Bill Text: HI SB1426 | 2011 | Regular Session | Amended

Hawaii Senate Bill 1426 (Prior Session Legislation)

Bill Title: County Surcharge Tax; General Obligation Bonds

Spectrum: Partisan Bill (Democrat 1-0)

Status: (Engrossed - Dead) 2011-03-10 - (H) Referred to FIN, referral sheet 33 [SB1426 Detail]

Download: Hawaii-2011-SB1426-Amended.html

THE SENATE	S.B. NO.	1426
TWENTY-SIXTH LEGISLATURE, 2011		S.D. 2
STATE OF HAWAII

A BILL FOR AN ACT

RELATING TO PUBLIC FUNDS.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF HAWAII:

PART I

SECTION 1. The legislature finds that due to recent worldwide economic events, the State, like the rest of the nation and the world, is experiencing a severe economic crisis. Although in the past, the State of Hawaii has displayed steady long-term fiscal planning, prudent decision-making practices, relatively stable real property values, and relatively low unemployment rates, it has been unable to avoid the negative effects of the struggling economy. Consequently, the State needs to find innovative ways to balance its budget for the current fiscal biennium and beyond. Sizeable budget shortfalls for the current and upcoming fiscal years require immediate and decisive action.

To meet the current and future financial needs of the State, the legislature believes that having the city and county of Honolulu return a portion of the moneys derived from the imposition of a county surcharge on state general excise and use taxes is a reasonable means of achieving a balanced budget for state operations without adversely impacting the city and county of Honolulu's fiscal status or resorting to a drastic reduction in state services or personnel.

The legislature further finds that the revenues already derived from the county surcharge on state general excise and use taxes and transferred to the city and county of Honolulu are largely unencumbered and will not be needed in the immediately foreseeable future. These moneys would be better utilized if applied to the immediate financial needs of the State, of which the city and county of Honolulu is a part.

To this end, the legislature finds that borrowing not more than $ from the balance of the amount derived from the county surcharge on state general excise and use taxes already transferred to the city and county of Honolulu and repaying the amount borrowed with revenues derived from the issuance of state general obligation bonds is prudent and will assist the State in maintaining current services and personnel until such time as the state economy recovers. At the same time, by ensuring that the loan is repaid in a timely manner through revenues derived from state general obligation bonds, any detrimental financial effect to the city and county of Honolulu will be avoided. In addition, to help ameliorate any detrimental financial impact to the city and county of Honolulu, this Act extends the surcharge on state general excise and use taxes for two additional years.

The purpose of this Act is to:

(1) Require the city and county of Honolulu to return to the State moneys derived from the county surcharge on state tax;

(2) Authorize the issuance of general obligation bonds to reimburse the city and county of Honolulu; and

(3) Extend the sunset of Act 247, Session Laws of Hawaii 2005, to extend, for an additional two years, the county surcharge on general excise and use taxes and the ordinance levying that surcharge.

SECTION 2. The city and county of Honolulu shall return to the State $ of the revenues transferred to the city and county of Honolulu pursuant to section 248-2.6, Hawaii Revised Statutes; provided that the city and county of Honolulu shall not return any of those revenues to the State until the State deposits in escrow the same amount of moneys from the proceeds of general obligation bonds issued pursuant to section 4 of this Act, which shall be transferred to the city and county of Honolulu as repayment. The State and the city and county of Honolulu shall enter into a memorandum of understanding to coordinate and effectuate the transfer of revenues from the city and county of Honolulu to the State and the transfer of the general obligation bond proceeds in escrow to the city and county of Honolulu, in accordance with this Act.

SECTION 3. Act 247, Session Laws of Hawaii 2005, is amended by amending section 9 to read as follows:

"SECTION 9. This Act shall take effect upon its approval; provided that:

(1) If none of the counties of the State adopt an ordinance to levy a county surcharge on state tax by December 31, 2005, this Act shall be repealed and section 437D‑8.4, Hawaii Revised Statutes, shall be reenacted in the form in which it read on the day prior to the effective date of this Act;

(2) If any county does not adopt an ordinance to levy a county surcharge on state tax by December 31, 2005, it shall be prohibited from adopting such an ordinance pursuant to this Act, unless otherwise authorized by the legislature through a separate legislative act;

(3) If an ordinance to levy a county surcharge on state tax is adopted by December 31, 2005:

(A) The ordinance shall be repealed on December 31, [~~2022;~~] 2024;

(B) This Act shall be repealed on December 31, [~~2022;~~] 2024; and

(C) Section 437D‑8.4, Hawaii Revised Statutes, shall be reenacted in the form in which it read on the day prior to the effective date of this Act."

