REPORT TITLE:
Tobacco Settlement


DESCRIPTION:
Creates a Hawaii Tobacco Settlement Special Fund.  Establishes an
Emergency and Budget Reserve Fund. (SB1034 HD1)

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
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THE SENATE                              S.B. NO.           S.D. 1
TWENTIETH LEGISLATURE, 1999                                H.D. 2
STATE OF HAWAII                                            
                                                             
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                   A  BILL  FOR  AN  ACT

RELATING TO THE HAWAII TOBACCO SETTLEMENT SPECIAL FUND.



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

 1                              PART I
 
 2      SECTION 1.  Research has shown that cigarette smoking and
 
 3 tobacco use are the leading causes of preventable morbidity and
 
 4 mortality in Hawaii and the nation.  In Hawaii, more than one
 
 5 thousand three hundred residents die annually as a result of
 
 6 tobacco-related illness, which accounts for sixteen per cent of
 
 7 resident deaths and more than $320,000,000 in economic impact.
 
 8 Federal and state health objectives for the years 2000 and 2010,
 
 9 which offer a vision for the new century, call for improvements
 
10 in health status.  These improvements are achieved through
 
11 prevention, intervention, reductions in preventable death and
 
12 disability, enhanced quality of life, and reduced disparities in
 
13 the health of populations within Hawaii, the Pacific, and the
 
14 nation.
 
15      The purpose of this part is to establish the Hawaii tobacco
 
16 settlement special fund to serve as a medium for a public-private
 
17 partnership to:
 
18      (1)  Reduce tobacco consumption in Hawaii;
 
19      (2)  Control and prevent chronic diseases where tobacco is a
 
20           risk factor;
 

 
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 1      (3)  Promote healthy lifestyles through better nutrition and
 
 2           improved physical activity; and
 
 3      (4)  Promote children's health.
 
 4      The fund shall serve as a mechanism to maximize financial
 
 5 resources for tobacco prevention and control, health promotion
 
 6 and disease prevention programs, children's health programs, and
 
 7 to serve as a long-term source of stable funding for prevention-
 
 8 oriented public health efforts.
 
 9      SECTION 2.  The Hawaii Revised Statutes is amended by adding
 
10 a new chapter to be appropriately designated and to read as
 
11 follows:
 
12                             "CHAPTER
 
13              HAWAII TOBACCO SETTLEMENT SPECIAL FUND
 
14         -1 Definitions.  Whenever used in this chapter, unless
 
15 the context otherwise requires:
 
16      "Children's health program" means health care for needy
 
17 children.
 
18      "Department" means the department of health.
 
19      "Director" means the director of health.
 
20      "Fund" means the Hawaii tobacco settlement special fund.
 
21      "Health promotion and disease prevention programs" means
 
22 those public health programs that attempt to reduce resources
 
23 spent on treating preventable illness and functional impairment,
 

 
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 1 enhance the quality of life, and reduce disparities in the health
 
 2 status of populations.
 
 3      "Tobacco prevention and control programs" means those public
 
 4 health programs that attempt to reduce tobacco consumption.
 
 5         -2  Creation of the Hawaii tobacco settlement special
 
 6 fund.(a)  There is established in the state treasury a special
 
 7 fund to be known as the Hawaii tobacco settlement special fund
 
 8 into which shall be deposited    per cent of the amount collected
 
 9 by the State from the tobacco settlement, to be administered by
 
10 the department in accordance with this section.  The moneys
 
11 received by the State from the settlement with the tobacco
 
12 companies and any interest, income, and capital gains earned by
 
13 the fund shall constitute special fund assets.
 
14      (b)  The department may contract with and transfer money
 
15 from this fund to interest-bearing accounts or to a private
 
16 entity for investment until such time as moneys may be needed for
 
17 the purposes of this chapter.  All interest accruing from the
 
18 investment of these moneys shall be credited to the Hawaii
 
19 tobacco settlement fund.
 
20      (c)  The department shall transfer up to   per cent of the
 
21 allocation to the department of human services for children's
 
22 health programs.
 

 
 
 
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 1      (d)  The department shall expend moneys in the fund to:
 
 2      (1)  Reduce cigarette smoking and tobacco use among youth
 
 3           and adults through education and enforcement
 
 4           activities;
 
 5      (2)  Control and prevent chronic diseases where tobacco use
 
 6           is a risk factor;
 
 7      (3)  Promote healthy lifestyles through better nutrition and
 
 8           improved physical activity; and
 
 9      (4)  Assess the effectiveness of health promotion and
 
10           disease prevention and tobacco prevention and control
 
11           programs.
 
