Report Title:

Special and Revolving Funds; Repeal; Discontinuance; Transfer

 

Description:

Implements the recommendations of the auditor with respect to the repeal, discontinuance, or modification of state special and revolving funds.

HOUSE OF REPRESENTATIVES

H.B. NO.

1917

TWENTY-FIRST LEGISLATURE, 2002

 

STATE OF HAWAII

 


 

A BILL FOR AN ACT

 

RELATING TO STATE FUNDS.

 

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

SECTION 1. The legislature finds that special and revolving funds generally provide automatic program funding through the assessment of fees, program revenues, or the use of other funds without the benefit of legislative review or taking into account the overall condition of the state budget.

The legislature further finds that Act 240, Session Laws of Hawaii 1990, directed the auditor to perform a comprehensive evaluation of all state special and revolving funds to determine whether their continued existence was justified, and whether moneys appropriated from the general fund and revenues generated by special or revolving fund programs should be deposited in the general fund.

In 1992, the auditor responded with its report entitled "Loss of Budgetary Control: A Summary Report of the Review of Special and Revolving Funds" (Report No. 92-14), in which the auditor found that the proliferation of special and revolving funds as financing mechanisms to support state programs has had a deleterious effect on the legislature's ability to control the state budget.

The legislature subsequently enacted Act 280, Session Laws of Hawaii 1993, which repealed or modified various special and revolving funds administered by state agencies. While the legislature concurred with the overall findings of the auditor, it recognized that circumstances necessitated the continuation of some special and revolving funds that were needed to meet federal obligations or to provide flexibility to accommodate variable or unpredictable program demands. The legislature stated its intent in Act 280 to continue to review all special and revolving funds and to repeal or modify the funds as circumstances demand.

The twentieth state legislature adopted House Concurrent Resolution No. 89 during the regular session of 2000 to request the auditor to update its 1992 report and to analyze each special and revolving fund created since July 1, 1990, as to its conformance with the criteria used by the auditor in complying with Act 240, Session Laws of Hawaii 1990. The concurrent resolution further requested the auditor to identify the following: for all special and revolving funds existing as of July 1, 1999, their cash balances as of June 30, 2000; a list of all special and revolving funds terminated since July 1, 1990; and an analysis of alternatives available to the legislature to strengthen its oversight of non-general fund moneys.

The auditor, in its July 2001 report entitled "Update of the 1992 Summary of Special and Revolving Funds", found that since July 1, 1990, seventy-one special and revolving funds had been repealed or discontinued. However, a majority (one hundred six out of one hundred sixty-six) of the special and revolving funds that were previously reviewed were still in existence as of July 1, 1999. In addition, the auditor found that few of the one hundred six special and revolving funds had undergone significant changes since they were last reviewed. Moreover, thirty-one special and revolving funds that were previously reviewed that were in existence as of July 1, 1999 still did not meet all established criteria. The fiscal year 1999-2000 ending cash balance of these thirty-one funds totaled approximately $77,400,000.

In addition, the auditor further found that one hundred thirty-two special and revolving funds had been statutorily or administratively created since July 1, 1990, but that twenty-five of those funds had since been repealed or discontinued. The aggregate cash balance of the special and revolving funds created after July 1, 1990 and still in existence as of June 30, 2000 totaled approximately $220,000,000. However, thirty-eight of those funds did not meet all criteria of a special or revolving fund and held over $19,000,000 outside the general fund.

Accordingly, the purpose of this Act is to implement the findings and recommendations of the auditor to repeal, discontinue, or modify various special and revolving funds currently administered by the departments, agencies, and offices of the State, and to strengthen non-general fund oversight by the legislature.

PART I. SPECIAL AND REVOLVING FUNDS UNDER THE

DEPARTMENT OF ACCOUNTING AND GENERAL SERVICES

SECTION 2. Section 36-32, Hawaii Revised Statutes, is repealed.

["36-32 State educational facilities improvement special fund. (a) There is created in the treasury of the State the state educational facilities improvement special fund, into which shall be deposited a portion of all general excise tax revenues collected by the department of taxation under section 237-31. The special fund shall be used solely to plan, design, acquire lands for and to construct public school facilities and to provide equipment and technology infrastructure to improve public schools and other facilities under the jurisdiction of the department of education, except public libraries. In addition, activities of the department of education intended to eliminate the gap between the facility needs of schools and available resources shall be eligible for funding from the special fund. Expenditures from the special fund shall be limited to projects authorized by the legislature and shall be subject to sections 37-31, and 37-33 through 37-40. Appropriations or authorizations from the special fund shall be expended by the comptroller.

(b) The department of accounting and general services shall submit an annual report to the legislature, which shall include a financial statement of the special fund and the status of projects undertaken pursuant to this section, no later than twenty days prior to the convening of each regular session."]

SECTION 3. Section 237-31, Hawaii Revised Statutes, is amended to read as follows:

"237-31 Remittances. All remittances of taxes imposed by this chapter shall be made by money, bank draft, check, cashier's check, money order, or certificate of deposit to the office of the department of taxation to which the return was transmitted. The department shall issue its receipts therefor to the taxpayer and shall pay the moneys into the state treasury as a state realization, to be kept and accounted for as provided by law; provided that:

[(1) The sum from all general excise tax revenues realized by the State that represents the difference between $45,000,000 and the proceeds from the sale of any general obligation bonds authorized for that fiscal year for the purposes of the state educational facilities improvement special fund shall be deposited in the state treasury in each fiscal year to the credit of the state educational facilities improvement special fund;

(2)] (1) A sum, not to exceed $5,000,000, from all general excise tax revenues realized by the State shall be deposited in the state treasury in each fiscal year to the credit of the compound interest bond reserve fund; and

[(3)] (2) A sum, not to exceed the amount necessary to meet the obligations of the integrated tax information management systems performance-based contract may be retained and deposited in the state treasury to the credit of the integrated tax information management systems special fund. The sum retained by the director of taxation for deposit to the integrated tax information [[]management[]] systems special fund for each fiscal year shall be limited to amounts appropriated by the legislature. This paragraph shall be repealed on July 1, 2004."

SECTION 4. Chapter 41D, Hawaii Revised Statutes, is amended as follows:

1. By amending section 41D-3(h) to read:

"(h) Claims compromised or settled under this section shall be paid from the state [risk management revolving] general fund."

2. By amending section 41D-4 to read:

"41D-4 State risk management [revolving fund.]; source of revenues, use of funds. (a) The [state risk management revolving fund is created and shall be funded in amounts reasonably necessary to:] comptroller shall authorize the disbursement of all moneys appropriated by the legislature under this chapter to:

(1) Carry out the responsibilities of the comptroller established in section 41D-2;

(2) Pay claims to state agencies for losses to property of the State caused by fire or other casualty, including the cost to repair or replace buildings and other structures, replace damaged contents, and to provide alternate structures while damaged structures are being repaired or replaced;

(3) Pay claims against the State under sections 662-11, 41D-3, and 41D-8; and

(4) Pay for losses to the State incurred by the dishonesty, nonfeasance, or misfeasance of any officer or employee of the State or for any losses to the State through larceny, theft, embezzlement, forgery, misappropriation, wrongful abstraction, wilful misapplication, or any other fraudulent or dishonest act committed by one or more of the employees of the State acting directly or in collusion with others.

(b) In addition to any appropriation the legislature shall make [to the state risk management revolving fund,] for the purposes of this chapter, the comptroller may apportion to, and collect from, state agencies those amounts of money that, in the discretion of the comptroller, reflect benefits received by the agencies under this chapter. The comptroller may consider the relevant risk and loss experience of the agencies in making apportionments and assessments. Funds so collected shall be deposited into the state [risk management revolving] general fund.

(c) The comptroller may establish deductibles for the state agencies for certain perils or classes of property losses and may:

(1) Assess the agencies for losses incurred in the amount of the deductible; or

(2) Reduce the payment from the state [risk management revolving] general fund to cover the casualty loss by the amount of the deductible.

(d) The comptroller may establish a formula for refunds to the state agencies based upon the agencies' risk and loss experience.

(e) Money [in the state risk management revolving fund] appropriated by the legislature under this chapter shall be expended only for the purposes delineated in subsection (a) and only upon the authority of the comptroller, [who is given discretion when to permit expenditures from the fund. Money in the state risk management revolving fund] and shall not be garnished, attached, or otherwise subjected to legal compulsion to pay actual or alleged obligations of the State, any state agency, or any state employee.

(f) The comptroller shall prepare, for each fiscal year, a report of all claims arbitrated, compromised, or settled for $10,000 or less paid [from the state risk management revolving fund.] under this chapter. The report shall be submitted to the legislature twenty days prior to the commencement of the regular session next succeeding the year for which the report is made.

(g) Money received from the settlement of claims or losses of the State as delineated in subsection (a) [may] shall be deposited into the state [risk management revolving] general fund."

3. By repealing section 41D-5.

["[41D-5] Investment of fund. The director of finance shall invest all moneys appropriated or assessed to the state risk management revolving fund. Interest upon the investments shall be credited to the state risk management revolving fund."]

4. By repealing section 41D-6.

["[41D-6] Fund advancement; dissolution. If the state risk management revolving fund should become financially incapable of meeting its obligations under this chapter, the comptroller, in the comptroller's discretion, may:

(1) Request that the governor authorize the transfer of sufficient sums to meet the fund's obligations from whatever such savings as may be available from other current appropriation for any other state program. Money so advanced shall be repaid from the state risk management revolving fund in annual installments, without interest. The amount of installments shall be fixed by the director of finance at whatever amount as can reasonably be expected to liquidate indebtedness of the fund in not more than ten years; or

(2) Dissolve the fund, prorating remaining assets of the fund among the claimants, giving priority to those claims as, in the comptroller's discretion, is appropriate."]

5. By amending section 41D-8 to read:

"[[]41D-8[]] Insurance on public vehicles. Vehicles owned by the State or in the custody and use of any department may be self-insured or insured by purchased insurance against public liability in compliance with article 10C of chapter 431. Determinations of whether to insure or self-insure shall be made by the comptroller in conjunction with the state agency having custody or control of the vehicle, or the vehicle may be insured on a complete or excess coverage basis under a comprehensive automobile liability insurance policy entered into by the comptroller. If the vehicles are self-insured, claims for which the State is liable under article 10C of chapter 431 may be settled and paid by the comptroller [from the state risk management revolving fund,] out of appropriations made by the legislature from the state general fund, notwithstanding the provisions of chapter 662. Any purchased state comprehensive automobile liability insurance policy shall be administered by and be subject to the control of the comptroller."

SECTION 5. Section 662-11, Hawaii Revised Statutes, is amended by amending subsection (b) to read as follows:

"(b) Claims arbitrated, compromised, or settled by the attorney general [for $10,000 or less shall be paid from the state risk management revolving fund. Claims arbitrated, compromised, or settled by the attorney general for more than $10,000] shall be paid only after funds are appropriated by the legislature from the state general fund for the payment of those claims."

SECTION 6. Section 103-8.5, Hawaii Revised Statutes, is amended to read as follows:

"[[]103-8.5[]] Works of art [special fund.] programs; source and use of funds. (a) [There is created a works of art special fund, into which shall be transferred one per cent of all state fund appropriations for capital improvements designated for the construction cost element; provided that this transfer shall apply only to capital improvement appropriations that are designated for the construction or renovation of state buildings.

(b) The works of art special fund shall be used] The comptroller shall disburse moneys appropriated by the legislature under this section solely for the following purposes:

(1) Costs related to the acquisition of works of art, including any consultant or staff services required to carry out the art in public places and relocatable works of art programs;

(2) Site modifications, display, and interpretive work necessary for the exhibition of works of art;

(3) Upkeep services, including maintenance, repair, and restoration of works of art; and

(4) Storing and transporting works of art[;].

[(c) The one per cent amount, which is included in all capital improvement appropriations, shall be calculated at the time the appropriation bills are signed into law. The moneys shall be transferred into the works of art special fund upon availability of moneys from the appropriations. Each agency receiving capital improvement appropriations shall calculate the one per cent amount and transfer the moneys into the works of art special fund.

(d)] (b) The comptroller and the state foundation on culture and the arts shall decide on the specific art objects to acquire, giving first consideration to placing appropriate pieces of art at the locations of the original appropriation.

The selection of, commissioning artists for, reviewing of design, execution, and placement of, and the acceptance of works of art shall be the responsibility of the comptroller and the state foundation on culture and the arts in consultation with the affected agency or department.

[Expenditures from the works of art special fund shall be made by the comptroller.

(e) The comptroller shall:

(1) Provide each agency receiving capital improvement appropriations with information regarding items that shall be included and excluded from the one per cent amount;

(2) Ensure that each agency calculates its one per cent amount correctly; and

(3) Ensure that each agency transfers the correct amount to the works of art special fund in a timely manner.

(f) The comptroller and the executive director shall track amounts due from each agency under the one per cent requirement as provided in this section.]"

SECTION 7. Section 105-11, Hawaii Revised Statutes, is amended to read as follows:

"[[]105-11[]] State motor pool revolving fund. (a) There shall be in the state treasury[,] a state motor pool revolving fund for the acquisition, operation, repair, maintenance, storage, and disposal of state-owned vehicles assigned to the motor pool.

(b) All proceeds collected from motor pool rentals shall be deposited in the state motor pool revolving fund and be expended by the comptroller to carry out the purposes of this section.

(c) All unexpended and unencumbered moneys remaining on balance with the fund at the close of each fiscal year which are deemed, by the director of finance, to be in excess of the moneys necessary to carry out the purposes of this section over the next following fiscal year shall lapse to the credit of the state general fund."

SECTION 8. The department of accounting and general services is hereby directed to discontinue the operation of the administratively established parking control revolving fund escrow account. All unencumbered and unexpended balances remaining in that fund shall be transferred to the credit of the state general fund on July 1, 2002. The department shall include in its budgetary request for each upcoming fiscal period, the amounts necessary to carry out the functions and activities formerly financed by the proceeds of that fund.

PART II. SPECIAL AND REVOLVING FUNDS UNDER

THE DEPARTMENT OF AGRICULTURE

SECTION 9. Chapter 147, Hawaii Revised Statutes, is amended as follows:

1. By amending the heading to part VII to read:

"[[]PART VII.[]] MARKETING ORDER [REVOLVING FUND] PROGRAMS"

2. By amending section 147-101 to read:

"[[]147-101[]] Marketing order [revolving fund. There is established a revolving fund for use by the department of agriculture in providing inspection services for federal marketing order programs.] programs; disposition of revenues; source of funds. (a) All moneys necessary for the department of agriculture to provide inspection services for federal marketing order programs shall be allocated by the legislature through appropriations out of the state general fund. The department shall include in its budgetary request for each upcoming fiscal period, the amounts necessary to effectuate the purposes of this section.

(b) Moneys [in the fund] allocated by the legislature may be expended for materials, salaries, equipment, training, and other costs related to providing inspection services. [Moneys] All moneys derived from the inspection services provided shall be deposited [in the] to the credit of the state general fund. Marketing order inspectors hired under this chapter shall be exempt from chapter 76."

SECTION 10. Section 150A-48, Hawaii Revised Statutes, is amended to read as follows:

"[[]150A-48[]] Microorganism import certification [revolving fund. (a) There is established in the state treasury the microorganism import certification revolving fund which shall be administered by the department for the purposes of this section. The microorganism import certification revolving fund shall consist of:

(1) Legislative appropriations to the microorganism import certification revolving fund;

(2) Certification and inspection fees, as authorized by rule;

(3) All fines collected pursuant to this part;

(4) Reimbursements for any costs paid by the department to remediate any impending danger or actual emergencies involving microorganisms imported pursuant to certificate;

(5) All interest earned on or accrued to moneys deposited in the microorganism import certification revolving fund;

(6) Grants and gifts to the microorganism import certification revolving fund; and

(7) Any other moneys made available to the microorganism import certification revolving fund from other sources.

(b) The balance in the microorganism import certification revolving fund shall not exceed $500,000. All amounts in excess of $500,000 shall be deposited to the credit of the state general fund.] program; source of funds. (a) All moneys to carry out the microorganism import certification program under this chapter shall be allocated by the legislature through appropriations out of the state general fund. The department shall include in its budgetary request for each upcoming fiscal period, the amounts necessary to effectuate the purposes of this section.

[(c) The department shall expend moneys in the] (b) Moneys allocated by the legislature for microorganism import certification [revolving fund] shall be expended by the department for the development, administration, and operation of the microorganism import certification program, including [but not limited to] personnel, training, materials and equipment, compliance monitoring activities, educational workshops for certified importers and applicants for certification, evaluation and remediation of impending threat or actual emergencies related to microorganisms imported pursuant to certificate, and for any other purpose deemed necessary to carry out the purposes of this part.

[(d)] (c) The department may set fees, by rule, for educational workshops for certified importers or applicants for certification.

(d) All moneys, fees, fines, reimbursements, and other payments collected by the department under this section shall be deposited to the credit of the state general fund."

SECTION 11. Section 155-14, Hawaii Revised Statutes, is amended to read as follows:

"155-14 Funds; application of payments. (a) There is created a special fund to be known as the agricultural loan revolving fund, from which moneys shall be loaned by the department of agriculture under this chapter. The department, by its board of agriculture, may transfer moneys from the agricultural loan revolving fund to the aquaculture loan revolving fund, from which moneys shall be disbursed by the department pursuant to chapter 219, and may transfer moneys from that revolving fund to the agricultural loan revolving fund for disbursement pursuant to this chapter; provided that:

(1) The amount of moneys transferred shall not exceed $1,000,000 for each revolving fund within the calendar year; and

(2) Twenty days prior to the convening of each regular session of the legislature, the department shall report to the legislature all transfers that were made between the agricultural loan revolving fund and the aquaculture loan revolving fund during the preceding calendar year and the balance of each revolving fund as of December 31 of each year.

(b) All interest and fees collected by the department shall be deposited in the agricultural loan reserve fund to the extent needed to carry on the operations of the department including payments for consultative services that would strengthen the agriculture loan program; any moneys surplus to these needs shall be transferred to the agricultural loan revolving fund at the discretion of the department. All payments received on account of principal shall be credited to the agricultural loan revolving fund.

(c) A proper reserve shall be maintained in the agricultural loan revolving fund to guarantee payment of loans under section 155-5.

(d) All funds of the department shall be paid out on warrants signed by the chairperson of the board of agriculture.

(e) All unexpended and unencumbered moneys remaining on balance with the agricultural loan revolving fund and the agricultural loan reserve fund at the close of each fiscal year which are deemed, by the director of finance, to be in excess of the moneys necessary to carry out the purposes of this chapter over the next following fiscal year shall lapse to the credit of the state general fund."

SECTION 12. Chapter 163D, Hawaii Revised Statutes, is amended as follows:

1. By amending the definition of "fund" in section 163D-2 to read:

""Fund" means the [Hawaii agricultural development revolving] state general fund."

2. By amending section 163D-8(e) to read:

"(e) The rules adopted pursuant to this section may include, but are not limited to:

(1) The methods of establishing assessment areas within a project area;

(2) The method of assessing real properties specially benefited;

(3) The costs to be borne by the corporation, the county in which the project facilities are situated, and the property owners;

(4) The procedures before the corporation relating to the creation of the assessment areas by the owners of real property therein, including provisions for petitions, bids, contracts, bonds, and notices;

(5) Provisions relating to assessments;

(6) Provisions relating to financing, such as bonds, [the Hawaii agricultural development revolving fund,] advances from available funds, special funds for the payment of bonds, the payment of principal and interest, and the sale and use of bonds;

(7) Provisions relating to funds and the refunding of outstanding debts; and

(8) Provisions relating to limitations on time to sue, and other related provisions."