SECTION 4. The director of finance is authorized to issue general obligation bonds in the sum of $ or so much thereof as may be necessary and the same sum or so much thereof as may be necessary is appropriated for fiscal year 2011-2012 for the purpose of replacing surcharge revenues that are returned from the city and county of Honolulu to the state general fund pursuant to section 2 of this Act; provided that the director of finance shall not issue the general obligation bonds until the State receives affirmative advice from the State's bond counsel regarding any potential effect on the State's bond rating from using the proceeds from the issuance of the general obligation bonds to replace the tax revenues returned from the city and county of Honolulu pursuant to section 2 of this Act.

The sum appropriated shall be transferred to the city and county of Honolulu by the department of budget and finance pursuant to this Act and section 248-2.6, Hawaii Revised Statutes.

PART II

SECTION 5. Section 248-2.6, Hawaii Revised Statutes, is amended to read as follows:

"[[]§248-2.6[]] County surcharge on state tax; disposition of proceeds. (a) If adopted by county ordinance, all county surcharges on state tax collected by the director of taxation shall be paid into the state treasury quarterly, within ten working days after collection, and shall be placed by the director of finance in special accounts. Out of the revenues generated by county surcharges on state tax paid into each respective state treasury special account, the director of finance shall deduct ten per cent of the gross proceeds of a respective county's surcharge on state tax to reimburse the State for the costs of assessment, collection, and disposition of the county surcharge on state tax incurred by the State. Amounts retained shall be general fund realizations of the State.

(b) The amounts deducted for costs of assessment, collection, and disposition of county surcharges on state tax shall be withheld from payment to the counties by the State out of the county surcharges on state tax collected for the current calendar year.

(c) For the purpose of this section, the costs of assessment, collection, and disposition of the county surcharges on state tax shall include any and all costs, direct or indirect, that are deemed necessary and proper to effectively administer this section and sections 237-8.6 and 238-2.6.

(d) After the deduction and withholding of the costs under subsections (a) and (b), the director of finance shall pay either the remaining balance or an amount equal to the remaining balance on [[]a[]] quarterly basis to the director of finance of each county that has adopted a county surcharge on state tax under section 46-16.8[.] in the manner described in subsection (e). The quarterly payments shall be made after the county surcharges on state tax have been paid into the state treasury special accounts or after the disposition of any tax appeal, as the case may be. All [~~county surcharges on state tax collected shall be~~] amounts distributed under this section by the director of finance to the county in which the county surcharge on state tax is generated [~~and~~] shall be a general fund realization of the county, to be used for the purposes specified in section 46‑16.8 by each of the counties.

(e) The director of finance may make payments required under subsection (d) from available sources other than the remaining balance after deducting costs of assessment and collection, including but not limited to general obligation bond proceeds. All payments made from sources other than the state treasury special accounts shall cause an equivalent amount to be deducted from the state treasury special account and become a general fund realization of the State."

PART III

SECTION 6. Act 226, Session Laws of Hawaii 2008, section 16, as amended by Act 11, Session Laws of Hawaii 2009, section 21, is amended to read as follows:

"SECTION 16. This Act shall take effect on July 1, 2008; provided that the amendments made to section 437D-8.4(a), Hawaii Revised Statutes, by this Act, shall not be repealed when section 437D-8.4, Hawaii Revised Statutes, is reenacted on December 31, [~~2022,~~] 2024, pursuant to Act 247, Session Laws of Hawaii 2005[.], as amended by Act , Session Laws of Hawaii 2011."

PART IV

SECTION 7. The revisor of statutes shall insert the effective date of this Act in the appropriate places in section 6 of this Act.

SECTION 8. Statutory material to be repealed is bracketed and stricken. New statutory material is underscored.

SECTION 9. This Act shall take effect on July 1, 2050.

Report Title:

County Surcharge Tax; General Obligation Bonds

Description:

Returns a portion of the county surcharge on GET and use taxes to the state general fund. Authorizes general obligation bonds to reimburse the city and county of Honolulu in fiscal year 2011-2012. Extends county surcharge for two years. Requires a memorandum of understanding between the State and city and county of Honolulu to return the funds. Effective 7/1/2050. (SD2)

The summary description of legislation appearing on this page is for informational purposes only and is not legislation or evidence of legislative intent.