12      (e)  The fund may receive appropriations, contributions,
 
13 grants, endowments, or gifts in cash or otherwise from any source
 
14 provided, as any appropriations made by the State are not
 
15 intended to supplant the funding of existing prevention programs.
 
16      (f)  There shall be an endowment component of the fund.
 
17      (g)  Moneys in the fund shall be used by the department for
 
18 the purposes of this chapter; provided that not more than five
 
19 per cent of this amount shall be used for administrative
 
20 expenses."
 
21      SECTION 3.  (a)  There is established in the department of
 
22 health an advisory board to develop a strategic plan to
 
23 effectuate the purposes of chapter    , Hawaii Revised Statutes.
 

 
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 1      (b)  The strategic plan shall:
 
 2      (1)  Assess the current status and effectiveness of programs
 
 3           engaged in health promotion, disease prevention, and
 
 4           tobacco prevention and control;
 
 5      (2)  Include detailed recommendations for the implementation
 
 6           of specific programs deemed necessary to further carry
 
 7           out the purposes of chapter    , Hawaii Revised
 
 8           Statutes; and
 
 9      (3)  Contain sufficient standards and benchmarks by which
 
10           measures of program success may be appropriately
 
11           evaluated.
 
12      (c)  The advisory board shall be sufficiently representative
 
13 of community stakeholders so as to assure broad-based input into
 
14 the development of the plan.
 
15      (d)  The department of health shall report its findings,
 
16 strategic plan, and recommendations to the legislature no later
 
17 than twenty days prior to the convening of the regular session of
 
18 2000.
 
19      SECTION 4.  Of the annual proceeds from the 1998 settlement
 
20 between the attorney general of the State of Hawaii and the
 
21 various tobacco companies,    per cent shall be deposited into
 
22 the Hawaii tobacco settlement special fund.
 

 
 
 
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 1                              PART II
 
 2      SECTION 5.  The legislature finds that the establishment of
 
 3 an emergency and budget reserve fund is necessary to provide the
 
 4 State with a mechanism to build a financial reserve to be used
 
 5 when there is an emergency or economic downturn, or when there is
 
 6 an unforeseen reduction in revenues.
 
 7      The purpose of this part is to establish an emergency and
 
 8 budget reserve fund.
 
 9      SECTION 6.  Chapter 37, Hawaii Revised Statutes, is amended
 
10 by adding a new part to be appropriately designated and to read
 
11 as follows:
 
12           "PART   .  EMERGENCY AND BUDGET RESERVE FUND
 
13      37-  Establishment of fund; deposits; maximum size.(a)
 
14 There is established in the treasury of the State the emergency
 
15 and budget reserve fund that shall be a special fund administered
 
16 by the director of finance.  Of the annual proceeds from the 1998
 
17 settlement between the attorney general of the State of Hawaii
 
18 and the various tobacco companies,     per cent shall be
 
19 deposited into the emergency and budget reserve fund.
 
20      (b)  The legislature may also deposit funds from other
 
21 sources to the emergency and budget reserve fund.
 
22      (c)  All interest earned from moneys in the emergency and
 
23 budget reserve fund shall accumulate and accrue to the general
 
24 fund.
 

 
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 1      37-  Appropriations required; purposes; prohibitions.
 
 2 (a)  Expenditures from the emergency and budget reserve fund are
 
 3 meant to be a temporary supplemental source of funding during
 
 4 times of emergency, economic downturn, or unforeseen reduction in
 
 5 revenues.  No expenditures shall be made from the emergency and
 
 6 budget reserve fund except pursuant to appropriations.  The
 
 7 general appropriations bill or the supplemental appropriations
 
 8 bill, as defined in section 9 of article VII of the Constitution
 
 9 of the State of Hawaii, shall not be used to appropriate moneys
 
10 from the emergency and budget reserve fund.  The governor,
 
11 through an appropriations bill, may recommend expenditures from
 
12 the emergency and budget reserve fund by setting forth the
 
13 purposes, consistent with the purposes listed in subsection (b),
 
14 the amounts, and the reasons why the appropriations are
 
15 necessary.
 