3. By amending section 163D-8(g) to read:

"(g) All sums collected under this section shall be deposited [in the] to the credit of the state general fund [established by section 163D-17], except that all moneys collected on account of assessments and interests thereon for any specific project facilities financed by the issuance of bonds, shall be set apart in a separate special fund in accordance with section 39-62 and applied solely to the payment of:

(1) The principal and interest on these bonds;

(2) The cost of administering, operating, and maintaining the program;

(3) The establishment of reserves; and

(4) Other purposes as may be authorized in the proceedings providing for the issuance of the bonds.

If any surplus remains in any special fund after the payment of the bonds chargeable against that special fund, the surplus shall be [credited to and become a part of the] deposited to the credit of the state general fund. [Notwithstanding any other law to the contrary, moneys in the fund may be used to make up any deficiencies in the special fund.]"

4. By amending section 163D-13 to read:

"[[]163D-13[]] Revenue bonds; special funds. (a) A separate special fund shall be established in accordance with section 39-62 for each project facility financed from the proceeds of the revenue bonds secured under the same trust indenture. Each fund shall be designated "project facility revenue bond special fund" and shall bear additional designation as the corporation deems appropriate to properly identify the fund.

(b) Notwithstanding any other law to the contrary, [including] except as otherwise provided in section [[]163D-17[]], all revenues, income, and receipts derived from the project facility for which the revenue bonds are issued shall be paid into the project facility revenue bond fund established for that project facility and applied as provided in the proceedings authorizing the issuance of the revenue bonds."

5. By amending section 163D-17 to read:

"163D-17 Hawaii agricultural development [revolving fund; established]; use of corporation funds. (a) [There is established the Hawaii agricultural development revolving fund, to which shall be credited any state appropriations to the fund or other moneys made available to the fund, to be expended as directed by the corporation.

(b) The corporation shall hold the fund in an account or accounts separate from other funds.] All moneys necessary to carry out the purposes of this section shall be allocated by the legislature through appropriations out of the state general fund. The corporation shall include in its budgetary request for each upcoming fiscal period, the amounts necessary to effectuate the purposes of this section. All moneys, interest, and other payments received by the corporation under this section shall be deposited to the credit of the state general fund. The corporation shall invest and reinvest [the fund] moneys allocated by the legislature and the income thereof to:

(1) Purchase qualified securities issued by enterprises for the purpose of raising seed capital; provided that the investment shall comply with the requirements of this chapter;

(2) Make grants, loans, and provide other monetary forms of assistance necessary to carry out the purposes of this chapter; and

(3) Purchase securities as may be lawful investments for fiduciaries in the State.

All appropriations, grants, contractual reimbursements, and other funds not designated for this purpose may be used to pay for the proper general expenses and to carry out the purposes of the corporation.

[(c)] (b) The corporation shall purchase qualified securities issued by an enterprise only after:

(1) Receiving:

(A) An application from the enterprise containing a business plan, which is consistent with the business and agricultural development plan, including a description of the enterprise and its management, product, and market;

(B) A statement of the amount, timing, and projected use of the capital required;

(C) A statement of the potential economic impact of the enterprise, including the number, location, and types of jobs expected to be created; and

(D) Any other information as the corporation shall require;

(2) Determining, based upon the application submitted, that:

(A) The proceeds of the investment will be used only to cover the seed capital needs of the enterprise, except as authorized in this section;

(B) The enterprise has a reasonable chance of success;

(C) The enterprise has the reasonable potential to create employment within the State and offers employment opportunities to residents;

(D) The coordinating entrepreneur and other founders of the enterprise have already made or are prepared to make a substantial financial and time commitment to the enterprise;

(E) The securities to be purchased are qualified securities;

(F) There is reasonable possibility that the corporation will recoup at least its initial investment; and

(G) Binding commitments have been made to the corporation by the enterprise for adequate reporting of financial data to the corporation, which shall include a requirement for an annual or other periodic audit of the books of the enterprise, and for control by the corporation that it considers prudent over the management of the enterprise, in order to protect the investment of the corporation, including membership on the board of directors of the enterprise, ownership of voting stock, input in management decisions, and the right of access to the financial and other records of the enterprise; and

(3) Entering into a binding agreement with the enterprise concerning the manner of payback by the enterprise of the funds advanced, granted, loaned, or received from the corporation. The manner of payback may include the payment of dividends, returns from the public sale of corporate securities or products, royalties, and other methods of payback acceptable to the corporation. In determining the manner of payback the corporation shall establish a rate of return or rate of interest to be paid on any investment, loan, or grant of corporation funds under this section.

[(d)] (c) If the corporation makes a direct investment, it shall also find that a reasonable effort has been made to find a professional investor to make an investment in the enterprise as a coventure, and that the effort was unsuccessful. The findings, when made by the corporation, shall be conclusive.

[(e)] (d) The corporation shall not make investments in qualified securities issued by an enterprise in excess of the following limits:

(1) Not more than $500,000 shall be invested in the securities of any one enterprise, except that more than a total of $500,000 may be invested in the securities of any one enterprise, if the corporation finds, after its initial investment, that additional investments in that enterprise are required to protect the initial investment of the corporation, and the other findings set forth in subsections (d) and (e) are made as to the additional investment;

(2) The corporation shall not own securities representing more than forty-nine per cent of the voting stock of any one enterprise at the time of purchase by the corporation after giving effect to the conversion of all outstanding convertible securities of the enterprise, except that in the event of severe financial difficulty of the enterprise, threatening the investment of the corporation in the enterprise, a greater percentage of those securities may be owned by the corporation; and

(3) Not more than fifty per cent of the assets of the corporation shall be invested in direct investments at any time.

[(f)] (e) No investment, loan, grant, or use of corporate funds for the purposes of this chapter shall be subject to chapter 42F or 103D."

SECTION 13. Chapter 167, Hawaii Revised Statutes, is amended as follows:

1. By amending section 167-19(c) to read:

"(c) All or any portion of the acreage assessments collected under this chapter, as determined by the board, exclusive of acreage assessments imposed on lands within an irrigation project financed through the issuance of revenue bonds, shall be deposited into the [irrigation system revolving] state general fund. Acreage assessments imposed on lands within an irrigation project financed through the issuance of revenue bonds shall be deposited into the [irrigation water development special] state general fund."

2. By amending section 167-22 to read:

"167-22 Irrigation system [revolving fund. (a) There is established the irrigation system revolving fund, into which shall be deposited:

(1) All legislative appropriations to the irrigation system revolving fund; and

(2) All or any portion of the receipts and revenues collected under this chapter, as determined by the board of agriculture, exclusive of the receipts and revenues deposited into the irrigation water development special fund.

(b) The irrigation system revolving fund shall be administered by the department of agriculture.]; disposition of receipts. (a) All moneys necessary to carry out the purposes of this section shall be allocated by the legislature through appropriations out of the state general fund. The department shall include in its budgetary request for each upcoming fiscal period, the amounts necessary to effectuate the purposes of this section. All moneys, receipts, and other revenues received by the department under this section shall be deposited to the credit of the state general fund.

(b) Moneys [in the revolving fund] allocated by the legislature shall be expended for:

(1) Administrative costs, engineering surveys, economic studies, plans, and maps; and

(2) Other water projects or purposes of the board of agriculture.

In the event any moneys are expended [from the revolving fund] for engineering surveys, economic studies, plans, and other expenses directly attributable to any water project, or for the establishment of any water project, the amount of the expenditures shall be reimbursed to the [revolving] state general fund from any funds received by the board for and on account of the project."

3. By amending section 167-22.5 to read:

"[[]167-22.5[]] Irrigation water development [special fund. (a) There is established in the state treasury the irrigation water development special fund, into which shall be deposited:

(1) Appropriations by the legislature to the irrigation water development special fund;

(2) All receipts and revenues derived from irrigation projects financed through the issuance of revenue bonds;

(3) All or any portion of the receipts and revenues collected under this chapter, as determined by the board, whether or not receipts or revenues are derived from irrigation projects financed through the issuance of revenue bonds; and

(4) Interest earned or accrued on moneys in the irrigation water development special fund.]

; disposition of receipts. (a) All moneys necessary to carry out the purposes of this section shall be allocated by the legislature through appropriations out of the state general fund. The department shall include in its budgetary request for each upcoming fiscal period, the amounts necessary to effectuate the purposes of this section. All moneys, receipts, and other revenues received by the department under this section shall be deposited to the credit of the state general fund.

(b) Moneys [in the irrigation water development special fund] allocated by the legislature shall be used by the board for the following purposes:

(1) Planning, design, improvement, construction, land acquisition, and equipment necessary for the development, operation, or maintenance of an irrigation project;

(2) Payment of debt service on revenue bonds issued by the department for irrigation project purposes, and the establishment of debt service and other revenues deemed necessary by the board;

(3) Reimbursement of the general fund for debt service on general obligation bonds issued to finance irrigation projects where the bonds are designated to be reimbursable [out of the irrigation water development special fund]; and

(4) Any other purpose deemed necessary by the board for the purpose of planning, designing, improving, constructing, developing, operating, and maintaining irrigation projects."

SECTION 14. Chapter 168, Hawaii Revised Statutes, is amended as follows:

1. By amending section 168-3 to read:

"[[]168-3[]] Funds. The board of agriculture shall pay all receipts and revenues received by it from the operation of an irrigation and water utilization system into the [irrigation system revolving] state general fund [established under] as provided in section 167-22. [The fund] Moneys allocated by the legislature shall be used and expended for the following purposes:

(1) Payment of the operating and maintenance costs of the system;

(2) Repairs, replacements, additions, and extensions;

(3) Reimbursement to the State the amount of any principal or interest due upon any bond issue under this chapter."

2. By amending section 168-5 to read:

"168-5 Irrigation systems [account. (a) There shall be a special account in the irrigation system revolving fund of the board of agriculture to be known as the "irrigation systems account". The director of finance may make temporary use of any portion or all of the money not immediately needed for construction and operation of an irrigation system for the purpose of paying warrants drawn on the treasury for current indebtedness of the State, or for deposit in the state sinking fund for the repayment of bonds, or for investment in state bonds; provided that sufficient of the sums so taken, deposited or invested shall be redeposited to the credit of the irrigation systems account prior to the time when any engagement for the payment from the account falls due.

The moneys from the account shall be expended upon warrants drawn by the comptroller for the purposes of this chapter.]

(b) In connection with the construction, operation, or maintenance of a project, the board may use such contributions of labor, materials, and property, including money, as may be allocated or otherwise made available by any person or instrumentality whatsoever, if in the judgment of the board the acceptance thereof, will not limit the scope of construction or operation of a project provided for by this chapter.

(c) Money received and accepted under this section shall be available for expenditure for the purposes for which contributed in like manner as if the sums had been specifically appropriated for such purposes.

(d)] federal funds; bonds; contracts. (a) Any provision of this chapter or any other state law to the contrary notwithstanding, it is expressly provided that, in the event that it is found possible to secure federal funds made available under any act of Congress to be expended in connection with or for the construction of a project authorized by this chapter, the board may enter into such undertakings with the proper officers or agencies of the federal government, agree to such conditions, and do and perform such other acts and things as may be necessary, or be required by such acts of Congress or any regulations or requirements of the federal government, as a condition to securing the federal funds for the project.

[(e)] (b) Any other provision of law to the contrary notwithstanding, any bonds issued under this chapter may, with the approval of the governor, be deposited with and pledged to, or be otherwise disposed of to, the United States or any board, agency, or instrumentality of the United States government, to secure the repayment, or in actual payment, of any loans or advances made or to be made, under any act or acts of Congress authorizing the loans or advances, by the United States or any such board, agency, or instrumentality to the State for the construction, in whole or in part, of a project authorized under this chapter or the cost of which, or any portion thereof, would be payable or could legally be paid, out of the proceeds of the bonds if sold.

[(f)] (c) Any other provision of law to the contrary notwithstanding, the board may use moneys appropriated by the legislature from the [irrigation [systems] account] state general fund to contract for operation or maintenance of the project facilities if the board deems [such] this action to be in the public interests."

SECTION 15. The department of agriculture is hereby directed to discontinue the operation of the following administratively created special and revolving funds:

(1) Access road relocation, Molokai designs revolving fund;

(2) Access road relocation, Molokai plans revolving fund;

(3) Agribusiness development corporation projects emergency appropriation revolving fund;

(4) Farm loans for economically depressed areas;

(5) Hurricane Iniki insurance proceeds special fund; and

(6) Irrigation system revolving fund emergency appropriation account.

All unencumbered and unexpended balances remaining in each fund scheduled for repeal in this section shall be transferred to the credit of the state general fund on July 1, 2002. The department shall include in its budgetary request for each upcoming fiscal period, the amounts necessary to carry out the functions and activities formerly financed by the special and revolving funds discontinued under this section.

PART III. SPECIAL AND REVOLVING FUNDS UNDER

THE DEPARTMENT OF THE ATTORNEY GENERAL

SECTION 16. Section 28-91.5, Hawaii Revised Statutes, is amended to read as follows:

"[[]28-91.5[]] Medicaid investigations [recovery fund; established. There is established in the state treasury the medicaid investigations recovery fund as a special fund, and which is to be administered by the department of the attorney general, into which shall be deposited all funds that have been recovered as a result of medicaid fraud settlements. Moneys from this special fund shall be used]; disposition of fraud settlements. All moneys necessary to support a portion of operating expenses of the medicaid fraud unit within the department of the attorney general[.] shall be allocated by the legislature through appropriations out of the state general fund. The department shall include in its budgetary request for each upcoming fiscal period, the amounts necessary to effectuate the purposes of this section. All funds that have been recovered by the department as a result of medicaid fraud settlements shall be deposited to the credit of the state general fund."

SECTION 17. Chapter 712A, Hawaii Revised Statutes, is amended as follows:

1. By amending section 712A-10 to read:

"712A-10 Administrative forfeiture. The prosecuting attorney may initiate administrative forfeiture of property other than real property, the estimated value of which is less than $100,000, or of any vehicle or conveyance, regardless of value. Administrative forfeiture shall be processed in the following manner:

(1) The prosecuting attorney shall file a petition with the attorney general, pursuant to rules adopted by the attorney general.

(2) The prosecuting attorney shall give notice of pending forfeiture by making reasonable efforts to serve a copy of the petition in a manner provided in section 712A-8(a) or 712A-8(b) on all persons known to have an interest in the property, together with instructions for filing a claim and cost or in pauperis bond, or a petition for remission or mitigation.

(3) The attorney general shall give notice of intention to forfeit the property administratively by publication in the manner provided in section 712A-8(c). Notice by publication shall include:

(a) A description of the property;

(b) The estimated value of the property;

(c) The date and place of the seizure;

(d) The offense for which the property is subject to forfeiture;

(e) Instructions for filing a claim and cost or in pauperis bond, or a petition for remission or mitigation; and

(f) Notice that the property will be forfeited to the State if a claim and cost or in pauperis bond or petition for remission or mitigation is not filed in substantial compliance with this section.

(4) Persons claiming an interest in the property may file either a petition for remission or mitigation of forfeiture, or a claim and cost or in pauperis bond, but not both, with the attorney general, within thirty days of notice by publication or receipt of written notice, whichever is earlier. Notwithstanding section 1-29, the thirty-day time period prescribed herein is computed by excluding the first day and including the last day, unless the last day is a Saturday, Sunday, or holiday and then it is also excluded, and the thirty-day time period runs until the end of the next day which is not a Saturday, Sunday, or a holiday. "Holiday" includes any day designated as a holiday pursuant to section 8-1.

(5) Any person claiming seized property may seek remission or mitigation of the forfeiture by timely filing a petition with the attorney general. A petition for remission or mitigation shall not be used to challenge the sufficiency of the evidence to support the forfeiture or the actions of any government official but shall presume a valid forfeiture and ask the attorney general to invoke the executive power to pardon the property, in whole or in part. The petition shall be signed by the petitioner and sworn on oath before a notary public and shall contain the following:

(a) A reasonably complete description of the property;

(b) A statement of the interest of the petitioner in the property, as owner or interest-holder which may be supported by bills of sale, contracts, or mortgages, or other documentary evidence; and

(c) Facts and circumstances sufficient to show whether the petitioner:

(i) Owns or holds an interest in the seized property as defined by section 712A-1;

(ii) Had any knowledge that the property was or would be involved in any violation of the law;

(iii) Had any knowledge of the particular violation which subjected the property to seizure and forfeiture;

(iv) Had any knowledge that the user of the property had any record, including arrests, except when the person was acquitted or the charges dismissed due to lack of evidence, for the violation which subjected the property to seizure and forfeiture or for any crime which is similar in nature.

Any subsequent pleadings or written communications alleging matters pertaining to [[]subparagraph[]] (b) or (c) of this [[]paragraph[]] must also be signed by the petitioner and sworn on oath before a notary public.

(6) If the attorney general, with sole discretion, determines that remission is not warranted, the attorney general may discretionarily mitigate the forfeiture where the petitioner has not met the minimum requirements for remission but where there are present other extenuating circumstances indicating that some relief should be granted to avoid extreme hardship. Mitigation may also be granted where the minimum requirements for remission have been met but the overall circumstances are such that the attorney general determines that complete relief is not warranted. Mitigation shall take the form of a money penalty imposed upon the petitioner which shall be deposited [into the criminal forfeiture] to the credit of the state general fund [established under section 712A-16]. Extenuating circumstances include:

(a) Language or culture barrier;

(b) Humanitarian factors such as youth or extreme age;

(c) Presence of physical or mental disease, disorder, or defect;

(d) Limited or peripheral criminal culpability;

(e) Cooperation with the seizing agency or the prosecuting attorney; and

(f) Any contributory error on the part of government officials.

(7) It shall be the duty of the attorney general to inquire into the facts and circumstances alleged in a petition for remission or mitigation of forfeiture. However, no petitioner is entitled to a hearing on the petition for remission or mitigation. Hearings, if any, shall be held at the discretion of the attorney general.

(8) The attorney general shall provide the seizing agency and the petitioner a written decision on each petition for remission or mitigation within sixty days of receipt of the petition unless the circumstances of the case require additional time, in which case the attorney general shall notify the petitioner in writing and with specificity within the sixty-day period that the circumstances of the case require additional time and further notify the petitioner of the expected decision date.

(9) Any person claiming seized property may seek judicial review of the seizure and proposed forfeiture by timely filing with the attorney general a claim and bond to the State in the amount of ten per cent of the estimated value of the property or in the sum of $2,500, whichever is greater, with sureties to be approved by the attorney general, upon condition that if the claimant fails to prove that claimant's interest is exempt from forfeiture under section 712A-5, the claimant shall pay the State's costs and expenses, including reasonable attorneys fees incurred in connection with a judicial proceeding. In lieu of a cost bond, a claimant may file an in pauperis bond sworn on oath before a notary public. An in pauperis bond shall be in the form set out in the appendix to the rules of penal procedure. The claim shall be signed by the claimant and sworn on oath before a notary public and shall comply with the requirements of section 712A-12(5). Upon receipt of the claim and bond, the attorney general shall notify the prosecuting attorney who may discretionarily continue to seek forfeiture by petitioning the circuit court for forfeiture of the property within forty-five days of receipt of notice that a proper claim and bond has been filed. The prosecuting attorney may also elect to honor the claim in which case the prosecuting attorney shall notify the seizing agency and authorize the release of the seizure for forfeiture on the property or on any specified interest in it.

(10) If a judicial forfeiture proceeding is instituted subsequent to notice of administrative forfeiture pursuant to paragraph (9), no duplicate or repetitive notice shall be required. The judicial proceeding, if any, shall adjudicate all timely filed claims. At the judicial proceeding, the claimant may testify, present evidence and witnesses on the claimant's behalf, and cross-examine witnesses who appear at the hearing. The State may present evidence and witnesses in rebuttal and in defense of its claim to the property and cross-examine witnesses who appear at the hearing. The State has the initial burden of showing by a preponderance of the evidence that the claimant's interest in the property is subject to forfeiture. On such a showing by the State, the claimant has the burden of showing by a preponderance of the evidence that the claimant's interest in the property is not subject to forfeiture.

