Hawaii Gov. Neil Abercrombie has signed legislation appropriating $42 million from the state’s Hurricane Reserve Trust Fund to the General Fund to help balance the state budget for fiscal year 2011, which ends June 30.
Additionally, SB 1270 authorizes the governor to transfer additional money, as needed, from the Hurricane Reserve Trust Fund to the General Fund to balance the budget.
To replenish the Hurricane Reserve Trust Fund, the law provides a mechanism to automatically use general excise tax revenues in fiscal years 2013, 2014 and 2015, as well as authorizes the issuance of revenue bonds by the hurricane relief fund to maintain a $75 million balance.
The Hurricane Reserve Trust Fund was established in 1992, after Hurricane Iniki destroyed many parts of Kauai and Oahu, and private insurance companies withdrew from the market. The fund was built from payments from Hawaii homeowners insurance premiums, but has never been used. And as the state faced financial woes, it has been eying the fund as a revenue source for the General Fund.
“Current economic conditions have necessitated difficult decisions by the state to balance an already precarious budget,” legislators said. “The reduction-in-force in state government has reduced services to the public and has also had an adverse effect on the efficiency and effectiveness of certain key operational areas. Funding reductions have also affected the state’s ability to provide services to those who are most vulnerable to setbacks during this time of economic uncertainty, and have affected the state’s ability to fuel and sustain an economic recovery.”
The state legislature noted that Japan’s earthquake and tsunami has negatively reduced tourism bookings in Hawaii, which are a major revenue source for the state. Using money from the hurricane relief fund was deemed necessary “to maintain programs at levels determined to be essential for education, public health and public welfare.