16      (b)  The legislature may make appropriations from the fund
 
17 for the following purposes:
 
18      (1)  To maintain levels of programs determined to be
 
19           essential to the public health, safety, and welfare;
 
20      (2)  To provide for counter cyclical economic and employment
 
21           programs in periods of economic downturn;
 
22      (3)  To restore facilities destroyed or damaged or services
 
23           disrupted by disaster in any county; and
 

 
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 1      (4)  To meet other emergencies when declared by the governor
 
 2           or determined to be urgent by the legislature.
 
 3      Any act making appropriations from the emergency and budget
 
 4 reserve fund shall include a declaration of findings and purposes
 
 5 setting forth the purposes, the amounts, and the reasons why the
 
 6 appropriations are necessary and shall require a three-fourths
 
 7 majority vote of each house of the legislature.
 
 8      (c)  Appropriations from the fund for the following purposes
 
 9 are specifically prohibited:
 
10      (1)  To meet expenses of the legislature;
 
11      (2)  To provide for salary adjustments for officials
 
12           appointed pursuant to article V, section 6 or article
 
13           VI, section 3 of the Hawaii Constitution and for others
 
14           whose salaries are directly related to salaries of
 
15           these officials; and
 
16      (3)  To fund cost items in any collective bargaining
 
17           contract unless the general fund or the applicable
 
18           special fund is or is projected to be in a deficit
 
19           position and cannot fund the cost items approved by the
 
20           legislature.
 
21      37-  Compliance with expenditure ceiling.  The general
 
22 fund expenditure ceiling requirement shall not apply to
 
23 appropriations made to the emergency and budget reserve fund but
 

 
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 1 shall apply to appropriations authorized from the emergency and
 
 2 budget reserve fund.
 
 3      37-  Report.  At least twenty days prior to the convening
 
 4 of each regular session, the director of finance shall submit to
 
 5 the legislature a report of the condition of the emergency and
 
 6 budget reserve fund, including:
 
 7      (1)  For the previous fiscal year:  
 
 8           (A)  The beginning balance;
 
 9           (B)  The amount deposited into the fund; 
 
10           (C)  The appropriations made from the fund; 
 
11           (D   The expenditure and encumbrances for each
 
12                appropriation; 
 
13           (E)  The amount, if any, lapsed for each appropriation;
 
14                and 
 
15           (F)  The closing balance;
 
16           and
 
17      (2)  For the fiscal year in progress:  
 
18           (A)  The beginning balance; 
 
19           (B)  The amount deposited into the fund; 
 
20           (C)  The appropriations made from the fund;
 
21           (D)  The expenditures for each appropriation for the
 
22                first quarter; 
 
23           (E)  The estimated expenditures for the remaining three
 

 
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 1                quarters; and 
 
 2           (F)  The estimated closing balance."
 
 3      SECTION 7.  Section 36-27, Hawaii Revised Statutes, is
 
 4 amended to read as follows:
 
 5      "36-27  Transfers from special funds for central service
 
 6 expenses.  Except as provided in this section, and
 
 7 notwithstanding any other law to the contrary, from time to time
 
 8 the director of finance, for the purpose of defraying the
 
 9 prorated estimate of central service expenses of government in
 
10 relation to all special funds, except the:
 
11      (1)  Special summer school and intersession fund under
 
12           section 302A-1310;
 
13      (2)  School cafeteria special funds of the department of
 
14           education;
 
15      (3)  Special funds of the University of Hawaii;
 
16      (4)  State educational facilities improvement special fund;
 
17      (5)  Convention center capital special fund under section
 
18           206X-10.5 and the convention center operations special
 
19           fund under section 206X-10.6;
 
20      (6)  Special funds established by section 206E-6;
 
21      (7)  Housing loan program revenue bond special fund;
 
22      (8)  Housing project bond special fund;
 
23      (9)  Aloha Tower fund created by section 206J-17;
 

 
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 1     (10)  Domestic violence prevention special fund under section
 
 2           321-1.3;
 
 3     (11)  Spouse and child abuse special account under section
 
 4           346-7.5;
 
 5     (12)  Spouse and child abuse special account under section
 
 6           601-3.6;
 
 7     (13)  Funds of the employees' retirement system created by
 
 8           section 88-109;
 
 9     (14)  Unemployment compensation fund established under
 
10           section 383-121;
 
11     (15)  Hawaii hurricane relief fund established under chapter
 
12           431P;
 