(11) In the event a claim and bond has not been filed in substantial compliance with this section, or if the attorney general, with sole discretion, determines that remission or mitigation is not warranted, the attorney general shall order forfeited all property seized for forfeiture. In the event the attorney general, with sole discretion, determines that remission or mitigation is warranted, the attorney general shall notify the seizing agency and the prosecuting attorney and order the release of the seizure for forfeiture on the property or on any specified interest in it. There shall be no appeal from the attorney general's decision or order of forfeiture or remission or mitigation.

(12) Administrative proceedings and the adoption of rules under this section are exempt from the requirements of chapter 91, the Hawaii administrative procedure act, and are adjudicatory functions for the purposes of applicable sections of the Hawaii Revised Statutes."

2. By amending 712A-16(2) to (6) to read:

"(2) All forfeited property and the sale proceeds thereof, up to a maximum of [three million dollars] $3,000,000 per year, not previously transferred pursuant to [[]subsection[]] (1)(a) [of this section,] shall, after payment of expenses of administration and sale, be distributed as follows:

(a) One quarter shall be distributed to the unit or units of state or local government [[]whose[]] officers or employees conducted the investigation and caused the arrest of the person whose property was forfeited or seizure of the property for forfeiture;

(b) One quarter shall be distributed to the prosecuting attorney who instituted the action producing the forfeiture; and

(c) One half shall be deposited [into the criminal forfeiture] to the credit of the state general fund [established by this chapter].

(3) Property and money distributed to units of state and local government shall be used for law enforcement purposes, and shall complement but not supplant the funds regularly appropriated for [such] those purposes.

(4) [There is established in the department of the attorney general a revolving fund to be known as the criminal forfeiture fund, hereinafter referred to as the "fund" in which shall be deposited one-half] All moneys necessary to carry out the purposes of this chapter shall be allocated by the legislature through appropriations out of the state general fund. The department shall include in its budgetary request for each upcoming fiscal period, the amounts necessary to effectuate the purposes of this chapter. One-half of the proceeds of a forfeiture and any penalties paid pursuant to section 712A-10(6) shall be deposited to the credit of the state general fund. All moneys [in the fund] allocated by the legislature shall be expended by the attorney general [and are hereby appropriated] for the following purposes:

(a) The payment of any expenses necessary to seize, detain, appraise, inventory, safeguard, maintain, advertise, or sell property seized, detained, or forfeited pursuant to this chapter or of any other necessary expenses incident to the seizure, detention, or forfeiture of such property and such contract services and payments to reimburse any federal, state, or county agency for any expenditures made to perform the foregoing functions;

(b) The payment of awards for information or assistance leading to a civil or criminal proceeding;

(c) The payment of supplemental sums to state and county agencies for law enforcement purposes; and

(d) The payment of expenses arising in connection with programs for training and education of law enforcement officers.

(5) The attorney general [may], without regard to the requirements of chapter 91, [promulgate] may adopt rules [and regulations] concerning the disposition of property[, the use of the fund,] and compromising and paying valid claims against property forfeited pursuant to this chapter.

(6) Not less than twenty days prior to the convening of each regular session, the attorney general shall provide to the legislature a report on the use of the Hawaii omnibus criminal forfeiture act during the fiscal year preceding the legislative session. The report shall include:

(a) The total amount and type of property seized by law enforcement agencies;

(b) The total number of administrative and judicial actions filed by prosecuting attorneys and the disposition thereof;

(c) The total number of claims or petitions for remission or mitigation filed in administrative actions and the dispositions thereof;

(d) The total amount and type of property forfeited and the sale proceeds thereof; and

(e) The total amount and type of property distributed to units of state and local government[;

(f) The amount of money deposited into the criminal forfeiture fund; and

(g) The amount of money expended by the attorney general from the criminal forfeiture fund under subsection (5) and the reason for the expenditures]."

PART IV. SPECIAL AND REVOLVING FUNDS UNDER

THE DEPARTMENT OF BUDGET AND FINANCE

SECTION 18. Chapter 328L, Hawaii Revised Statutes, is amended as follows:

1. By amending section 328L-2(b) to read:

"(b) The fund shall be used for the purpose of receiving and appropriating the tobacco settlement moneys as follows:

(1) Forty per cent shall be appropriated into the [emergency and budget reserve] state general fund [under section 328L-3];

(2) Thirty-five per cent shall be appropriated to the department for purpose of section 328L-4; and

(3) Twenty-five per cent shall be appropriated into the Hawaii tobacco prevention and control trust fund under section 328L-5."

2. By repealing section 328L-3.

["[328L-3] Emergency and budget reserve fund. (a) There is established in the state treasury the emergency budget and reserve fund which shall be a special fund administered by the director of finance, into which shall be deposited:

(1) Forty per cent of the moneys received from the tobacco settlement moneys under section 328L-2(b)(1);

(2) Appropriations made by the legislature to the fund.

(b) All interest earned from moneys in the emergency and budget reserve fund shall be credited to the general fund.

(c) Expenditures from the emergency and budget reserve fund shall be a temporary supplemental source of funding for the State during times of emergency, economic downturn, or unforeseen reduction in revenues. No expenditures shall be made from the emergency and budget reserve fund except pursuant to appropriations. The general appropriations bill or the supplemental appropriations bill, as defined in section 9 of article VII of the Constitution of the State of Hawaii, shall not be used to appropriate moneys from the emergency and budget reserve fund. The governor, through an appropriations bill, may recommend expenditures from the emergency and budget reserve fund by setting forth the purposes of the expenditures consistent with subsection (d), the amounts, and the reasons justifying the necessity for the appropriations.

(d) The legislature may make appropriations from the fund for the following purposes:

(1) To maintain levels of programs determined to be essential to the public health, safety, and welfare;

(2) To provide for counter cyclical economic and employment programs in periods of economic downturn;

(3) To restore facilities destroyed or damaged or services disrupted by disaster in any county; and

(4) To meet other emergencies when declared by the governor or determined to be urgent by the legislature.

Any act making appropriations from the emergency and budget reserve fund shall include a declaration of findings and purposes setting forth the purposes, the amounts, and the reasons why the appropriations are necessary and shall require a two-thirds majority vote of each house of the legislature.

(e) Appropriations for the following purposes from the emergency and budget reserve fund are specifically prohibited:

(1) To meet expenses of the legislature;

(2) To provide for salary adjustments for officials appointed pursuant to article V, section 6 or article VI, section 3 of the Constitution of the State of Hawaii and for others whose salaries are directly related to salaries of these officials; and

(3) To fund cost items in any collective bargaining contract."]

PART V. SPECIAL AND REVOLVING FUNDS UNDER THE

DEPARTMENT OF BUSINESS, ECONOMIC DEVELOPMENT, AND TOURISM

SECTION 19. Section 125C-7, Hawaii Revised Statutes, is amended to read as follows:

"125C-7 Petroleum products control [fund. (a) There is established in the state treasury a revolving fund to be known as the petroleum products control fund. All fees or charges collected for services furnished or petroleum products sold, all moneys borrowed, and all contributions or grants of money received under this chapter shall be deposited in this fund; provided that the governor may establish other suitable funds in the state treasury for the deposit and separate accounting of moneys contributed or granted for special purposes under this chapter. All moneys in the petroleum products control fund are appropriated for the purposes of this chapter and shall be expended by the governor or the governor's authorized representative. The governor or the governor's authorized representative may expend and use the moneys in the petroleum products control fund to purchase petroleum products, to obtain services, equipment, materials, and supplies necessary under this chapter, and to repay moneys borrowed under this chapter.

(b) The governor's authorized representative shall submit requests to the governor to withdraw moneys from the petroleum products control fund as may be necessary for expenditure, by or under the direction of the governor, for immediate relief in the event of a shortage, or when the governor determines a shortage to be imminent and unavoidable; provided that not more than $500,000 shall be expended for the immediate relief of any single shortage.]; source of funds; disposition of receipts. (a) All moneys to purchase petroleum products, to obtain services, equipment, materials, and supplies necessary under this chapter, and to repay moneys borrowed under this chapter shall be allocated by the legislature through appropriations out of the state general fund. The governor shall include in the governor's budgetary request for each upcoming fiscal period, the amounts necessary to effectuate the purposes of this section.

(b) All fees or charges collected for services furnished or petroleum products sold, all moneys borrowed, and all contributions or grants of money received under this chapter shall be deposited to the credit of the general fund.

(c) In expending the moneys, the governor's authorized representative may allot any portion thereof to any state or county agency, office, or employee, for relief of the conditions created by the shortage. The governor may determine whether a shortage contemplated by this section has occurred, or is imminent and unavoidable. The determination of the governor in this matter shall be conclusive.

(d) The governor's authorized representative may expend funds from the petroleum products control fund during ordinary petroleum market conditions for planning and preparation to respond to a shortage."

SECTION 20. Section 201-106, Hawaii Revised Statutes, is amended to read as follows:

"[[]201-106[]] Clean Hawaii [fund established.] program; disposition of receipts. (a) [There is established within the state treasury a special fund to be known as the clean Hawaii fund, which shall be administered and used by the department] All moneys necessary to market and promote the development of local processing and manufacturing industries for collected recycled materials[. All moneys derived from the following sources to market and promote the development of local processing and manufacturing industries for collected recycled materials shall be deposited into the fund:

(1) Moneys appropriated to the fund by the legislature;

(2) Moneys received by the department from federal, state, or county agencies;

(3) Direct transfers of funds from federal, state, or county agencies;

(4) Moneys received in fees, royalties, or premiums;

(5) Private grants, contracts, or gifts;

(6) Funds from other sources; and

(7) Earnings on investments.]

shall be allocated by the legislature through appropriations out of the state general fund. The department shall include in its budgetary request for each upcoming fiscal period, the amounts necessary to effectuate the purposes of this section. All moneys, fees, and other payments received to market and promote the development of local processing and manufacturing industries for collected recycled materials shall be deposited to the credit of the state general fund.

(b) The department may use moneys [in the clean Hawaii fund] allocated by the legislature to:

(1) Make grants for marketing and promoting the development of local processing and manufacturing industries for collected recycled materials, subject to the standards provided in section 42F-103;

(2) Pay for expenses, fees, or costs related to the marketing, promotion, or development of local processing, manufacturing, or purchasing of recycled products; or

(3) Pay for expenses, fees, or costs to organize, conduct, sponsor, or cooperate with others in sponsoring conferences, workshops, demonstrations, studies, or other events or functions that are related to the stimulation and formation of recycling or environmental businesses.

(c) The director may execute contracts and adopt rules pursuant to chapter 91 to implement the purposes of [the clean Hawaii fund.] this section."

SECTION 21. Chapter 201G, Hawaii Revised Statutes, is amended as follows:

1. By amending section 201G-223 to read:

"[[]201G-223[]] Rental assistance [revolving fund. (a) There is created a rental assistance revolving fund to be administered by the corporation.

(b) The aggregate principal sum in the rental assistance revolving fund which may without limitation include]; disposition of revenues; source of funds. (a) All moneys necessary to carry out the purposes of this section shall be allocated by the legislature through appropriations out of the state general fund. The corporation shall include in its budgetary request for each upcoming fiscal period, the amounts necessary to effectuate the purposes of this section. All moneys received by the corporation for the purposes of this section, including sums made available from any government program or grant, from private grants or contributions, or from the proceeds of any bond issue, [or by appropriation,] shall be [invested by the corporation in a manner which will maximize the rate of return on investment of the fund; provided that any investment shall be consistent with section 201G-167 but need not comply with section 36-21.

(c) The corporation may use, as needed, the aggregate principal sum and the accumulated earnings in the rental assistance revolving fund] deposited to the credit of the state general fund.

(b) Moneys allocated by the legislature for the purposes of this section may be used to make payments under the rental assistance contracts or to subsidize tenants' rents in projects developed under this part; provided that the corporation shall [use up to $25,000,000 plus any bond proceeds to] provide interim construction financing to:

(1) Qualified sponsors who are private nonprofit or profit entities; or

(2) The corporation, for the development of affordable rental housing; provided further that the corporation, in allotting interim construction financing moneys pursuant to this part, shall give preference to rental housing projects developed by qualified sponsors who are private nonprofit or profit entities."

2. By amending section 201G-224(b) to read:

"(b) Prior to the execution of a rental assistance contract, the corporation may execute an agreement to enter into a rental assistance contract with an owner, which agreement shall provide for the execution of a rental assistance contract upon satisfaction of the terms set forth in [such] that agreement and otherwise established by the corporation. [Each rental assistance contract heretofore entered into by the corporation which provided that rental assistance payments shall be made solely from the earnings on the investment of the rental assistance revolving fund shall hereafter, without modification of such contracts, be payable from the aggregate principal sum and the accumulated earnings in the rental assistance revolving fund.]"

3. By amending section 201G-325 to read:

"[[]201G-325[]] Downpayment loan program [revolving fund. There is created within the state treasury a revolving fund to be administered by the corporation and to be known as the downpayment loan revolving fund. The revolving fund shall be funded from the proceeds of general obligation bonds or other appropriations from the state legislature, and shall be used to carry out the purposes of this subpart.]; disposition of bond proceeds. (a) All moneys necessary to carry out the purposes of this subpart shall be allocated by the legislature through appropriations out of the state general fund. The corporation shall include in its budgetary request for each upcoming fiscal period, the amounts necessary to effectuate the purposes of this subpart.

(b) All proceeds of general obligation bonds received by the corporation under this section shall be deposited to the credit of the state general fund."

4. By amending the heading of chapter 201G, part III, subpart I, to read:

"I. Housing Alteration [Revolving] Loan [Fund] Program"

5. By amending section 201G-342 to read:

"[[]201G-342[]] Housing alteration [revolving] loan [fund] program for persons with physical disabilities[. There is created a housing alteration revolving loan fund for persons with physical disabilities, to be administered by the corporation as a separate fund from the other funds under this chapter. The fund]; disposition of receipts. (a) All moneys necessary to carry out the purposes of this section shall be allocated by the legislature through appropriations out of the state general fund. The corporation shall include in its budgetary request for each upcoming fiscal period, the amounts necessary to effectuate the purposes of this section.

(b) All moneys received by the corporation in repayment of loan principal, payment of interest, or fees under this section shall be deposited to the credit of the state general fund.

(c) Moneys allocated by the legislature shall be used to provide low interest loans to eligible persons with physical disabilities or their caregivers to make design alterations for the purposes of this subpart; provided that the maximum loan shall be $25,000 per residence occupied by one or more eligible persons with physical disabilities. Any funds appropriated by the legislature for the purpose of [the housing alteration revolving loan fund for persons with physical disabilities and all moneys received or collected by the corporation for the purpose of the revolving fund] this section shall be used for loans under this subpart[; provided that interest earned on funds appropriated for the housing alteration revolving loan fund may be used by the corporation for administrative purposes]."

6. By amending section 201G-343 to read:

"[[]201G-343[]] Program administration. The corporation, in administering the housing alteration [revolving] loan [fund] program, shall establish the terms and conditions, maturities, interest rates, collateral, and other requirements for loans. The corporation may take all necessary actions to collect any delinquent amounts in the event of a default in the payment of any installment of principal or interest on any loans made [from the fund] and to otherwise secure such loans in a manner which affords reasonable protection of the State's resources. The corporation may enter into agreements with or purchase services required for the purposes of this subpart from any state or national bank authorized to accept or hold deposits in the State."

7. By amending section 201G-344 to read:

"201G-344 Rules. The corporation, in consultation with the disability and communication access board, shall adopt rules in accordance with chapter 91 with respect to the administration of [this] the housing alteration loan program [and the fund], including [but not limited to] rules concerning income eligibility, certification of medical necessity, and degree of physical disability."

8. By amending section 201G-411 to read:

"201G-411 Dwelling unit revolving fund. There is created a dwelling unit revolving fund. The funds appropriated for the purpose of the dwelling unit revolving fund and all moneys received or collected by the corporation for the purpose of the revolving fund shall be deposited in the revolving fund. The proceeds in the revolving fund shall be used to reimburse the general fund to pay the interest on general obligation bonds issued for the purposes of the revolving fund, for the necessary expenses in administering subpart F, part II, and for carrying out the purposes of subpart F, part II, including but not limited to the expansion of community facilities constructed in conjunction with housing projects, and supplementing building costs, federal guarantees required for operational losses, and all things required by any federal agency in the construction and receipt of federal funds for housing projects. All unexpended and unencumbered moneys remaining on balance with the fund at the close of each fiscal year which are deemed, by the director of finance, to be in excess of the moneys necessary to carry out the purposes of this section over the next following fiscal year shall lapse to the credit of the state general fund."

9. By amending section 201G-441 to read:

"201G-441 Expenditures of revolving funds under the corporation exempt from appropriation and allotment. Except as to administrative expenditures, and except as otherwise provided by law, expenditures from these revolving funds administered by the corporation under subpart [I,] N, O, P, or Q or section 201G-170, [201G-223,] 201G-401, 201G-411, 201G-421, or 516-44 may be made by the corporation without appropriation or allotment of the legislature; provided that no expenditure shall be made from and no obligation shall be incurred against any revolving fund in excess of the amount standing to the credit of the fund or for any purpose for which the fund may not lawfully be expended. Nothing in sections 37-31 to 37-41 shall require the proceeds of the revolving funds identified in subpart [I,] N, O, P, or Q or section 201G-170, [201G-223,] 201G-401, 201G-411, 201G-421, or 516-44 to be reappropriated annually."

SECTION 22. Chapter 206E, Hawaii Revised Statutes, is amended as follows:

1. By amending section 206E-107 to read:

"206E-107 Trustee; designation, duties. (a) The authority shall designate a trustee for each issue of revenue bonds secured under the same trust indenture; provided that the trustee shall be approved by the director of finance.

(b) The trustee shall be authorized by the authority to receive and receipt for, hold, and administer the proceeds of the revenue bonds, and to apply the proceeds to the purposes for which the bonds are issued.

[(c) The trustee shall also be authorized by the authority to hold and administer the reserved housing loan program revenue bond special fund established pursuant to section 206E-109, and to receive and receipt for, hold, and administer the revenues derived by the authority from the benefits of the reserved housing loan program for which the revenue bonds are issued and to apply these revenues to the payment of the cost of administering, operating, and maintaining the reserved housing loan programs, to pay the principal of and interest on these bonds, to the establishment of reserves, and to other purposes as may be authorized in the proceedings providing for the issuance of the revenue bonds.]

(d)] (c) Notwithstanding section 39-68, the director of finance may appoint the trustee to serve as fiscal agent for:

(1) The payment of the principal of and interest on the revenue bonds; and

(2) The purchase, registration, transfer, exchange, and redemption of the bonds.

[(e)] (d) The trustee shall perform additional functions with respect to the payment, purchase, registration, transfer, exchange, and redemption, as the director of finance may deem necessary, advisable, or expeditious, including the holding of the revenue bonds and coupons which have been paid and the supervision of the destruction thereof in accordance with law.

[(f)] (e) Nothing in this part shall limit or be construed to limit the powers granted to the director of finance in sections 36-3 and 39-13, and the third sentence of section 39-68, to appoint the trustee or others as fiscal agents, paying agents and registrars for the revenue bonds or to authorize and empower those fiscal agents and registrars to perform the functions referred to in those sections."

2. By repealing section 206E-109.

["206E-109 Revenue bonds; special funds. The authority shall establish a separate special fund in accordance with section 39-62 for each reserved housing loan program or part thereof financed from the proceeds of the revenue bonds secured under the same trust indenture."]

3. By amending section 206E-113 to read:

"206E-113 Reserved housing loan programs; fees. The authority may establish, revise, charge, and collect fees, premiums, and charges as necessary, reasonable, or convenient, for its reserved housing loan programs.

