 of the bill proposed to raid ninety-seven special funds.  The total amount proposed to be raided was more than $320 million.  Almost no executive department was spared.

Among the victims: $3.9 million from the state parking revolving fund.  I get that the state gets parking revenue (from the airports, for example) but why does it need to be shoved into a segregated fund?  $7.2 million from the pest inspection quarantine and eradication fund.  That sounds like a core function of the Department of Agriculture, so why use a special fund?  $19.3 million for DBEDT’s HI-CAP program, which provides capital assistance to small businesses.  The program is supposed to be federally funded, so how come there is so much state fund buildup?  From the Department of Education, $33.2 million for the school food service special fund and $7.9 million for the community use of school facilities special fund.  If we are talking about 165,000 kids, $33 million is $200 per kid.  Why is so much money squirreled away when we’re asking parents to pay for their meals on an ongoing basis?  The University of Hawaii has auxiliary enterprise special funds, eight of which made WAM’s list.  The biggest one was for Admin, with $8.8 million.  The Department of Land and Natural Resources is sitting on $43.7 million in the special land and development fund and $24.6 million in the ocean-based recreation special fund.  And the Department of Health has $22.7 million in the community health centers special fund and $14.1 million in the clean air special fund.  These sound more like core department responsibilities that should be funded out of the general fund.

I can just imagine the panic and confusion sparked when the various agencies found out about the proposed raids, and the frantic lobbying efforts that followed.  That would be funny, except that all of the government employees involved, including the legislators, are paid by taxpayers.  So, they were panicking and scurrying instead of doing, um, other essential work.

The agencies’ efforts seem to have paid off.  The Conference Draft of the bill, which probably will become law, removes all of the raiding except for an $8.1 million transfer from the state educational facilities improvement special fund.  (This, by the way, was not on WAM’s list of ninety-seven.)  The Conference Report states that the fund was repealed in 2020.  (Act 72 of 2020 repealed HRS section 36-32, which established that fund.)  So, it took us five years to figure out that eight million dollars was sitting around doing nothing.

At least the proposed major raid, which turned out to be a relatively minor raid, will accomplish something.