13     (16)  Hawaii health systems corporation special funds;
 
14     (17)  Boiler and elevator safety revolving fund established
 
15           under section 397-5.5;
 
16     (18)  Tourism special fund established under section [[]201B-
 
17           11[]]; [and]
 
18     (19)  Department of commerce and consumer affairs' special
 
19           funds; and
 
20     (20)  Emergency and budget reserve fund established under
 
21           section 37-   ;
 
22 shall deduct five per cent of all receipts of all other special
 
23 funds, which deduction shall be transferred to the general fund
 

 
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 1 of the State and become realizations of the State.  All officers
 
 2 of the State and other persons having power to allocate or
 
 3 disburse any special funds shall cooperate with the director in
 
 4 effecting these transfers.  To determine the proper revenue base
 
 5 upon which the central service assessment is to be calculated,
 
 6 the director shall adopt rules pursuant to chapter 91 for the
 
 7 purpose of suspending or limiting the application of the central
 
 8 service assessment of any fund.  No later than twenty days prior
 
 9 to the convening of each regular session of the legislature, the
 
10 director shall report all central service assessments made during
 
11 the preceding fiscal year."
 
12      SECTION 8.  Section 36-30, Hawaii Revised Statutes, is
 
13 amended by amending subsection (a) to read as follows:
 
14      "(a)  Each special fund, except the:
 
15      (1)  Transportation use special fund established by section
 
16           261D-1;
 
17      (2)  Special summer school and intersession fund under
 
18           section 302A-1310;
 
19      (3)  School cafeteria special funds of the department of
 
20           education;
 
21      (4)  Special funds of the University of Hawaii;
 
22      (5)  State educational facilities improvement special fund;
 
23      (6)  Special funds established by section 206E-6;
 

 
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 1      (7)  Aloha Tower fund created by section 206J-17;
 
 2      (8)  Domestic violence prevention special fund under section
 
 3           321-1.3;
 
 4      (9)  Spouse and child abuse special account under section
 
 5           346-7.5;
 
 6     (10)  Spouse and child abuse special account under section
 
 7           601-3.6;
 
 8     (11)  Funds of the employees' retirement system created by
 
 9           section 88-109;
 
10     (12)  Unemployment compensation fund established under
 
11           section 383-121;
 
12     (13)  Hawaii hurricane relief fund established under chapter
 
13           431P;
 
14     (14)  Convention center capital special fund established
 
15           under section 206X-10.5 and the convention center
 
16           operations special fund established under section
 
17           206X-10.6;
 
18     (15)  Hawaii health systems corporation special funds; [and]
 
19     (16)  Tourism special fund established under section [[]201B-
 
20           11[]]; and
 
21     (17)  Emergency and budget reserve fund established under
 
22           section 37-   ;
 
23 shall be responsible for its pro rata share of the administrative
 

 
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 1 expenses incurred by the department responsible for the
 
 2 operations supported by the special fund concerned."
 
 3      SECTION 9.  There is transferred out of the general revenues
 
 4 of the State of Hawaii to the emergency and budget reserve fund
 
 5 an amount equal to    per cent of the proceeds from the 1998
 
 6 settlement between the attorney general of the State of Hawaii
 
 7 and the various tobacco companies.
 
 8                             PART III
 
 9      SECTION 10.  If any provision of this Act, or its
 
10 application to any person or circumstance is held invalid, the
 
11 invalidity shall not affect other provisions or applications of
 
12 the Act which may be given effect without the invalid provision
 
13 or application, and to this end the provisions of this Act are
 
14 severable.
 
15      SECTION 11.  Statutory material to be repealed is bracketed.
 
16 New statutory material is underscored.
 
17      SECTION 12.  This Act shall take effect upon its approval;
 
18 provided that:
 
19      (1)  Sections 4 and 9 shall take effect on July 1, 1999;
 
20      (2)  The amendments made to sections 36-27 and 36-30, Hawaii
 
21           Revised Statutes, by this Act shall not be repealed
 
22           when those sections 13 of Act 216, Session Laws of
 
23           Hawaii 1997; and
 

 
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 1      (3)  The amendments made to section 36-27, Hawaii Revised
 
 2           Statutes, by this Act shall not be repealed when that
 
 3           section is reenacted on July 31, 2003, pursuant to
 
 4           section 9 of Act 142, Session Laws of Hawaii 1998.