The fees, premiums, and charges shall be deposited [into the reserved housing loan program revenue bond special] to the credit of the state general fund [established for the particular reserved housing loan program or part thereof from which the fees, premiums and charges are derived as determined by the authority]."

SECTION 23. Section 206J-17, Hawaii Revised Statutes, is amended to read as follows:

"206J-17 [Aloha Tower fund. (a) There is created the Aloha Tower fund. All:

(1) Moneys;

(2) Rentals;

(3) Charges;

(4) Other revenues of the development corporation; and

(5) Moneys or charges received by the department of business, economic development, and tourism;

including reimbursements for costs and staff services as a result of planning, development, or redevelopment of the lands located seaward of Nimitz Highway between Pier 4 and the Honolulu International Airport shall be deposited into the fund.

(b) The development corporation may establish a separate account with respect to each issue of bonds issued under this chapter and direct that the moneys, rentals, charges, and other revenues pledged to the payment of the bond issue be credited to that account and, as permitted by section 206J-12(g)(7), designate a trustee to receive and receipt for, hold, and administer the moneys in the account. Moneys credited to a separate account held by a trustee may be paid directly to the trustee; provided that appropriate entries are made for purposes of accounting.

(c) The moneys on deposit in the fund shall be used] Funds for operation; disposition of revenues; disposition of bond proceeds. (a) All moneys to meet the general operating needs and expenses of the development corporation for the purposes of this chapter, and for the development, redevelopment, or improvement of the Honolulu Waterfront located seaward of Nimitz Highway between Pier 4 and the Honolulu International Airport[.], shall be allocated by the legislature through appropriations out of the state general fund. The development corporation shall include in its budgetary request for each upcoming fiscal period, the amounts necessary to effectuate the purposes of this section.

(b) Except as provided in subsection (c), all moneys, rentals, charges, and other fees collected by the development corporation under this chapter shall be deposited to the credit of the state general fund.

(c) The development corporation shall establish separate special funds in accordance with section 39-62 for the deposit of the proceeds of bonds authorized under this chapter."

SECTION 24. Chapter 206M, Hawaii Revised Statutes, is amended as follows:

1. By amending section 206M-8(j) to read:

"(j) Moneys received by the development corporation pursuant to subsection (a)(1)(D) shall not be, nor be deemed to be, revenues or receipts derived under the project agreement which may be pledged as security for special purpose revenue bonds and shall be paid [into the high technology special] to the credit of the state general fund.

A qualified person may comply with the unconditional obligation to make payments required by subsection (a), if the obligations are unconditionally guaranteed or insured by, or the performance thereof assigned to, or guaranteed or insured by, a person or persons other than the qualified person who is satisfactory to the development corporation."

2. By amending section 206M-15.5 to read:

"206M-15.5 [High technology special fund. There is established in the state treasury a fund to be known as the high technology special fund, into which shall be deposited, except as otherwise provided by section 206M-17, all moneys, fees, and equity from tenants, qualified persons, or other users of the development corporation's industrial parks, projects, other leased facilities, and other services and publications; provided that the total amount of moneys in the fund shall not exceed $3,000,000 at the end of any fiscal year. All moneys in the fund are appropriated for the purposes of and shall be expended by the development corporation for the operation, maintenance, and management of its industrial parks, projects, facilities, services, and publications, and to pay the expenses in administering the special purpose revenue bonds of the development corporation or in carrying out its project agreements.] Industrial parks, projects, leased facilities, and other services; source of funds. (a) All moneys necessary for the operation, maintenance, and management of the development corporation's industrial parks, projects, facilities, and services; for the funding of publications; and to pay the expenses in administering the special purpose revenue bonds of the development corporation or in carrying out its project agreements, shall be allocated by the legislature through appropriations out of the state general fund. The development corporation shall include in its budgetary request for each upcoming fiscal period, the amounts necessary to effectuate the purposes of this section.

(b) All moneys and fees received from tenants or other users of the development corporation's industrial parks, projects, other leased facilities, and other services and publications shall be deposited to the credit of the state general fund."

3. By amending section 206M-17 to read:

"206M-17 Revenue bond fund accounts. The development corporation shall establish separate special funds in accordance with section 39-62 for the deposit of the proceeds of special purpose revenue bonds and special facility revenue bonds authorized under this part and [[]part III[]] respectively. The development corporation shall have the right to appropriate, apply, or expend the revenues derived with respect to the project agreement for a project for the following purposes:

(1) To pay when due all special purpose revenue bonds and special facility revenue bonds, premiums, if any, and interest thereon, for the payment of which the revenues are or have been pledged, charged, or otherwise encumbered, including reserves therefor; and

(2) To the extent not paid by the qualified person to provide for all expenses of administration, operation, and maintenance of the project, including reserves therefor.

[Unless and until adequate provision has been made for the foregoing purposes, the development corporation shall not transfer the revenues derived from the project agreement to the high technology special fund of the State.]"

4. By amending section 206M-44(a) to read:

"(a) In addition to the conditions and terms set forth in this part, any special facility lease entered into by the development corporation shall at least contain provisions obligating the other party to the special facility lease:

(1) To pay to the development corporation during the initial term of the special facility lease, whether the special facility is capable of being used or occupied or is being used or occupied by the other party, a rental or rentals at the time or times and in the amount or amounts that will be sufficient to:

(A) Pay the principal and interest on all special facility revenue bonds issued for the special facility;

(B) Establish or maintain any reserves for these payments; and

(C) Pay all fees and expenses of the trustees, paying agents, transfer agents, and other fiscal agents for the special facility revenue bonds issued for the special facility;

(2) To pay to the development corporation:

(A) A ground rental, equal to the fair market rental of the land, if the land on which the special facility is located was not acquired from the proceeds of the special facility revenue bonds; or

(B) A properly allocable share of the administrative costs of the development corporation in carrying out the special facility lease and administering the special facility revenue bonds issued for the special facility if the land was acquired from the proceeds of the special facility revenue bonds;

(3) To either operate, maintain, and repair the special facility and pay the costs thereof or to pay to the development corporation all costs of operation, maintenance, and repair of the special facility;

(4) To:

(A) Insure, or cause to be insured, the special facility under builder's risk insurance (or similar insurance) in the amount of the cost of construction of the special facility to be financed from the proceeds of the special facility revenue bonds;

(B) Procure and maintain, or cause to be procured or maintained, to the extent commercially available, a comprehensive insurance policy providing protection and insuring the development corporation and its officers, agents, servants, and employees (and so long as special facility revenue bonds are outstanding, the trustee) against all direct or contingent loss or liability for damages for personal injury or death or damage to property, including loss of use thereof, occurring on or in any way related to the special facility or occasioned by reason of occupancy by and the operations of the other person upon, in and around the special facility;

(C) Provide all risk casualty insurance, including insurance against loss or damage by fire, lightning, flood, earthquake, typhoon, or hurricane, with standard extended coverage and standard vandalism and other malicious mischief endorsements; and

(D) Provide insurance for workers' compensation and employers' liability for personal injury or death or damage to property (the other party may self-insure for workers' compensation if permitted by law); provided that all policies with respect to loss or damage of property including fire or other casualty and extended coverage and builder's risk shall provide for payments of the losses to the development corporation, the other party or the trustee for the special facility revenue bonds as their respective interests may appear; and provided further that the insurance may be procured and maintained as part of or in conjunction with other policies carried by the other party; and provided further that the insurance shall name the development corporation, and so long as any special facility revenue bonds are outstanding, the trustee, as additional insured; and

(5) Indemnify, save, and hold the development corporation, the trustee, and their respective agents, officers, members, and employees harmless from and against all claims and actions and all costs and expenses incidental to the investigation and defense thereof, by or on behalf of any person, firm, or corporation, based upon or arising out of the special facility or the other party's use and occupancy thereof, including, without limitation, from and against all claims and actions based upon and arising from any:

(A) Condition of the special facility;

(B) Breach or default on the part of the other party in the performance of any of the party's obligations under the special facility lease;

(C) Fault or act of negligence of the other party or the party's agents, contractors, servants, employees, or licensees; or

(D) Accident to or injury or death of any person or loss of or damage to any property occurring in or about the special facility, including any claims or actions based upon or arising by reason of the negligence or any act of the other party.

Any moneys received by the development corporation pursuant to paragraphs (2) and (3) shall be paid [into the high technology special] to the credit of the state general fund and shall not be nor be deemed to be revenues of the special facility."

5. By amending section 206M-45 to read:

"[[]206M-45[]] Special facility revenue bonds. All special facility revenue bonds authorized to be issued under this part shall be issued pursuant to part III of chapter 39, except as follows:

(1) No revenue bonds shall be issued unless at the time of issuance, the development corporation has entered into a special facility lease with respect to the special facility for which the revenue bonds are to be issued;

(2) The revenue bonds shall be issued in the name of the development corporation and not in the name of the State;

(3) No further authorization of the legislature shall be required for the issuance of the special facility revenue bonds, but the approval of the governor shall be required for the issuance;

(4) The revenue bonds shall be payable solely from and secured solely by the revenues derived by the development corporation from the special facility for which they are issued;

(5) The final maturity date of the revenue bonds shall not be later than either the estimated life of the special facility for which the revenue bonds are issued or the expiration of the initial term of the special facility lease;

(6) If deemed necessary or advisable by the development corporation, or to permit the obligations of the other party to the special facility lease to be registered under the U.S. Securities Act of 1933, the development corporation, with the approval of the director of finance, may appoint a national or state bank within or without the State to serve as trustee for the holders of the revenue bonds and may enter into a trust indenture or trust agreement with the trustee. The trustee may be authorized by the development corporation to collect, hold, and administer the revenues derived from the special facility for which the revenue bonds are issued and to apply the revenues to the payment of the principal and interest on the revenue bonds. In the event that any trustee shall be appointed, any trust indenture or trust agreement entered into by the development corporation with the trustee may contain the covenants and provisions authorized by part III of chapter 39 to be inserted in a resolution adopted or certificate issued, as though the words "resolution" or "certificate" as used in that part read "trust indenture or trust agreement".

The covenants and provisions shall not be required to be included in the resolution or certificate authorizing the issuance of the revenue bonds if included in the trust indenture or trust agreement. Any resolution or certificate, trust indenture, or trust agreement adopted, issued, or entered into by the development corporation pursuant to this part may also contain any provisions required for the qualification thereof under the U.S. Trust Indenture Act of 1939. The development corporation may pledge and assign to the trustee the special facility lease and the rights of the development corporation including the revenues thereunder;

(7) If the development corporation, with the approval of the director of finance, shall have appointed or shall appoint a trustee for the holders of the revenue bonds, then notwithstanding the provisions of section 39-68, the director of finance may elect not to serve as fiscal agent for the payment of the principal and interest, and for the purchase, registration, transfer, exchange, and redemption of the revenue bonds, or may elect to limit the functions the director of finance shall perform as the fiscal agent. The development corporation, with the approval of the director of finance, may appoint the trustee to serve as the fiscal agent, and may authorize and empower the trustee to perform the functions with respect to payment, purchase, registration, transfer, exchange, and redemption, that the development corporation may deem necessary, advisable, or expedient, including, without limitation, the holding of the revenue bonds and coupons, if any, that have been paid and the supervising and conducting of the destruction thereof in accordance with sections 40-10 and 40-11. Nothing in this paragraph shall be a limitation upon or construed as a limitation upon the powers granted in paragraph (6) to the development corporation with the approval of the director of finance to appoint the trustee, or granted in sections 36-3, 39-13, and 39-68 to the director of finance to appoint the trustee or others, as fiscal agents, paying agents, and registrars for the revenue bonds or to authorize and empower the fiscal agents, paying agents, and registrars to perform the functions referred to in paragraph (6) and sections 36-3, 39-13, and 39-68, it being the intent of this paragraph to confirm that the director of finance may elect not to serve as fiscal agent for the revenue bonds or may elect to limit the functions the director of finance shall perform as the fiscal agent, that the director of finance may deem necessary, advisable, or expedient;

(8) The development corporation may sell the revenue bonds either at public or private sale;

(9) If no trustee is appointed to collect, hold, and administer the revenues derived from the special facility for which the revenue bonds are issued, the revenues shall be held in a separate account in the treasury of the State[, separate and apart from the high technology special fund,] to be applied solely to the carrying out of the resolution, certificate, trust indenture, or trust agreement authorizing or securing the revenue bonds;

(10) If the resolution, certificate, trust indenture, or trust agreement provides that no revenue bonds issued thereunder shall be valid or obligatory for any purpose unless certified or authenticated by the trustee for the holders of the revenue bonds, the signatures of the officers of the State upon the bonds required by section 39-56 may be facsimiles of their signatures;

(11) Proceeds of the revenue bonds may be used and applied by the development corporation to reimburse the other party to the special facility lease for all preliminary costs and expenses, including architectural and legal costs; and

(12) If the special facility lease requires the other party to operate, maintain, and repair the special facility that is the subject of the lease, at the other party's expense, the requirement shall constitute compliance by the development corporation with section 39-61(a)(2), and none of the revenues derived by the development corporation from the special facility shall be required to be applied to the purposes of section 39-62(2). Sections 39-62(4), 39-62(5), and 39-62(6) shall not apply to the revenues derived from a special facility lease."

SECTION 25. Chapter 210D, Hawaii Revised Statutes, is amended as follows:

1. By amending section 210D-4 to read:

"210D-4 Hawaii community-based economic development [revolving fund; established. There is established a revolving fund to be known as the Hawaii community-based economic development revolving fund from which moneys shall be loaned, granted by the department under this chapter. All moneys appropriated to the fund by the legislature, received as repayments of loans, payments of interest or fees, received as royalties, shall be deposited into the revolving fund and used for the purposes of this chapter. The department may use all appropriations and other moneys in the revolving fund not appropriated for a designated purpose to make grants or loans, provided that at no time shall the department reallocate funds from the loan program to the grant program so that insufficient funds remain available to make loans.] program; source of operating funds. (a) All moneys to carry out the purposes of the Hawaii community-based economic development program under this chapter shall be loaned or granted by the department or allocated by the legislature through appropriations out of the state general fund. The department shall include in its budgetary request for each upcoming fiscal period, the amounts necessary to effectuate the purposes of this section.

(b) All moneys received in repayment of loan principal, interest, and fees shall be deposited to the credit of the state general fund."

2. By amending section 210D-8 to read:

"210D-8 Powers and duties. The department shall have the necessary powers to carry out the purposes of this chapter, including the following:

(1) With advice from the council, prescribe the qualifications for eligibility of applicants for loans and grants;

(2) With advice from the council, establish preferences and priorities in determining eligibility for financial assistance;

(3) Establish the conditions, consistent with the purpose of this chapter, for the awarding of financial assistance;

(4) Provide for inspection at reasonable hours of facilities, books, and records of a community-based organization which has applied for or has been awarded financial assistance and require the submission of progress and final reports;

(5) Provide loans, and grants for community-based economic development activities and community-based enterprises for purposes consistent with this chapter;

(6) Determine the necessity for and the extent of security required in a loan;

(7) Prescribe and provide appropriate management counseling and monitoring of business activities;

(8) Administer the Hawaii community-based economic development [revolving fund;] program;

(9) Include in its budget for subsequent fiscal periods amounts necessary to effectuate the purposes of this chapter;

(10) Participate in loans made to qualified persons by private lenders;

(11) Establish interest rates chargeable by the State for direct and participation loans; and

(12) Adopt rules pursuant to chapter 91 to implement this chapter."

SECTION 26. Section 211E-2, Hawaii Revised Statutes, is amended to read as follows:

"211E-2 Hawaii innovation development fund; establishment. (a) There is established a revolving fund to be known as the Hawaii innovation development fund, that shall be administered by the department of business, economic development, and tourism for the purpose of promoting the development of new products or inventions that have direct economic benefits for Hawaii. The department shall provide low interest loans pursuant to subsection (b) to inventors for the development of their new product or invention. All moneys received as repayment of loans and interest payment shall be deposited in the fund. The department may transfer moneys from the Hawaii innovation development fund established by this section to either the state disaster revolving loan fund established by section 209-34, or the Hawaii capital loan revolving fund established by section 210-3, and moneys from these three funds shall be disbursed by the department or the director pursuant to chapters 209, 210, and 211E, respectively. The department or the director may transfer moneys from the state disaster revolving loan fund and the Hawaii capital loan revolving fund to the Hawaii innovation development fund for disbursement pursuant to this chapter:

(1) The total amount of moneys transferred to the state disaster revolving loan fund, the Hawaii capital loan revolving fund, or the Hawaii innovation development fund shall not exceed $1,000,000 for each respective fund within the calendar year;

(2) Notwithstanding paragraph (1), the total amount of moneys transferred between the state disaster revolving loan fund and the Hawaii capital loan revolving fund or the Hawaii innovation development fund shall not exceed $1,000,000 within the calendar year if the governor proclaims a state disaster pursuant to section 209-2; and

(3) The department shall report any transfer of funds made under this section to the legislature within ten days of the transfer.

(b) The department shall adopt rules pursuant to chapter 91 to carry out the purposes of this chapter including the following:

(1) Prescribe the qualification for eligibility of loan applicants;

(2) Establish preferences and priorities in determining eligibility for loans and loan repayments;

(3) Determine the necessity for and the extent of security required in any loan;

(4) Establish the interest rates chargeable by the State; provided that each loan granted under this section shall bear a simple interest which shall not exceed seven and one-half per cent; and

(5) Prescribe the forms of financial participation the department may engage in as a result of making a loan under this chapter, including but not limited to warrants, options, or royalties on sales or earnings.

(c) All unexpended and unencumbered moneys remaining on balance with the Hawaii innovation development fund at the close of each fiscal year which are deemed, by the director of finance, to be in excess of the moneys necessary to carry out the purposes of this chapter over the next following fiscal year shall lapse to the credit of the state general fund."

SECTION 27. Section 211F-5, Hawaii Revised Statutes, is amended to read as follows:

"[[]211F-5[]] Hawaii strategic development corporation [revolving fund. There is established the Hawaii strategic development corporation revolving fund. The following moneys shall be deposited into the Hawaii strategic development corporation revolving fund and shall not be considered part of the general fund: all moneys appropriated by the legislature,]; source of funds. (a) All moneys to carry out the purposes of the Hawaii strategic development corporation under this chapter shall be allocated by the legislature through appropriations out of the state general fund. The corporation shall include in its budgetary request for each upcoming fiscal period, the amounts necessary to effectuate the purposes of this section.

(b) All moneys received as repayments of loans, earned on investments, received pursuant to a venture agreement, received as royalties, received as premiums or fees charged by the corporation, or otherwise received by the corporation[.] shall be deposited to the credit of the state general fund."

SECTION 28. Chapter 227D, Hawaii Revised Statutes, is amended as follows:

1. By amending section 227D-2(a) to read:

"(a) There is established the natural energy laboratory of Hawaii authority, which shall be a body corporate and politic and an instrumentality and agency of the State. The authority shall be placed within the department of business, economic development, and tourism for administrative purposes, pursuant to section 26-35. The purpose of the natural energy laboratory of Hawaii authority shall be to facilitate research, development, and commercialization of natural energy resources and ocean-related research, technology, and industry in Hawaii and to engage in retail, commercial, or tourism activities that will financially support that research, development, and commercialization at a research and technology park in Hawaii. Its duties shall include:

(1) Establishing, managing, and operating facilities that provide sites for:

(A) Research and development;

(B) Commercial projects and businesses utilizing natural resources, such as ocean water or geothermal energy;

(C) Compatible businesses engaged in scientific and technological investigations, or retail, commercial, and tourism activities; and

(D) Businesses or educational facilities that support the primary projects and activities;

(2) Providing support, utilities, and other services to facility tenants and government agencies;

(3) Maintaining the physical structure of the facilities;

(4) Promoting and marketing these facilities;

(5) Promoting and marketing the reasonable utilization of available natural resources;

(6) Supporting ocean research and technology development projects that support national and state interests, use facilities and infrastructure in Hawaii, and foster potential commercial development; and

(7) Engaging in retail, commercial, and tourism activities that are not related to facilitating research, development, and commercialization of natural energy resources in Hawaii; provided that all income derived from these activities shall be deposited [in the natural energy laboratory of Hawaii authority special] to the credit of the state general fund."

