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Friday, April 15, 2011
Creative Accounting 101: Special Fund Raids
By Grassroot Institute @ 10:45 PM :: 6274 Views :: Energy, Environment

Creative Accounting 101 by Hawaii State Legislature to Balance Budget

from Grassroot Institute

After the second crossover this week, 393 bills are still alive at the Legislature as lawmakers are trying to find every means possible to come up with a balanced budget, even ways that stand a good chance of being challenged in court.

By “temporarily” dismissing the requirements set by law regarding the use of public money and by repealing considerations and promises -- including tax exemptions and credits, and special funds for specific purposes -- made to businesses and taxpayers, lawmakers continue to play with fire when it comes to their balanced budget mission.

Case in point is Senate Bill 120, which is among the biggest money grabs this session. The bill continues to move along, albeit in a much different form then when it was first introduced.

The bill started out with the purpose of repealing 148 out of an existing 186 special funds, and now wants to go after a lot less of these funds, including “temporarily” repealing requirements that have to do with the Compliance Resolution Fund.

The Compliance Resolution Fund is funded by business, banking and insurance fees. Certain fees for the insurance division were raised last year (2010 Act 22 and Act 59) and now it seems there is a surplus in the fund that is being raided this year.

To see the 2010 Annual Compliance Resolution Fund Report from the Department of Commerce and Consumer Affairs, go to:

In SB120, the bill “temporarily repeals requirement that $2,000,000 of tax revenues from banks and other financial corporations be deposited into the Compliance Resolution Fund” and instead go into the general fund. And also, it wants the director of finance “to annually collect funds from the Compliance Resolution Fund to pay the interest payments on the General Obligation Bonds beginning on June 1, 2011.”

Included in other special funds this bill wants to raid or repeal is the transfer of $30 million from the Hawaii Tobacco Prevention and Control Trust Fund into the general fund by taking $15 million in each of the fiscal year’s 2011-2012 and 2012-2013.

Sometimes when lawmakers grab money out of a fund, it is required that money be returned, like in the Hurricane Relief Fund that is again up for being raided this session. For those kinds of raids, will it mean raising the fees to businesses and consumers in order to repay that money?

While the intent of Hawaii lawmakers is to create a balanced budget, aren’t they simply taking money from areas that currently have funds legally set aside for specific purposes and obligating the return of those funds in future budgets?

To see the status of SB120, click here:

To see this post in Rooted in Reason, go to: or see other posts there at

Although the bills that remain alive will have no more public hearings, citizens may still voice their opinions on these measures by calling or emailing legislators or the governor.

Here is a list of all bills still alive this session:

To send an email to all legislators, go to:

Or find your individual Senator or Representative at:

To contact the governor, go to:

Start a discussion at or on HawaiiVotes Facebook.

Hawaii Votes is a free public service of the Grassroot Institute of Hawaii. Its purpose is to inform citizens, community leaders, business people, media, and public officials about legislation that affects their families, schools, jobs and communities. The site empowers citizens to take a more active part in the democratic process, and hold their elected representatives accountable. Hawaii Votes gives users instant access to concise, plain language and objective descriptions of bills, substantive amendments, and votes that take place in the Hawaii Legislature. Unlike any other bill tracking utility, Hawaii Votes is unique because all legislative actions are described - not just those selected by a particular interest group. It is searchable by legislator, keyword, and 50 subject categories, so users can create their own custom "voting record guide." See the Web site at


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