Lawmakers to examine special funds


By ANITA HOFSCHNEIDER

Associated Press

HONOLULU — The Hawaii House Finance Committee is re-evaluating the use of special funds in the months leading up to the next legislative session.

State departments have hundreds of separate accounts channeling money into specific initiatives, and they need more attention and oversight, Finance Committee Chairwoman Sylvia Luke said.

The Democrat from Honolulu said she wants the committee to perform thorough research now so it can tackle the issue when the Legislature reconvenes in January.

Special funds are created to provide dedicated revenue streams for particular initiatives, but critics say the funds don’t always stay true to their original purpose or meet other legal criteria to justify their existence.

The state auditor said in a report last year that special funds need greater scrutiny and some should be repealed. The auditor criticized several accounts, including one that uses revenue from the conveyance tax to fund natural resource protection.

Gov. Neil Abercrombie lobbied the Legislature this year to expand that fund to provide more money for natural resource protection, but his initiative failed. Lawmakers decided instead to cover the cost through the general funds and capital improvement funds, more in line with the auditor’s recommendation.

Fiscal conservatives have been calling for greater scrutiny of special funds for decades.

Lowell Kalapa from the Tax Foundation of Hawaii said lawmakers use the accounts to circumvent the state’s constitutional limit to general fund spending, allowing the government to grow faster than it should.

The funds, he said, lack accountability because they aren’t analyzed as carefully as general fund appropriations, and no one knows exactly how much money is in them.

Grassroot Institute of Hawaii, a conservative think tank, estimated special funds contained $1.4 billion in unspent revenue in 2010.

“We’re talking about a lot of money,” Luke said.

Sen. Sam Slom, the only Republican member of the state’s 25-person Senate, has been refusing to vote for new special funds since he joined the Legislature 17 years ago.

Slom said he’s glad to hear the House is formally investigating the accounts, following a trend of increasing scrutiny in the last few years in both chambers.

“It is a poor budgeting method,” he said. “It hides a lot of money from taxpayers.”

 

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