2. By amending section 227D-5 to read:

"227D-5 [Special fund. There is established in the state treasury a fund to be known as the natural energy laboratory of Hawaii authority special fund, into which shall be deposited all moneys and fees from tenants or other users of the authority's parks, projects, other leased facilities, and other services and publications as well as any grants or gifts received by the authority.] Project operating funds; disposition of receipts. (a) All moneys [in the fund are appropriated for the purposes of and shall be expended by the authority] for the operation, maintenance, and management of [its] the authority's parks, projects, facilities, services, and publications, and for the design and construction of new facilities and the renovation of or addition to existing facilities[.] shall be allocated by the legislature through appropriations out of the state general fund. The authority shall include in its budgetary request for each upcoming fiscal period, the amounts necessary to effectuate the purposes of this section.

(b) All moneys and fees collected from tenants and other users of the authority's parks, projects, leased facilities, other services, and publications shall be deposited to the credit of the state general fund."

PART VI. SPECIAL AND REVOLVING FUNDS UNDER

THE DEPARTMENT OF COMMERCE AND CONSUMER AFFAIRS

SECTION 29. Section 26-9, Hawaii Revised Statutes, is amended to by amending subsection (o) to read as follows:

"(o) Every person licensed under any chapter within the jurisdiction of the department of commerce and consumer affairs and every person licensed subject to chapter 485 or registered under chapter 467B shall pay upon issuance of a license, permit, certificate, or registration a fee and a subsequent annual fee to be determined by the director and adjusted from time to time to ensure that the proceeds, together with all other fines, income, and penalties collected under this section, do not surpass the annual operating costs of conducting compliance resolution activities required under this section. The fees may be collected biennially or pursuant to rules adopted under chapter 91, and shall be deposited into the special fund established under this subsection. Every filing pursuant to chapter 514E or section 485-6(15) shall be assessed, upon initial filing and at each renewal period in which a renewal is required, a fee that shall be prescribed by rules adopted under chapter 91, and that shall be deposited into the special fund established under this subsection. Any unpaid fee shall be paid by the licensed person, upon application for renewal, restoration, reactivation, or reinstatement of a license, and by the person responsible for the renewal, restoration, reactivation, or reinstatement of a license, upon the application for renewal, restoration, or reinstatement of the license. If the fees are not paid, the director may deny renewal, restoration, reactivation, or reinstatement of the license. The director may establish, increase, decrease, or repeal the fees when necessary pursuant to rules adopted under chapter 91.

There is created in the state treasury a special fund to be known as the compliance resolution fund to be expended by the director's designated representatives as provided by this subsection. Notwithstanding any law to the contrary, all revenues, fees, and fines collected by the department shall be deposited into the compliance resolution fund. Unencumbered balances existing on June 30, 1999, in the cable television fund under chapter 440G, the division of consumer advocacy fund under chapter 269, the financial institution examiners' revolving fund, section 412:2-109, and the special handling fund, section 415-128, shall be deposited into the compliance resolution fund. This provision shall not apply to the drivers education fund underwriters fee, section 431:10C-115, insurance premium taxes and revenues, revenues of the workers' compensation special compensation fund, section 386-151, the captive insurance administrative fund, section 431:19-101.8, the insurance commissioner's education and training fund, section 431:2-214, the medical malpractice patients' compensation fund as administered under section 5 of Act 232, Session Laws of Hawaii 1984, the insurance examiners' revolving fund, section 431:2-307, the motor vehicle insurance administration revolving fund, section 431:10C-115.5, and fees collected for deposit in the office of consumer protection restitution fund, section 487-14, the real estate appraisers fund, section 466K-1, the real estate recovery fund, section 467-16, the real estate education fund, section 467-19, the contractors recovery fund, section 444-26, the contractors education fund, section 444-29, the condominium management education fund, section 444-29, and the public broadcasting revolving fund, section 314-13. Any law to the contrary notwithstanding, the director may use the moneys in the fund to employ, without regard to chapter 76, hearings officers, investigators, attorneys, accountants, and other necessary personnel to implement this subsection. Any law to the contrary notwithstanding, the moneys in the fund shall be used to fund the operations of the department with the exception of costs related to the Hawaii public broadcasting authority. The moneys in the fund may be used to train personnel as the director deems necessary and for any other activity related to compliance resolution.

As used in this subsection, unless otherwise required by the context, "compliance resolution" means a determination of whether:

(1) Any licensee or applicant under any chapter subject to the jurisdiction of the department of commerce and consumer affairs has complied with that chapter;

(2) Any person subject to chapter 485 has complied with that chapter;

(3) Any person submitting any filing required by chapter 514E or section 485-6(15) has complied with chapter 514E or section 485-6(15);

(4) Any person has complied with the prohibitions against unfair and deceptive acts or practices in trade or commerce; or

(5) Any person subject to chapter 467B has complied with that chapter;

and includes work involved in or supporting the above functions, licensing, or registration of individuals or companies regulated by the department, consumer protection, and other activities of the department.

The director shall prepare and submit an annual report to the governor and the legislature on the use of the compliance resolution fund. The report shall describe expenditures made from the fund including non-payroll operating expenses.

Moneys in the compliance resolution fund shall not be used to expand the function or otherwise carry out the purposes of the institutional network (INET), a telecommunications infrastructure implemented via cable television operators' systems that is intended to support broadband communication between various government entities. All moneys necessary to carry out the purposes of the institutional network shall be allocated by the legislature through appropriations out of the state general fund. The department shall include in its budgetary request for each upcoming fiscal period, the amounts necessary to effectuate the purposes of the institutional network."

PART VII. SPECIAL AND REVOLVING FUNDS UNDER

THE DEPARTMENT OF EDUCATION

SECTION 30. Chapter 302A-405, Hawaii Revised Statutes, is amended as follows:

1. By amending section 302A-405(b) to read:

"(b) All moneys received by or for the public school cafeterias from the sale of meals, the sale of services, the federal government, or any other source, shall be deposited [in one special school lunch fund. Except as otherwise provided by the legislature, all expenditures for the operation of public school cafeterias shall be made from this fund.] to the credit of the state general fund. All moneys to carry out the purposes of this section shall be allocated by the legislature through appropriations out of the state general fund. The department shall include in its budgetary request for each upcoming fiscal period, the amounts necessary to effectuate the purposes of this section."

2. By amending section 302A-417(b) to read:

"(b) The department may establish the requirements for the position of traffic safety education specialist and may employ at least one traffic safety education specialist for the purposes of this section. The traffic safety education specialist may be paid out of [fees allocated to the director of commerce and consumer affairs from the special drivers education fund account pursuant to section 431:10C-115.] appropriations made by the legislature from the state general fund."

3. By amending section 302A-435 to read:

"[[]302A-435[]] Financing adult and community education program. The financial support for this program shall be [in part from fees collected from students enrolled, and in part] from public funds appropriated by the legislature out of the proceeds of the state general fund for this purpose. Fees collected from students enrolled in adult and community education programs shall be set in accordance with the recommendations of the advisory council, and shall be deposited to the credit of the state general fund. Fees under this section may be collected from students regularly enrolled; provided that:

(1) Adults registered with the department of labor and industrial relations and unemployed shall be granted free enrollment in such courses as will tend to assist these persons in securing employment;

(2) Adults certified by the department of human services as indigent may be enrolled on a nonfee basis in classes that will tend to assist these persons in becoming self-sustaining;

(3) Discharged veterans who are entitled to federal educational assistance shall be enrolled upon authorization of the Department of Veterans Affairs and fees shall be charged against federal funds in accordance with Department of Veterans Affairs contract regulations; and

(4) Administrative and supervisory costs, costs of instruction, and all other necessary expenses not covered by fees and other authorized charges shall be paid for out of funds appropriated for this purpose.

The department shall include in its budgetary request for each upcoming fiscal period, the amounts necessary to effectuate the purposes of the adult and community education program."

4. By amending section 302A-1130(f) to read:

"(f) Special fees and charges collected from pupils who negligently break, damage, lose, or destroy school books, equipment, or supplies shall be deposited in a fund and expended by the department under rules adopted pursuant to chapter 91. All unexpended and unencumbered moneys remaining on balance with the fund at the close of each fiscal year which are deemed, by the director of finance, to be in excess of the moneys necessary to carry out the purposes of this section over the next following fiscal year shall lapse to the credit of the state general fund."

5. By amending section 302A-1304 to read:

"[[]302A-1304[]] Department of education storeroom[; revolving fund]. There shall be a storeroom established by the department to provide schools a source for commonly used educational, office, and custodial supplies. [There is established a revolving fund to be known as the "storeroom revolving fund", into which shall be deposited the receipts from charges made to schools for the supplies and cost of issuing the supplies from the storeroom and transfers from other accounts or funds. Receipts and transfers deposited into the storeroom revolving fund may be expended to purchase educational, office, and custodial supplies, and equipment and services needed to operate the storeroom. Balances in excess of $400,000 at the end of each fiscal year shall lapse into the general fund.] All moneys to purchase commonly used educational, office, and custodial supplies shall be allocated by the legislature through appropriations out of the state general fund. The department shall include, in its budgetary request for each upcoming fiscal period, the amounts necessary to effectuate the purposes of this section. All receipts from charges made to schools for the supplies from the storeroom shall be deposited to the credit of the state general fund."

6. By amending section 302A-1310 to read:

"302A-1310 Out-of-school time instructional programs; funds, expenditures. All moneys received by and for the public out-of-school time instructional programs from tuition and other fees or from any other source shall be deposited [in a special out-of-school time instructional program fund; and except as otherwise provided by the legislature, all expenditures for the operation of public out-of-school time instructional programs shall be made from this fund.] to the credit of the state general fund. All moneys to carry out the purposes of this section shall be allocated by the legislature through appropriations out of the state general fund. The department shall include in its budgetary request for each upcoming fiscal period the amounts necessary to effectuate the purposes of this section."

SECTION 31. Section 103D-1213, Hawaii Revised Statutes, is amended to read as follows:

"[[]103D-1213[]] Sale of produce, etc.; disposition of proceeds; exceptions. Except as otherwise provided by law or rules adopted by the governor, the sale by any governmental office, department, board, establishment, institution, or agency (hereafter referred to as "agency") of domestic animals such as hogs, poultry, etc.; of the produce of animal husbandry; of fruits, vegetables, and other agricultural produce; of manufactured articles; or the like (hereafter referred to as "products") where the raising, production, or manufacture of the same is a part of the usual or authorized activities of the agency, may be made by the agency in a manner to be determined by the head of the agency. The proceeds of the sales, where not otherwise provided by law, shall be paid into the general fund as state realizations. If any of the products are sold from one agency to any other agency, a reasonable sale price may be paid to the selling agency by the purchasing agency and credited to the current expense appropriation of the selling agency, subject to re-expenditure during the fiscal or other period in which the current expense appropriation is available, and any unexpended balance shall lapse at the end of the period. This section shall not apply to [public school activities, such as the sale of food in public school cafeterias, the proceeds of which are not considered as public funds payable into the treasury of the State, nor shall the same apply to] activities of the University of Hawaii. Nothing in this section shall be deemed to prohibit a transfer from one agency to another of the products without charge, if so ordered by the selling agency."

SECTION 32. Section 312-3.6, Hawaii Revised Statutes, is amended to read as follows:

"312-3.6 Libraries special fund. (a) There is established in the state treasury a libraries special fund into which shall be deposited all moneys collected pursuant to section 312-3.5.

(b) The fund shall be administered by the state librarian who [shall], unless otherwise directed by the library advisory committee, shall disburse to each public library[,] the amount commensurate with the moneys received from the library under section 312-3.5 over the previous fiscal period. Allocations shall be made in quarterly installments within thirty days of the end of each calendar quarter.

(c) Moneys allocated from the libraries special fund to the public libraries shall be used to purchase books or other library materials. Each public library may post on a bulletin board or other appropriate place a list of the purchases made from the special fund in the preceding quarter.

(d) The state librarian shall submit an annual report on the status of the libraries special fund, to include information regarding:

(1) Deposits into the fund and the source of these revenues;

(2) Allocations to each public library, including allocations established for both the fiscal year covered by the annual report and the subsequent fiscal year;

(3) Descriptions and amounts of expenditures made from the fund;

(4) Balances remaining on June 30 of each year;

(5) Financial information regarding receipt sources by individual libraries; and

(6) Actual expenditure of receipts by individual libraries;

provided that this report shall be submitted to the legislature and to the governor, or the director of finance if so delegated by the governor, no later than twenty days prior to the convening of each regular session of the legislature.

(e) All unexpended and unencumbered moneys remaining on balance with the fund at the close of each fiscal year which are deemed, by the director of finance, to be in excess of the moneys necessary to carry out the purposes of this section over the next following fiscal year shall lapse to the credit of the state general fund."

SECTION 33. Section 431:10C-115, Hawaii Revised Statutes, is amended by amending subsection (c) to read as follows:

"(c) The commissioner shall allocate the fees deposited for each fiscal year in the following manner:

(1) Fifty per cent to the commissioner to be expended for the operation of the drivers education program provided in section 286-128(d); and

(2) Fifty per cent to the [director of commerce and consumer affairs for:

(A) The drivers education program administered by the department of education for high school students; and

(B) The traffic safety education program established and administered by the department of education pursuant to section 302A-417.] credit of the state general fund."

SECTION 34. Chapter 302A, Hawaii Revised Statutes, is amended by adding a new section to part II, subpart C, be appropriately designated and to read as follows:

"302A- Drivers education and traffic safety education programs; source of operating funds. (a) The department of education shall include in its budgetary request for each upcoming fiscal period the amounts necessary to effectuate the following purposes:

(1) The drivers education program administered by the department of education for high school students pursuant to section 302A-413; and

(2) The traffic safety education program established and administered by the department of education pursuant to section 302A-417.

(b) All moneys to carry out the purposes of this section shall be allocated by the legislature through appropriations out of the state general fund."

SECTION 35. The department of education is hereby directed to discontinue the operation of the administratively established federal revenue maximization fund. All unencumbered and unexpended balances remaining in that fund shall be transferred to the credit of the state general fund on July 1, 2002. The department shall include in its budgetary request for each upcoming fiscal period, the amounts necessary to carry out the functions and activities formerly financed by the proceeds of that fund.

PART VIII. SPECIAL AND REVOLVING FUNDS UNDER

THE DEPARTMENT OF HEALTH

SECTION 36. Chapter 128D, Hawaii Revised Statutes, is amended as follows:

1. By amending the definition of "fund" in section 128D-1 to read:

""Fund" means the [environmental response revolving] state general fund."

2. By amending section 128D-2 to read:

"128D-2 Environmental response [revolving fund; uses. (a) There is created within the state treasury an environmental response revolving fund, which shall consist of moneys appropriated to the fund by the legislature, moneys paid to the fund as a result of departmental compliance proceedings, moneys paid to the fund pursuant to court-ordered awards or judgments, moneys paid to the fund in court-approved or out-of-court settlements, all interest attributable to investment of money deposited in the fund, moneys generated by the environmental response tax established in section 243-3.5, and moneys allotted to the fund from other sources; provided that when the total balance of the fund exceeds $20,000,000, the department of health shall notify the department of taxation of this fact in writing within ten days. The department of taxation then shall notify all distributors liable for collecting the tax imposed by section 243-3.5 of this fact in writing, and the imposition of the tax shall be discontinued beginning the first day of the second month following the month in which notice is given to the department of taxation. If the total balance of the fund thereafter declines to less than $3,000,000, the department of health shall notify the department of taxation which then shall notify all distributors liable for collecting the tax imposed by section 243-3.5 of this fact in writing, and the imposition of the tax shall be reinstated beginning the first day of the second month following the month in which notice is given to the department of taxation.] program; source of funds; disposition of receipts. (a) All moneys to meet the general operating needs and expenses of the department under this chapter shall be allocated by the legislature through appropriations out of the state general fund. The department shall include in its budgetary request for each upcoming fiscal period, the amounts necessary to effectuate the purposes of this chapter.

(b) Moneys [from the fund] allocated by the legislature shall be expended by the department for response actions and preparedness, including removal and remedial actions, consistent with this chapter; provided that the revenues generated by the "environmental response tax" and deposited into the [environmental response revolving] general fund:

(1) Shall also be used:

(A) For oil spill planning, prevention, preparedness, education, research, training, removal, and remediation; and

(B) For direct support for county used oil recycling programs; and

(2) May also be used to support environmental protection and natural resource protection programs, including but not limited to energy conservation and alternative energy development, and to address concerns related to air quality, global warming, clean water, polluted runoff, solid and hazardous waste, drinking water, and underground storage tanks, including support for the underground storage tank program of the department and funding for the acquisition by the State of a soil remediation site and facility.

(c) All moneys paid to the department as a result of departmental compliance proceedings, court-ordered awards or judgments, court-approved or out-of-court settlements, moneys generated by the environmental response tax, and all other fines, receipts, and payments shall be deposited to the credit of the state general fund."

3. By amending section 128D-2.5 to read:

"[[]128D-2.5[]] Toxicologists. The department may establish permanent exempt positions known as toxicologists for the purpose of assessing human health risk. The positions shall be appointed by the director without regard to chapters 76 and 77. The funds for these positions shall come from [the environmental response revolving fund established in section 128D-2.] appropriations made by the legislature from the state general fund."

4. By amending section 128D-2.6 to read:

"[[]128D-2.6[]] Ecological risk assessor. The department may establish a permanent exempt position for an ecological risk assessor for the purpose of assessing ecological risks and damages. The position shall be appointed by the director without regard to chapters 76 and 77. The funds for this position shall come from [the environmental response revolving fund established in section 128D-2;] appropriations made by the legislature from the state general fund; provided that the duties of the ecological risk assessor shall bear a rational nexus to the intent and purposes of [[]this chapter[]]."

5. By amending section 128D-4 to read:

"128D-4 State response authorities; uses of [fund.] funds. (a) Whenever any hazardous substance is released or there is a substantial threat of such a release into the environment, or there is a release or substantial threat of such release into the environment of any pollutant or contaminant that may present a substantial danger to the public health, welfare, or the environment, the director is authorized to act, consistent with the state contingency plan, to remove or arrange for the removal of, and provide for remedial action relating to such hazardous substance, pollutant, or contaminant at any time, including its removal from any contaminated natural resources, or take any other response measure consistent with the state contingency plan which the director deems necessary to protect the public health or welfare or the environment. The director may:

(1) Issue an administrative order or conduct any other enforcement or compliance activities necessary to compel any known responsible party or parties to take appropriate removal or remedial action necessary to protect the public health and safety and the environment;

(2) Upon determining that there may be an imminent and substantial endangerment to the public health or welfare or the environment because of an actual or threatened release of a hazardous substance, issue without a hearing, such orders as may be necessary to protect the public health, welfare, and the environment;

(3) Solicit the cooperation of responsible parties prior to issuing an order to encourage voluntary cleanup efforts; and, if necessary, negotiate enforcement agreements with responsible parties to conduct needed response actions according to deadlines established in compliance orders or settlement agreements;

(4) Undertake those investigations, monitoring, surveys, testing, sampling, and other information gathering necessary to identify the existence, source, nature, and extent of the hazardous substances or pollutants or contaminants involved and the extent of danger to the public health or welfare or to the environment;

(5) Perform any necessary removal or remedial actions so as to abate any immediate danger to the public health or welfare or to the environment; and

(6) Contract the services of appropriate organizations to perform the actions set forth in paragraphs (1), (2), (3), (4), and (5).

(b) For the purposes of determining or investigating an actual release or a suspected release, or choosing or taking any response action, or conducting any study, or enforcing this chapter, any person who has or may have information relevant to any of the following, upon the reasonable and necessary request of any duly authorized representative of the department, shall furnish information or documents in the person's possession relating to such matter:

(1) The identification, nature, and quantity of hazardous substances or pollutants or contaminants which have been or are generated, treated, or stored or disposed of at a facility or vessel or transported to a facility or vessel.

(2) The nature and extent of a release or threatened release of a hazardous substance or pollutant or contaminant from a facility or vessel.

(3) Information relating to the ability of a person to pay for or perform the cleanup.

In addition, upon reasonable notice, such person shall grant any such authorized representative of the department access at all reasonable times to any facility, vessel, establishment, site, place, property, or location to inspect same and to review and copy all documents or records relating to such matters or shall copy and furnish the officer, employee, or representative of the department all such documents or records, at the option and expense of such person.

(c) Moneys [in the] appropriated by the legislature out of the state general fund may be expended by the director for any of the following purposes:

(1) Payment of all costs of removal or remedial actions incurred by the State or the counties in response to a release or threatened release of a hazardous substance or pollutant or contaminant; or

(2) Payment for the State's share of a removal or remedial action pursuant to section 104(c)(3) of CERCLA;

(3) Payment of all costs incurred by the State in the restoration, rehabilitation, or replacement or acquisition of the equivalent of any natural resources injured, destroyed, or lost as a result of a release of a hazardous substance or pollutant or contaminant;

(4) Payment of all costs of response action for a release due to the legal application of a pesticide product registered under the Federal Insecticide, Fungicide, and Rodenticide Act; or

(5) Payment of all costs or remedial action for any release permitted by any federal, state or local permit or other legal authority.

(d) No response actions taken pursuant to this chapter by the department shall duplicate federal response actions.

[(e) The governor may raise the legislative ceiling established in the environmental response revolving fund if, in the governor's determination, sufficient funds do not exist within the ceiling to conduct emergency response actions pursuant to this chapter.]"

6. By amending section 128D-8(d) to read:

"(d) Civil penalties collected under this chapter shall be paid to the department for deposit into the [revolving] fund and may be recovered in a civil action in a court of competent jurisdiction where the violation is alleged to have occurred."

7. By amending section 128D-13 to read:

"[[]128D-13[]] Reporting requirements. The department shall submit to the legislature an annual report, including a comprehensive budget to implement remedial action plans requiring funding by the [environmental response revolving] fund. This report shall identify those sites eligible for remedial action under CERCLA, including a statement as to any appropriation that may be necessary to pay the State's share of the plan."

8. By amending section 128D-19(d) to read:

"(d) A petitioner who is liable under this chapter may recover the petitioner's reasonable costs of compliance with the order from the fund, [or, if there are not sufficient moneys in the fund to satisfy the claims, then from the State,] to the extent that the petitioner can demonstrate, on the administrative record, that the director's decision in selecting the action ordered was arbitrary and capricious or was otherwise not in accordance with the law. Reimbursement awarded under this subsection shall include all costs incurred by the petitioner pursuant to the order. If only a portion of the order is found to be arbitrary and capricious or otherwise not in accordance with law, reimbursement awarded under this [paragraph] subsection shall include all costs incurred by the petitioner pursuant to the portions of the order found to be arbitrary and capricious or otherwise not in accordance with the law."

9. By repealing section 128D-36.

["[128D-36] Funding. (a) The department shall establish an account, to be called the voluntary response action account, within the environmental response revolving fund pursuant to section 128D-2, for the purpose of administration and oversight of this part.

(b) The $1,000 nonrefundable application fee shall be deposited into the voluntary response action account.

(c) Upon initial approval of an application, the department may require a deposit of up to $5,000 to initiate a site-specific account. The department may require an additional deposit of up to $5,000, whenever the balance of the site-specific account falls below $1,000.

(d) If a site-specific account balance is inadequate to support oversight, the department may discontinue oversight on the voluntary response action. The department may pursue enforcement action against the requesting party and any other person liable under section 128D-6, pursuant to part I of this chapter, when an account balance is inadequate to support further oversight by the department.

(e) At the completion of the voluntary response action, or at the termination of the agreement, the department shall provide a final accounting of the site-specific account and return the balance to the requesting party."]

SECTION 37. Chapter 128E, Hawaii Revised Statutes, is amended as follows:

1. By amending section 128E-8(a) and (b) to read:

"(a) The department shall establish an account[,] within the state treasury to be called the local emergency response planning committees account, [within the environmental response revolving fund pursuant to section 128D-2,] for the purpose of administration and oversight of this chapter.

(b) All moneys to meet the general operating needs and expenses of the emergency planning and community right-to-know program of the department shall be allocated by the legislature through appropriations out of the state general fund [and the environmental response revolving fund; provided that the appropriations from the environmental response revolving fund shall not exceed the amount of moneys collected from the filing fees assessed in section 128E-9]. The department shall include in its budgetary request for each upcoming fiscal period the amounts necessary to effectuate the purposes of this chapter."

2. By amending section 128E-9 to read:

"128E-9 Filing fees. Facilities that are required to report according to section 128E-6(a)(2), shall remit $100 with each submission of chemical inventory forms or Tier II forms to the commission by March 1 of each year. All moneys collected by the department pursuant to this section shall be deposited [in the state treasury and accrue] to the credit of the [environmental response revolving] state general fund [established in section 128D-2]."

SECTION 38. Section 243-3.5, Hawaii Revised Statutes, is amended by amending subsection (c) to read as follows:

"(c) Notwithstanding section 248-8 to the contrary, the environmental response tax collected under this section shall be paid over to the director of finance for deposit into the [environmental response revolving] state general fund [established by section 128D-2]."

SECTION 39. Section 342B-50, Hawaii Revised Statutes, is amended to read as follows:

"[[]342B-50[]] Disposition of collected fines and penalties. Fines and penalties collected under sections 342B-47, 342B-48, and 342B-49 shall be deposited into the [environmental response revolving] state general fund [established by section 128D-2]."

SECTION 40. Section 342D-39, Hawaii Revised Statutes, is amended to read as follows:

"[[]342D-39[]] Disposition of collected fines and penalties. Fines and penalties collected under this part shall be deposited into the [environmental response revolving] state general fund [established by section 128D-2]."

SECTION 41. Section 342E-4, Hawaii Revised Statutes, is amended by amending subsection (c) to read as follows:

"(c) Any fine or penalty collected shall be [placed in the environmental response revolving] deposited to the credit of the state general fund [pursuant to [section] 128D-2]."

SECTION 42. Section 342F-11.5, Hawaii Revised Statutes, is amended to read as follows:

"[[]342F-11.5[]] Disposition of collected fines and penalties. Fines and penalties collected under sections 342F-9 and 342F-11 shall be deposited into the [environmental response revolving] state general fund [established by section 128D-2]."

SECTION 43. Section 342H-10.5, Hawaii Revised Statutes, is amended to read as follows:

"342H-10.5 Disposition of collected fines and penalties. Except as otherwise provided in this section, fines and penalties collected under sections 342H-9 and 342H-10 shall be deposited into the [environmental response revolving] state general fund [established by section 128D-2]. Where a county individually, or the State and a county jointly, initiates and conducts an investigation resulting in the imposition and collection of a fine or penalty, pursuant to section 342H-30(c), the fine or penalty shall be distributed as follows:

(1) One half to the department of the county whose officers or employees initiated and conducted the investigation; and

(2) One half to the [environmental response revolving] credit of the state general fund [established in section 128D-2]."

SECTION 44. Chapter 342I, Hawaii Revised Statutes, is amended as follows:

1. By amending section 342I-9 to read:

"[[]342I-9[]] Disposition of collected fines and penalties. Fines and penalties collected under this part shall be deposited into the [environmental response revolving] state general fund[, established by section 128D-2]."

2. By amending section 342I-35 to read:

"[[]342I-35[]] Disposition of collected fines and penalties. Fines and penalties collected under this part shall be deposited into the [environmental response revolving] state general fund [established by section 128D-2]."

SECTION 45. Section 342J-10.5, Hawaii Revised Statutes, is amended to read as follows:

"[[]342J-10.5[]] Disposition of collected fines and penalties. Fines and penalties collected under sections 342J-9 and 342J-10 shall be deposited into the [environmental response revolving] state general fund [established by section 128D-2]."

SECTION 46. Section 323F-21, Hawaii Revised Statutes, is amended by amending its title and subsection (a) to read as follows:

"[[]323F-21[]] Fiscal provisions[. (a) There is created in the state treasury a special fund to be known as the health systems special fund into which shall be deposited all fees, proceeds, reimbursements, and the like owed to or received by the corporation and its facilities, except as herein provided. The special fund shall be used solely to fulfill the purposes outlined in this chapter.

The corporation may establish and maintain within its special fund, accounts that may be necessary and appropriate to carry out its purposes and responsibilities.]; source of funds; disposition of receipts. (a) All moneys necessary for the corporation to carry out the purposes of this chapter shall be allocated by the legislature through appropriations out of the state general fund. The corporation shall include in its budgetary request for each upcoming fiscal period, the amounts necessary to effectuate the purposes of this chapter. All fees, proceeds, reimbursements, and other moneys received by the corporation shall be deposited to the credit of the state general fund.

The corporation may provide reasonable reserves for any of the following purposes:

(1) Insurance deductibles;

(2) The improvement, replacement, or expansion of its facilities or services;

(3) The securing of the corporation's bonds, notes, or other instruments of indebtedness; or

(4) Any other purpose it deems necessary or appropriate in the performance of its purposes and responsibilities."

SECTION 47. Section 334-15, Hawaii Revised Statutes, is amended to read as follows:

"334-15 Mental health and substance abuse [special fund; established. (a) There is established a special fund to be known as the mental health and substance abuse special fund into which shall be deposited all] programs; source of funds; disposition of receipts. (a) All revenues and other moneys collected from certification programs and treatment services rendered by the mental health and substance abuse programs operated by the State[. Notwithstanding any other law to the contrary, the department is authorized to establish separate accounts within the special fund for depositing moneys received from certification programs and from each mental health and substance abuse program. Moneys deposited into the respective accounts of each program shall be used for the payment of the operating expenses of the respective program.

(b) The director shall submit a report to the legislature, not later than twenty days prior to the convening of each regular session, which identifies for each account in the special fund, the account balance and ceiling increase, any transfers and expenditures made, and the purposes of the expenditures.] shall be deposited to the credit of the state general fund. All moneys necessary to carry out the purposes of this section shall be allocated by the legislature through appropriations out of the state general fund. The department shall include in its budgetary request for each upcoming fiscal period, the amounts necessary to effectuate the purposes of this section."

SECTION 48. Section 321-12.5, Hawaii Revised Statutes, is amended by amending subsections (b) and (c) as follows:

"(b) All moneys collected as fees pursuant to subsection (a) shall be deposited into the [mental health and substance abuse special] state general fund [established by section 334-15].

(c) All funds deposited in the [mental health and substance abuse special] state general fund pursuant to subsection (b) shall be used exclusively to support the activities relating to the application, training, certification, and monitoring of the certified forensic examination program."

SECTION 49. The department of health is hereby directed to discontinue the operation of the following administratively created special and revolving funds:

(1) Hurricane Iniki insurance proceeds;

(2) Interagency federal revenue maximization revolving fund accounts; and

(3) Salary/fringe benefits for toxicologist.

All unencumbered and unexpended balances remaining in each fund scheduled for repeal in this section shall be transferred to the credit of the state general fund on July 1, 2002. The department shall include in its budgetary request for each upcoming fiscal period, the amounts necessary to carry out the functions and activities formerly financed by the special and revolving funds discontinued under this section.

SECTION 50. The Hawaii health systems corporation is hereby directed to discontinue the operation of the following administratively created special and revolving funds:

(1) Collections revolving fund; and

(2) Hurricane Iniki storm damages.

All unencumbered and unexpended balances remaining in each fund scheduled for repeal in this section shall be transferred to the credit of the state general fund on July 1, 2002. The corporation shall include in its budgetary request for each upcoming fiscal period, the amounts necessary to carry out the functions and activities formerly financed by the special and revolving funds discontinued under this section.

PART IX. SPECIAL AND REVOLVING FUNDS UNDER

THE DEPARTMENT OF HUMAN RESOURCES DEVELOPMENT

SECTION 51. Section 26-5, Hawaii Revised Statutes, is amended by amending subsection (f) to read as follows:

"(f) There is established in the state treasury the human resources development special fund, to be administered by the department of human resources development, which shall consist of: all revenues received by the department as a result of entrepreneurial efforts in securing new sources of funds not provided for in the department's budget for services rendered by the department, [all revenues received by the department from the charging of participant fees for in-service training that are in addition to general fund appropriations in the department's budget for developing and operating in-service training programs,] appropriations made by the legislature to the fund, and moneys directed to the department from any other source, including gifts, grants, and awards.

Moneys in the human resources development special fund shall be used for the following purposes:

(1) Supporting the department's entrepreneurial initiatives, training activities, and programs;

(2) Administrative costs of the department's entrepreneurial initiatives, training activities, and programs; and

(3) Any other purpose deemed necessary by the director for the purpose of facilitating the department's entrepreneurial initiatives, training activities, and programs."

SECTION 52. Section 81-3, Hawaii Revised Statutes, is amended to read as follows:

"81-3 Financing of operations. [Funds] All funds necessary for the development and operation of in-service training programs and activities shall be [provided by general fund appropriations.] allocated by the legislature through appropriations out of the state general fund. Additional revenues may be provided through the charging of fees as may be necessary to conduct programs for participating agencies [and shall be made part of a revolving fund.]; provided that the proceeds of all fees collected under this chapter shall be deposited to the credit of the state general fund. The department shall include in its budgetary request for each upcoming fiscal period, the amounts necessary to effectuate the purposes of this section."

PART X. SPECIAL AND REVOLVING FUNDS

UNDER THE DEPARTMENT OF HUMAN SERVICES

SECTION 53. Section 346E-15, Hawaii Revised Statutes, is amended to read as follows:

"[[]346E-15[]] Health care [revolving fund.]; Medicaid; disposition of tax revenues. The department shall collect the tax and pay all tax revenues into the state general fund [for deposit into the health care revolving fund which is hereby created in the state treasury. Amounts deposited in the health care revolving fund, and any interest earned on these amounts, shall be used only for section 346-14 Medicaid purposes]. Any federal Medicaid matching funds to expenditures made from funds deposited in the [health care revolving] state general fund shall not become part of the [health care revolving] state general fund. [The funds in the health care revolving fund shall be expended by the department.] All moneys necessary for section 346-14 Medicaid purposes shall be allocated by the legislature through appropriations out of the state general fund. The department shall include in its budgetary request for each upcoming fiscal period, the amounts necessary to effectuate the purposes of this section."

SECTION 54. Section 347-12.5, Hawaii Revised Statutes, is amended to read as follows:

"[[]347-12.5[] Randolph-Sheppard revolving account. (a) There is established within the state treasury the Randolph-Sheppard revolving account. The revolving account shall be used by the department of human services for:] Blind vending program; source of funds; disposition of receipts. (a) All moneys necessary for the department to carry out the purposes of this section shall be allocated by the legislature through appropriations out of the state general fund. The department shall include in its budgetary request for each upcoming fiscal period, the amounts necessary to effectuate the purposes of this section. All vending machine income generated by federal, state, and county operations, donations, and other moneys received by the department shall be deposited to the credit of the state general fund.

(b) Moneys allocated by the legislature shall be used for:

(1) The provision of the following benefits for blind vendors:

(A) A retirement or pension plan;

(B) Health insurance; and

(C) Sick and vacation leave;

(2) The maintenance and replacement of equipment used in the blind vending program;

(3) The purchase of new equipment to be used in the blind vending program; and

(4) The provision of management services, which shall include, but not be limited to:

(A) The hiring of consultants;

(B) The sponsoring of training seminars;

(C) Transportation;

(D) Per diem for vendors to attend meetings of the state committee of blind vendors;

(E) Services for the state committee of blind vendors; and

(F) Other costs related to the blind vending program.

(b) Income from vending machines on federal, state, and county properties that are within reasonable proximity to, and in direct competition with, a blind vendor may be deposited into the [account] state general fund and then disbursed to the blind vendor.

[(c) The revolving account shall consist of funds derived from:

(1) Vending machine income generated by federal, state, and county operations;

(2) Any other legally accepted source of income; and

(3) Donations.]"

SECTION 55. The department of human services is hereby directed to discontinue the operation of the administratively established federal maximization revolving fund account. All unencumbered and unexpended balances remaining in that fund shall be transferred to the credit of the state general fund on July 1, 2002. The department shall include in its budgetary request for each upcoming fiscal period, the amounts necessary to carry out the functions and activities formerly financed by the proceeds of that fund.

PART XI. SPECIAL AND REVOLVING FUNDS UNDER

THE DEPARTMENT OF LABOR AND INDUSTRIAL RELATIONS

SECTION 56. Section 383-128, Hawaii Revised Statutes, is amended to read as follows:

"383-128 Employment and training [fund established. (a) Effective January 1, 1992, there is established in the state treasury, apart from all other funds in this State, a special fund to be known as the employment and training fund.] programs; source of funds; disposition of receipts. (a) All assessments collected pursuant to section 383-129 and all other moneys received [by the fund] from any other source shall be deposited [into the employment and training fund.] to the credit of the state general fund. All moneys necessary to carry out the purposes of this section shall be allocated by the legislature through appropriations out of the state general fund. The department shall include in its budgetary request for each upcoming fiscal period, the amounts necessary to effectuate the purposes of this section.

(b) [The moneys in the employment and training fund] Moneys allocated by the legislature for the purposes of this section may be used for funding:

(1) The operation of the state employment service for which no federal funds have been allocated;

(2) Business-specific training programs to create a more diversified job base and to carry out the purposes of the new industry training program pursuant to section 394-8;

(3) Industry or employer-specific training programs where there are critical skill shortages in high growth occupational or industry areas;

(4) Training and retraining programs to assist workers who have become recently unemployed or likely to be unemployed;

(5) Programs to assist residents who do not otherwise qualify for federal or state job training programs to overcome employment barriers; and

(6) Training programs to provide job-specific skills for individuals in need of assistance to improve career employment prospects.

(c) The director may require employers assisted by any of these programs to contribute up to fifty per cent of the cost of such assistance in cash or in-kind contributions.

(d) The department may contract for employment, education, and training services from public and private agencies and nonprofit corporations. Contracts, pursuant to subsection (b), shall be exempt from chapters 103D and 103F so funds for these services may be expended in a timely manner to effectuate the purposes of this section. All other disbursements shall be in accordance with chapters 103D and 103F.

(e) For purposes of grants and subsidies awarded under subsection (d), any organization requesting a grant or subsidy shall:

(1) Be licensed and accredited, as applicable, under the laws of the State;

(2) Have at least one year's experience with the project or in the program area for which the request or proposal is being made; except that the director may grant an exception where the project or program area deals with new industry training; and

(3) Be, employ, or have under contract persons who are qualified to engage in the program or activity to be funded by the State.

(f) Recipients of grants or subsidies shall be subject to the following conditions:

(1) Any organization requesting a grant or subsidy shall submit its request together with all the information required by the director on an application form provided by the department;

(2) The recipient of a grant or subsidy shall not use public funds for purposes of entertainment or perquisites;

(3) The recipient of a grant or subsidy shall comply with applicable federal, state, and county laws;

(4) The recipient of a grant or subsidy shall comply with any other requirements the director may prescribe;

(5) The recipient of a grant or subsidy shall allow the director, the legislative bodies, and the legislative auditor full access to records, reports, files, and other related documents so that the program, management, and fiscal practices of the grant recipient may be monitored and evaluated to assure the proper and effective expenditure of public funds;

(6) Every grant or subsidy shall be monitored according to rules established by the director to ensure compliance with this section; and

(7) Any recipient of a grant or subsidy under this section who withholds or omits any material fact or deliberately misrepresents facts to the director or who violates the terms of the recipient's contract shall be in violation of this section and, in addition to any other penalties provided by law, shall be prohibited from applying for a grant or subsidy under this section for a period of five years from the date of termination.

(g) The director shall submit a report to the legislature on the status of [the] employment and training [fund,] programs under this section, including expenditures and program results, at least twenty days prior to the convening of each regular legislative session.

[(h) The director of finance shall act as the treasurer and custodian of the employment and training fund, invest those moneys in accordance with applicable laws and rules, and disburse the moneys in the employment and training fund in accordance with directions by the director of labor and industrial relations. All interest earned from investment of moneys in the employment and training fund shall be deposited in the fund. The director of finance shall be liable on the director's official bond for the faithful performance of all duties in connection with the employment and training fund. All sums recovered on the surety bond for losses sustained by the employment and training fund shall be deposited in the fund.

(i) Administrative costs for the collection of employment and training fund contributions and for costs related to the establishment and maintenance of the employment and training fund shall be borne by the fund beginning with fiscal year 1992-1993 and thereafter.

(j) The director may establish positions and hire necessary personnel to establish and administer the employment and training fund without regard to chapters 76 and 77.]"

SECTION 57. Section 392-62, Hawaii Revised Statutes, is amended to read as follows:

"[[]392-62[]] Management of the fund. (a) The director of finance shall be the treasurer and custodian of the special fund for disability benefits and shall administer the fund in accordance with the directions of the director of labor and industrial relations. All moneys in the fund shall be held in trust for the purposes of this part only and shall not be expended, released, or appropriated or otherwise disposed of for any other purpose. Moneys in the fund may be deposited in any depositary bank in which general funds of the State may be deposited but [such] those moneys shall not be commingled with other state funds and shall be maintained in separate accounts on the books of the depositary bank. [Such] The moneys shall be secured by the depositary bank to the same extent and in the same manner as required by the general depositary law of the State; and collateral pledged for this purpose shall be kept separate and distinct from any other collateral pledged to secure other funds of the State. The director of finance shall be liable for the performance of the director of finance's duties under this section as provided in chapter 37.

(b) All unexpended and unencumbered moneys remaining on balance with the fund at the close of each fiscal year which are deemed, by the director of finance, to be in excess of the moneys necessary to carry out the purposes of this chapter over the next following fiscal year shall lapse to the credit of the state general fund."

SECTION 58. Chapter 393, Hawaii Revised Statutes, is amended as follows:

1. By amending section 393-33(a) to read:

"(a) If an employer fails to comply with section 393-11, 393-12, 393-13, or 393-15 the employer shall pay a penalty of not less than $25 or of $1 for each employee for every day during which such failure continues, whichever sum is greater. The penalty shall be assessed under rules [and regulations promulgated] adopted pursuant to chapter 91 and shall be collected by the director and [paid into the special] deposited to the credit of the state general fund [for premium supplementation established by section 393-41]. The director [may], for good cause shown, may remit all or any part of the penalty."

2. By amending section 393-34(b) to read:

"(b) All fines collected pursuant to this chapter shall be deposited into the [special premium supplementation] state general fund [created by section 393-41]."

3. By amending part IV to read:

"PART IV. PREMIUM SUPPLEMENTATION

[[393-41] Establishment of special premium supplementation fund. There is established in the treasury of the State, separate and apart from all public moneys or funds of the State, a special fund for premium supplementation which shall be administered exclusively for the purposes of this chapter. All premium supplementations payable under this part shall be paid from the fund. The fund shall consist of (1) all money appropriated by the State for the purposes of premium supplementation under this part and (2) all fines and penalties collected pursuant to this chapter.

[393-42] Management of the fund. The director of finance shall be the treasurer and custodian of the premium supplementation fund and shall administer the fund in accordance with the directions of the director of labor and industrial relations. All moneys in the fund shall be held in trust for the purposes of this part only and shall not be expended, released, or appropriated or otherwise disposed of for any other purpose. Moneys in the fund may be deposited in any depositary bank in which general funds of the State may be deposited but such moneys shall not be commingled with other state funds and shall be maintained in separate accounts on the books of the depositary bank. Such moneys shall be secured by the depositary bank to the same extent and in the same manner as required by the general depositary law of the State; and collateral pledged for this purpose shall be kept separate and distinct from any other collateral pledged to secure other funds of the State. The director of finance shall be liable for the performance of the director of finance's duties under this section as provided in chapter 37.

[393-43] Disbursements from the fund. Expenditures of moneys in the premium supplementation fund shall not be subject to any provisions of law requiring specific appropriations or other formal release by the state officers of money in their custody. All payments from the fund shall be made upon warrants drawn upon the director of finance by the comptroller of the State supported by vouchers approved by the director.

[393-44] Investment of moneys. With the approval of the department the director of finance may, from time to time, invest such moneys in the premium supplementation fund as are in excess of the amount deemed necessary for the payment of benefits for a reasonable future period. Such moneys may be invested in bonds of any political or municipal corporation or subdivision of the State, or any of the outstanding bonds of the State, or invested in bonds or interest-bearing notes or obligations of the State (including state director of finance's warrant notes issued pursuant to chapter 40), or of the United States, or those for which the faith and credit of the United States are pledged for the payment of principal and interest, or in federal land bank bonds or joint stock farm loan bonds. The investments shall at all times be so made that all the assets of the fund shall always be readily convertible into cash when needed for the payment of benefits. The director of finance shall dispose of securities or other properties belonging to the fund only under the direction of the director of labor and industrial relations.]

[[]393-45[]] Entitlement to premium supplementation. (a) An employer who employs less than eight employees entitled to coverage under this chapter and who provides coverage to [such] those employees pursuant to section 393-7(a) shall be entitled to premium supplementation [from the fund] if the employer's share of the cost of providing [such] that coverage as determined by sections 393-13 and 393-15 exceeds 1.5 per cent of the total wages payable to [such] those employees and if the amount of [such] the excess is greater than five per cent of the employer's income before taxes directly attributable to the business in which [such] those employees are employed.

(b) The amount of the supplementation shall be that part of the employer's share of the premium cost which exceeds the limits specified in subsection (a).

[[]393-46[]] Income directly attributable to the business. (a) "Income directly attributable to the business" means gross profits from the business minus deductions for:

(1) Compensation of officers;

(2) Salaries and wages, except wages paid by an individual proprietor to oneself;

(3) Repairs;

(4) Taxes on business and business property;

(5) Business advertising;

(6) Amounts contributed to employee benefit plans;

(7) Interest on business indebtedness;

(8) Rent on business property; and

(9) Other expenses necessary for the current conduct of business.

(b) Deductions shall not include:

(1) Bad debts;

(2) Contributions or gifts, other than those listed under subsection (a)(6);

(3) Amortization and depreciation; or

(4) Losses by fire, storm, casualty, or theft.

(c) The director may [promulgate] adopt rules [and regulations] necessary to define income directly attributable to business for the purpose of section 393-45.

[[]393-47[]] Claim of premium supplementation. An employer entitled to premium supplementation shall file a claim therefor in the manner provided by [regulation of] rules adopted by the director. The employer shall have the burden of proof of establishing the employer's entitlement.

393-48 Prepaid health care benefits [to be paid from the premium supplementation fund; recovery]; source of funds; disposition of recovered benefits. [Prepaid] From appropriations made by the legislature, prepaid health care benefits shall be paid [from the premium supplementation fund] by the director to [an] any employee [who is] entitled to receive prepaid health care benefits but cannot receive [such] those benefits because of bankruptcy of the employee's employer or because the employee's employer is not in compliance with this chapter. The department shall include in its budgetary request for each upcoming fiscal period, the amounts necessary to effectuate the purposes of this part. Benefits paid [from the premium supplementation fund to such] to any employee under this part may be recovered from the employee's bankrupt or noncomplying employer. The director shall institute administrative and legal actions as provided in section 393-33 to effect recovery of [such] the benefits. All benefits, fines, and penalties recovered under this part shall be deposited to the credit of the state general fund."

SECTION 59. Section 396-20, Hawaii Revised Statutes, is amended to read as follows:

"[[]396-20[]] Hoisting machine operators' certification [revolving fund. (a) There is established in the state treasury a revolving fund to be known as the hoisting machine operators' certification revolving fund into which shall be deposited all fees, penalties, fines, and interest collected from:

(1) Certification of hoisting machine operators;

(2) Interest and investment moneys earned on any moneys in the fund; and

(3) All moneys received for the fund from any source.

The moneys in the fund may be used to carry out the purposes of this section. The director of finance shall disburse the moneys in the fund in accordance with instructions from the director.] ; source of funds; disposition of receipts. (a) All moneys necessary for the department to carry out the purposes of this section shall be allocated by the legislature through appropriations out of the state general fund. The department shall include in its budgetary request for each upcoming fiscal period, the amounts necessary to effectuate the purposes of this section. All fees, penalties, fines, and other moneys received by the department shall be deposited to the credit of the state general fund.

(b) [The fund] Moneys allocated by the legislature may be used for:

(1) Personnel and operating expenses for an executive director for the hoisting machine operators advisory board;

(2) All necessary board costs and reimbursements;

(3) Preparation and dissemination of public information on hoisting machine operators' certification and training;

(4) Preparation of annual reports on certification program activities and accomplishments [and on the fund]; and

(5) Any reimbursements to the state general fund for funds appropriated by the legislature [to establish the revolving fund].

(c) The director shall submit an annual report to the legislature on [the status of the fund, including] expenditures and program results[,] not less than twenty days prior to the convening of each regular session."

SECTION 60. The department of labor and industrial relations is hereby directed to discontinue the operation of the administratively established hurricane Iniki insurance proceeds revolving fund. All unencumbered and unexpended balances remaining in that fund shall be transferred to the credit of the state general fund on July 1, 2002. The department shall include in its budgetary request for each upcoming fiscal period, the amounts necessary to carry out the functions and activities formerly financed by the proceeds of that fund.

PART XII. SPECIAL AND REVOLVING FUNDS UNDER THE

DEPARTMENT OF LAND AND NATURAL RESOURCES

SECTION 61. Section 195D-31, Hawaii Revised Statutes, is amended to read as follows:

"[[]195D-31[] Trust fund. (a) There is established within the state treasury a special fund to be known as the endangered species trust fund to be administered by the department in order to implement the purposes of this chapter.

The fund shall consist of moneys from the following sources:] Endangered species; source of funds; disposition of receipts. (a) All moneys necessary to implement the purposes of this chapter shall be allocated by the legislature through appropriations out of the state general fund. The department shall include in its budgetary request for each upcoming fiscal period, the amounts necessary to effectuate the purposes of this section.

(b) The following moneys shall be deposited to the credit of the state general fund:

(1) Moneys accrued from the sale of retail items officially sponsored by the department [for the fund];

(2) Private contributions for the management and recovery of Hawaii's unique plants and animals;

(3) Fees and assessments charged for the commercial use of public land and waters [and designated for the fund];

(4) Penalties, fines, or auctions resulting from enforcement violations [[]for this chapter[]]; and

(5) [Legislative appropriations.] All other moneys received by the department.

[(b) The fund shall be held separate and apart from all other moneys, funds, and accounts in the state treasury; provided that moneys received as deposits or contributions from private sources shall be deposited and accounted for in accordance with the conditions established by the agencies or persons making the contribution. Earnings on the investment of the assets of the fund shall become a part of the fund. Any balance in the fund at the end of a fiscal year shall be carried forward to the next fiscal year.]"

SECTION 62. Chapter 195F, Hawaii Revised Statutes, is amended as follows:

1. By amending the definition of "fund" in section 195F-2 to read:

""Fund" means the [forest stewardship] state general fund [as established by section 195F-4]."

2. By amending section 195F-3(c) to read:

"(c) The program shall assist in the forest stewardship of public lands and in developing education and training programs for sustainable forestry pursuant to section [195F-4(a)(2).] 195F-4(b)(2)."

3. By amending section 195F-4 to read:

"195F-4 Forest stewardship [fund. (a) There is established a special fund within the state treasury known as the forest stewardship fund which]; source of funds. (a) All moneys necessary to carry out the purposes of this section shall be allocated by the legislature through appropriations out of the state general fund. The department shall include in its budgetary request for each upcoming fiscal period, the amounts necessary to effectuate the purposes of this section. All moneys received by the department shall be deposited to the credit of the state general fund.

(b) Moneys allocated by the legislature shall be used as follows:

(1) Payments shall be made by the board pursuant to agreements entered into with qualified landowners to further the purposes of this chapter;

(2) Moneys collected from the harvest of non-native forest products from forest reserves, from the harvest of native forest products from degraded forests as defined in section 186-5.5, within forest reserves, from forest products found dead and lying on the ground, or from the sale of tree seedlings from the state nurseries, shall be used for the following activities:

(A) Replanting, managing, and maintaining designated timber management areas;

(B) Enhancing the management of public forest reserves with an emphasis on restoring degraded koa forests; and

(C) Developing environmental education and training programs pertaining to sustainable forestry;

provided that the activities described in subparagraphs (B) and (C) may not be funded unless the activities described in approved management plans pertaining to subparagraph (A) are adequately funded; and

(3) Moneys deposited into the fund as authorized by section 247-7 may also be used by the department to administer the program.

[(b) The fund shall consist of moneys received from any public or private sources. The fund shall be held separate and apart from all other moneys, funds, and accounts in the state treasury; provided that any moneys received from the federal government or from private contributions shall be deposited and accounted for in accordance with conditions established by the agencies or persons from whom the moneys are received.

Investment earnings credited to the fund shall become a part of the assets of the fund. Any balance remaining in the fund at the end of any fiscal year shall be carried forward in the fund for the next fiscal year.]"

4. By amending section 195F-6(a) to read:

"(a) [Payments from the forest stewardship] Moneys allocated by the legislature through appropriations out of the state general fund shall not exceed fifty per cent of the total cost of the landowner in developing and implementing an approved management plan. Total payments to any one landowner shall be determined by the board, and the reasonable value of material, goods, and services contributed toward the plan by the landowner shall be included in determining the amount of the landowner's cost. The landowner shall be required to spend private funds before reimbursements are made. In-kind services such as heavy equipment and existing sources of labor may be utilized as a portion of the landowner's contribution in implementing the management plan that is consistent with this chapter."

5. By amending section 195F-6(e) to read:

"(e) The board shall submit annually a detailed report to the governor and legislature that shall:

(1) Identify management objectives that have been completed on private lands resulting from payments made pursuant to section [195F-4(a)(1)] 195F-4(b)(1) and provide an analysis of problems and issues encountered in meeting or failing to meet objectives as set forth in the management plans;

(2) Identify all reforestation, forest management, education, and training objectives that have been completed as a result of any expenditures made pursuant to section [195F-4(a)(2);] 195F-4(b)(2);

(3) [Describe the financial condition of the fund, including] Identify amounts of receipts and expenditures from the previous fiscal year; and

(4) Set forth plans and management objectives for the next fiscal year."

SECTION 63. Section 183-16, Hawaii Revised Statutes, is amended to read as follows:

"183-16 Income from forest reserves. (a) Any moneys accrued from:

(1) The harvest of non-native forest products from forest reserves;

(2) The harvest of native forest products from degraded forests as defined in section 186-5.5, within forest reserves;

(3) The sale of forest products found dead and lying on the ground; or

(4) The sale of tree seedlings from state nurseries;

shall be deposited into the [forest stewardship] state general fund.

(b) Any other moneys accrued from any forest reserve or the products thereof shall be deposited into the state general fund."

SECTION 64. Section 195-9, Hawaii Revised Statutes, is amended to read as follows:

"195-9 Natural area reserve [fund;] and heritage [program; established. (a) There is hereby established in the state treasury a special fund known as the natural area reserve fund] programs; source of funds; disposition of receipts. (a) All funds necessary to implement the purposes of this chapter, including the identification, establishment, and management of natural area reserves, the acquisition of private lands for new natural area reserves, the operation of the heritage program, and the provision of matching funds for the natural area partnership program[. The fund shall be administered by the department.], shall be allocated by the legislature through appropriations out of the state general fund.

(b) [The fund shall consist of moneys] Moneys received from any public or private sources[. The fund shall be held separate and apart from all other moneys, funds, and accounts in the state treasury,] shall be deposited to the credit of the state general fund; except that any moneys received from the federal government or from private contributions shall be deposited and accounted for in accordance with conditions established by the agencies or persons from whom the moneys are received. [Investment earnings credited to the assets of the fund shall become a part of the assets of the fund. Any balance remaining in the fund at the end of any fiscal year shall be carried forward in the fund for the next fiscal year.] The department shall include in its budgetary request for each upcoming fiscal period, the amounts necessary to effectuate the purposes of this section."

SECTION 65. The department of land and natural resources is hereby directed to discontinue the operation of the following administratively created special and revolving funds:

(1) Appraisal fees revolving fund;

(2) Conservation and resources enforcement;

(3) Park development and operation;

(4) Trail and access program fund; and

(5) Water resources.

All unencumbered and unexpended balances remaining in each fund scheduled for repeal in this section shall be transferred to the credit of the state general fund on July 1, 2002. The department shall include in its budgetary request for each upcoming fiscal period, the amounts necessary to carry out the functions and activities formerly financed by the special and revolving funds discontinued under this section.

PART XIII. SPECIAL AND REVOLVING FUNDS UNDER

THE DEPARTMENT OF PUBLIC SAFETY

SECTION 66. Section 329-59, Hawaii Revised Statutes, is amended to read as follows:

"329-59 Controlled substance registration [revolving fund; established. (a) There is established within the state treasury the controlled substance registration revolving fund. The fund shall be expended at the discretion of the director of public safety]; source of funds; disposition of fees. (a) All moneys necessary to carry out the purposes of this section shall be allocated by the legislature through appropriations out of the state general fund. The department shall include in its budgetary request for each upcoming fiscal period, the amounts necessary to effectuate the purposes of this section. Moneys allocated by the legislature shall be used for the purpose of:

(1) Offsetting the cost of the electronic prescription accountability system and the registration and control of the manufacture, distribution, prescription, and dispensation of controlled substances and regulated chemicals listed under section 329-61, within the State; and

(2) Funding positions authorized by the legislature by law.

(b) [The fund shall consist of all moneys derived from fees collected pursuant to sections 329-31 and 329-67 and legislative appropriations.] All fees collected pursuant to sections 329-31 and 329-67 shall be deposited [in the controlled substance registration revolving] to the credit of the state general fund."

SECTION 67. Chapter 351, Hawaii Revised Statutes, is amended as follows:

1. By amending section 351-61 to read:

"351-61 Terms of order. Except as otherwise provided in this chapter, any order for the payment of compensation under this chapter may be made on such terms as the commission deems appropriate. Without limiting the generality of the preceding sentence, the order may provide for apportionment of the compensation, for the holding of the compensation or any part thereof in trust, for the payment of the compensation in a lump sum or periodic installments, and for the payment of compensation for hospital, medical, funeral, or burial expenses directly to the person who has provided such services. All such orders shall contain words clearly informing the claimant that all awards and orders for payments under this chapter are subject to the making of an appropriation by the legislature to pay the claim[, except as otherwise provided in section 351-62.5]."

2. By amending section 351-62.5 to read:

"351-62.5 Crime victim compensation [special fund]; when payments authorized[.]; source of funds; disposition of fees. (a) [There is established a crime victim compensation special fund from which the commission may make payments as provided in subsection (b). The fund shall be administered by the director of public safety for purposes of this chapter. Interest and investment earnings credited to the assets of the fund shall become part of the fund. Any balance remaining in the fund at the end of any fiscal year shall be carried forward for the next fiscal year.] All moneys necessary to carry out the purposes of this section shall be allocated by the legislature through appropriations out of the state general fund. The department of public safety shall include in its budgetary request for each upcoming fiscal period, the amounts necessary to effectuate the purposes of this section.

(b) Where the commission has made an award pursuant to this chapter, the commission shall make the payments to or on behalf of the victim or one or more of the dependents of a deceased victim, or to or for the benefit of other persons who have suffered pecuniary loss or incurred expenses on account of hospital, medical, funeral, or burial expenses as a result of the victim's injury or death. Victims or dependents entitled to receive awards shall be notified of the option to have payments made on their behalf to other designated persons. Payments made pursuant to this section shall not exceed the total amount of the award.

(c) The amount appropriated under section 351-70 shall be redeposited into the state general fund and applied to other payments as authorized by the commission.

(d) [Funds] All funds received pursuant to section 354D-12(b)(1) and all amounts received pursuant to sections 351-35, 351-62.6, 351-63, 706-605, and 853-1 shall be deposited [into the crime victim compensation special] to the credit of the state general fund. Moneys [received] allocated by the legislature shall be used for compensation payments, operating expenses, salaries of positions as authorized by the legislature, and collection of fees. The commission may enter into memorandums of agreement with the judiciary for the collection of fees by the judiciary; provided that no funds shall be deposited by the judiciary into the [crime victim compensation special] state general fund until collected."

3. By amending section 351-62.6(a) to read:

"(a) The court shall impose a compensation fee upon every defendant who has been convicted or who has entered a plea under section 853-1 and who is or will be able to pay the compensation fee. The amount of the compensation fee shall be commensurate with the seriousness of the offense as follows:

(1) Not less than $100 nor more than $500 for a felony;

(2) $50 for a misdemeanor; and

(3) $25 for a petty misdemeanor.

The compensation fee shall be separate from any fine that may be imposed under section 706-640 and shall be in addition to any other disposition under this chapter; provided that the court shall waive the imposition of a compensation fee if the defendant is unable to pay the compensation fee. Moneys from the compensation fees shall be deposited into the [crime victim compensation special] state general fund [under] as provided in section 351-62.5."

4. By amending section 351-64.5(b) to read:

"(b) The person liable shall, in the discretion of the commission, either repay any amount to the [crime victim compensation special] state general fund or have such amount deducted from any future compensation payable to the person under this chapter."

5. By amending section 351-70 to read:

"351-70 Annual report. The commission shall transmit annually to the governor and to the director of public safety, at least thirty days prior to the convening of the legislature a report of its activities under this chapter including a brief description of the facts in each case, and the amount, if any, of compensation awarded, and the names of attorneys and health care providers where they are the applicants. The director of public safety shall, within five days after the opening of the legislative session, transmit the report, together with a tabulation of the total amount of compensation awarded during the prior fiscal year and an estimate of the amount that is reasonably estimated to be required for the next fiscal year, and a legislative bill to appropriate funds for [the] crime victim compensation [special fund] for the next fiscal year. The commission shall provide upon request of the governor, the director of public safety, or the legislature, the relevant data, including the names of all applicants for compensation, under this chapter."

6. By amending section 351-84(b) to read:

"(b) Moneys deposited into the special account shall be used first as provided in section 351-83, if necessary, and then to reimburse the [crime victim compensation special] state general fund for payments made pursuant to this chapter for the crime committed by the convicted person."

SECTION 68. Section 354D-12, Hawaii Revised Statutes, is amended by amending subsection (b) to read as follows:

"(b) Proceeds and wages owed to a qualified, able-bodied inmate from the sale of goods or services that were produced by the qualified, able-bodied inmate under a program authorized by this chapter shall be held in an account maintained by the department and paid:

(1) To the [crime victim compensation special] state general fund on a quarterly basis in amounts representing not less than five per cent nor more than twenty per cent of the earnings of all inmates in the State incarcerated for a violent crime listed in section 351-32; provided that these payments shall be mandatory and shall in no way relate to any claim filed under chapter 351; and provided further that the director shall submit timely annual reports to the legislature and the crime victim compensation commission on the amounts paid pursuant to this paragraph during the previous fiscal year;

(2) To support the qualified, able-bodied inmate's dependents in amounts deemed appropriate by the department after consultation with the department of human services;

(3) Into trust funds that may be established for the qualified, able-bodied inmate and shall be payable upon the inmate's release; and

(4) Into the correctional industries revolving fund, for costs incident to the qualified, able-bodied inmate's confinement in an amount determined by the department, but not to exceed twenty per cent of the proceeds and wages."

SECTION 69. Section 706-605, Hawaii Revised Statutes, is amended by amending subsection (1) to read as follows:

"(1) Except as provided in parts II and IV of this chapter or in section 706-647 and subsections (2) and (6) of this section and subject to the applicable provisions of this Code, the court may sentence a convicted defendant to one or more of the following dispositions:

(a) To be placed on probation as authorized by part II of this chapter;

(b) To pay a fine as authorized by part III and section 706-624 of this chapter;

(c) To be imprisoned for a term as authorized by part IV of this chapter;

(d) To make restitution in an amount the defendant can afford to pay; provided that the court may order any restitution to be paid to victims pursuant to section 706-646 or to the [crime victim compensation special] state general fund in the event that the victim has been given an award for compensation under chapter 351 and, if the court orders, in addition to restitution, payment of fine in accordance with paragraph (b), the payment of restitution and a compensation fee shall have priority over the payment of the fine; payment of restitution shall have priority over payment of a compensation fee; or

(e) To perform services for the community under the supervision of a governmental agency or benevolent or charitable organization or other community service group or appropriate supervisor; provided that the convicted person who performs such services shall not be deemed to be an employee of the governmental agency or assigned work site for any purpose. All persons sentenced to perform community service shall be screened and assessed for appropriate placement by a governmental agency coordinating public service work placement as a condition of sentence."

PART XIV. SPECIAL AND REVOLVING FUNDS UNDER

THE JUDICIARY

SECTION 70. Section 286G-2, Hawaii Revised Statutes, is amended to read as follows:

"286G-2 Driver education and training fund. There is established in the state treasury a special fund to be known as the driver education and training fund. All driver education assessments collected pursuant to this chapter shall be deposited in the driver education and training fund to be expended by the administrative director of the courts for driver education and training programs administered by the judiciary, subject to part III of chapter 37 to the extent that the same applies to appropriations for the judiciary. All unexpended and unencumbered moneys remaining on balance with the fund at the close of each fiscal year which are deemed, by the director of finance, to be in excess of the moneys necessary to carry out the purposes of this chapter over the next following fiscal year shall lapse to the credit of the state general fund."

PART XV. SPECIAL AND REVOLVING FUNDS UNDER

THE UNIVERSITY OF HAWAII

SECTION 71. Chapter 304, Hawaii Revised Statutes, is amended as follows:

1. By amending section 304-8.1 to read:

"304-8.1 Research and training [revolving fund. (a) There is established a University of Hawaii research and training revolving fund into which shall be deposited one hundred per cent of the total amount of]; indirect overhead revenues. (a) All receipts, grants, and other indirect overhead revenues generated by the university from research and training programs[. The board of regents of the University of Hawaii is authorized to expend one hundred per cent of the revenues deposited in the fund for:] shall be deposited to the credit of the state general fund. All moneys necessary to carry out the purposes of this section shall be allocated by the legislature through appropriations out of the state general fund. Moneys allocated by the legislature shall be used for:

(1) Research and training purposes which may result in additional research and training grants and contracts; and

(2) Facilitating research and training at the university[; and

(3) Further deposit into the discoveries and inventions revolving fund and the University of Hawaii housing assistance revolving fund].

The board of regents shall include in its budgetary request for each upcoming fiscal period, the amounts necessary to effectuate the purposes of this section.

(b) The University of Hawaii shall prepare and submit an annual report on the status of [the] research and training [revolving fund] at the university to the legislature twenty days before the convening of each regular session. The annual report shall include but not be limited to a breakdown of travel expenses.

[(c) Notwithstanding sections 304-10, 304-8.92, and 304-8.96 to the contrary, the board of regents or its designee, may establish a separate account within the research and training revolving fund for the purpose of providing advance funding to meet reimbursable costs incurred in connection with federally financed research and training projects. Any reimbursement received as a result of providing advance funding shall be deposited into the research and training revolving fund to be used for the purpose of meeting reimbursable costs incurred in connection with federally financed projects.

(d) Revenues deposited into the fund shall not be used as a basis for reducing any current or future budget request or allotment to the University of Hawaii unless the university requests such a reduction.]"

2. By amending section 304-8.5 to read:

"304-8.5 Animal research farm, Waialee, Oahu [revolving fund. There is established a revolving fund]; disposition of revenues; source of funds. (a) All moneys necessary for animal research and related services and supplies for the animal research farm, Waialee, Oahu, operated by the college of tropical agriculture and human resources, University of Hawaii, [into which shall be deposited the receipts from] shall be allocated by the legislature through appropriations out of the state general fund. The university shall include in its budgetary request for each upcoming fiscal period, the amounts necessary to effectuate the purposes of this section. All moneys received by the university from fees realized from the sale of livestock, services, and supplies[. Funds deposited in this account shall be expended for animal research, and services and supplies related thereto.] shall be deposited to the credit of the state general fund."

3. By amending section 304-8.7 to read:

"304-8.7 Intercollegiate athletic programs at the University of Hawaii at Manoa [intercollegiate athletics revolving fund] and the University of Hawaii at Hilo [intercollegiate athletics revolving fund. Notwithstanding any other law to the contrary, there are established revolving funds for the intercollegiate athletic programs of the University of Hawaii at Manoa and the University of Hawaii at Hilo, which shall be used to receive, deposit, disburse, and account for funds from the activities of the intercollegiate athletic programs.]; establishment of charges; disposition of receipts. (a) All moneys to carry out the intercollegiate programs of the University of Hawaii at Manoa and the University of Hawaii at Hilo shall be allocated by the legislature through appropriations made out of the state general fund. The university may establish appropriate charges for activities related to its athletic programs and the use of its athletic facilities, the proceeds from which shall be deposited [into these revolving funds.

The university shall maintain the financial integrity and viability of these revolving funds, including the maintenance of an adequate reserve to cope with the various factors that impact the revenue structure of an intercollegiate athletic program.] to the credit of the state general fund.

(b) The university shall include in its budgetary request for each upcoming fiscal period, the amounts necessary to carry out the purposes of this section."

4. By amending section 304-8.8 to read:

"[[]304-8.8[]] University of Hawaii at Manoa malpractice [special fund. There is established a special fund to be known as the University of Hawaii at Manoa malpractice special fund, which shall be used for] defense and settlement costs; source of funds; establishment and disposition of fees. (a) All moneys necessary to cover costs arising from the defense and settlement of claims against the university, its students, or its faculty for professional malpractice in programs which provide professional services, including [but not limited to] clinical medicine, nursing, and law[; provided that this fund shall not be used to fund settlements funded through professional liability insurance or through special appropriations of the legislature.], shall be allocated by the legislature through appropriations made out of the state general fund. The university shall include in its budgetary request for each upcoming fiscal period, the amounts necessary to carry out the purposes of this section. These moneys shall not be used to fund settlements funded through professional liability insurance.

(b) The university may establish appropriate charges and fees to individuals who are provided professional liability coverage under this section, the proceeds of which shall be deposited [in accounts and credited to the University of Hawaii at Manoa malpractice special] to the credit of the state general fund."

5. By amending section 304-8.91 to read:

"304-8.91 Child care programs [revolving fund. There is established a child care programs revolving fund] and centers; source of operating funds; establishment and disposition of fees. (a) All moneys necessary for the operation of child care programs and the construction and renovation of child care centers established by the University of Hawaii[.] shall be allocated by the legislature through appropriations out of the state general fund. The university shall include in its budgetary request for each upcoming fiscal period, the amounts necessary to carry out the purposes of this section.

(b) Fees charged for child care at child care programs, proceeds from donations to the university for child care programs, and proceeds from loans or other instruments of indebtedness for the construction or renovation of child care centers, shall be deposited [into the revolving] to the credit of the state general fund. [Expenditures from the revolving fund shall be made for the operation of child care programs and payment of principal and interest on obligations incurred for the construction or renovation of child care centers.] All proceeds from loans or other instruments of indebtedness for the construction or renovation of child care centers shall be administered in accordance with section 39-62."

6. By amending section 304-8.945 to read:

"[[]304-8.945 Conference center [revolving fund] program for the University of Hawaii, Hilo campus[.]]; source of funds; disposition of fees. (a) As used in this section, "dean" means the dean of the college of continuing education and community service. [There is established a revolving fund]

All moneys necessary for the conference center program in the college of continuing education and community service of the University of Hawaii, Hilo campus[.] shall be allocated by the legislature through appropriations out of the state general fund. The university shall include in its budgetary request for each upcoming fiscal period, the amounts necessary to carry out the purposes of this section.

(b) All fees, charges, and other moneys collected in conjunction with the conference center program shall be deposited [in the revolving] to the credit of the state general fund. The dean is authorized to expend funds [from the revolving fund] allocated by the legislature for all costs associated with conducting conferences, seminars, and courses by the conference center program, including [but not limited to,] expenses for honoraria, hotel and room rentals, food and refreshment, printing and mailing, airfare and per diem, leis, rental of audio-visual equipment, and conference supplies and materials, without regard to sections 103-22 and 103-42.

[(b)] (c) The dean shall prepare an annual report to the legislature accounting for all [income and] expenditures [of the revolving fund.] made pursuant to this section during the previous fiscal year."

7. By amending section 304-8.95 to read:

"304-8.95 Hawaii opportunity program in education [endowment special fund]. (a) There is created [in the treasury of the State,] the Hawaii opportunity program in education (HOPE) [endowment special fund. Expenditures from the Hawaii opportunity program in education endowment special fund shall be limited to:

(1) Providing funds] to award scholarships, stipends, and mandatory fees for the University of Hawaii to financially needy students with priority given to students from ethnic groups which are under-represented in the student population of the University of Hawaii[; and

(2) Pay all costs incident to the prudent investment of the principal and income deposited in the endowment special fund.

Appropriations or authorizations from the Hawaii opportunity program in education endowment special fund shall be expended by the board of regents]. All moneys necessary to carry out the Hawaii opportunity program in education shall be allocated by the legislature out of appropriations from the general fund. The university shall include in its budgetary request for each upcoming fiscal period, the amounts necessary to carry out the purposes of this section.

(b) [The endowment special fund shall be administered by the board of regents, which shall also be responsible for investing the principal and income deposited therein.

(c)] Scholarship, stipend, and mandatory fee awards for the University of Hawaii, funded by [sums from the Hawaii opportunity program in education endowment special fund,] legislative appropriations under subsection (a), shall be made beginning in the fiscal year 1998, in accordance with rules adopted by the board of regents pursuant to chapter 91. The rules shall include criteria for determining under-representation of particular groups in the student population of the university and financial need. [Scholarship, stipend, and mandatory fee awards shall be made from appropriations or authorizations from the Hawaii opportunity program in education endowment special fund, and only earnings from the investment of principal and income on deposit in the endowment special fund received after June 30, 1997, shall be available for such appropriations or authorizations. The total sum appropriated or authorized for scholarship, stipend, and mandatory fee awards in any fiscal year shall not exceed ten per cent of the amount deposited in the endowment special fund on June 30, 1997, and in no event shall the total sum appropriated or authorized out of the special fund for scholarship awards in any fiscal year cause the amount deposited in the Hawaii opportunity program in education endowment special fund to be less than the amount on deposit in the special fund on June 30, 1997.

(d) Notwithstanding any law to the contrary,] (c) All revenues derived from private organizations and individuals [may be] received by the Hawaii opportunity program in education [endowment special fund and may be managed and invested pursuant to this section.] shall be deposited to the credit of the state general fund."

8. By amending section 304-8.956 to read:

"[[]304-8.956[]] University of Hawaii auxiliary enterprises [special fund. (a) There is established the University of Hawaii auxiliary enterprises special fund. Except as otherwise provided by law, all]; source of funds; disposition of fees. (a) All moneys necessary to carry out the purposes of this section shall be allocated by the legislature out of appropriations from the general fund. The university shall include in its budgetary request for each upcoming fiscal period, the amounts necessary to carry out the purposes of this section. All fees, charges, and other revenues, including interest, derived and collected from the university's provision of auxiliary services shall be deposited [into the University of Hawaii auxiliary enterprises special] to the credit of the state general fund [and]. Moneys allocated by the legislature for the purposes of this section shall be expended solely for the costs of providing these services. The university may establish and collect fees and charges for the costs of providing these services. [The university also may transfer other funds into the University of Hawaii auxiliary enterprises special fund to offset the cost of these services. The university may establish accounts under the University of Hawaii auxiliary enterprises special fund to facilitate the administration of this fund among the various campuses and operating units of the University of Hawaii system. All expenditures from this fund shall be subject to legislative appropriation.]

(b) As used in this section, "auxiliary services" means those services provided by the university to students, faculty, staff, and others that are ancillary to, but facilitate the instruction, research, and public service missions of the university, and may include food services, transportation services, counseling and guidance, and laboratory animal services."

9. By amending section 304-8.97 to read:

"304-8.97 University of Hawaii alumni [revolving fund. There is established a revolving fund to be known as the University of Hawaii alumni revolving fund, into which shall be deposited]; source of funds; disposition of proceeds. (a) All funds and proceeds received by the university from alumni activities and donations from alumni[. Funds deposited into this account] shall be deposited to the credit of the state general fund. All moneys necessary to carry out the purposes of this section shall be allocated by the legislature out of appropriations from the general fund. The university shall include in its budgetary request for each upcoming fiscal period, the amounts necessary to carry out the purposes of this section.

(b) Moneys allocated by the legislature for the purposes of this section may be expended by the university for all costs associated with conducting alumni affairs activities and programs for the university system, including [but not limited to] expenses for honoraria, hotel and room rentals, food and refreshment, printing and mailing, banners and signs, plaques and awards, airfare and per diem, leis, rental of audio visual, musical and stage equipment, and activity supplies and materials, without regard to statutory competitive bidding requirements."

10. By amending section 304-16.5(b) to read:

"(b) The board of regents, or its designated representatives, is authorized to grant, modify, or suspend tuition waivers. The board of regents shall provide a report and make recommendations as appropriate to the legislature on all tuition waivers no later than twenty days prior to the convening of each regular session. This report shall include but not be limited to the number of tuition waivers and scholarships, stipends, and mandatory fees granted to financially needy students from ethnic groups that are under-represented in the student population of the University of Hawaii through the Hawaii opportunity program in education [endowment special fund]."

11. By amending section 304-68.5 to read:

"[[]304-68.5[]] International exchange of health care tourism [revolving fund. (a) There is established a revolving fund] program; source of funds; disposition of receipts. (a) All moneys necessary for the international exchange of health care tourism program [into which shall be deposited all] shall be allocated by the legislature out of appropriations from the general fund. The university shall include in its budgetary request for each upcoming fiscal period, the amounts necessary to carry out the purposes of this section. All donations, gifts, contributions, [legislative appropriations], and moneys generated by the program through education, training, and research contracts and grants[. Moneys deposited into this fund for the school of medicine and the school of nursing shall be divided into separate accounts for each school, provided that moneys not designated for use by a particular school shall be divided equally.] shall be deposited to the credit of the state general fund. Moneys allocated by the legislature shall be expended [from each account] by the school of medicine and the school of nursing[,] for student aid, training projects, teaching, supplies, services, and activities related to the development and promotion of the health-related tourism education program.

(b) The deans of the school of medicine and the school of nursing shall jointly prepare and submit an annual report to the legislature accounting for all [income and] expenditures [of the revolving fund.

(c) All unexpended and unencumbered moneys appropriated by the legislature remaining in the fund at the close of each fiscal year which are deemed, by the director of finance, to be in excess of the moneys necessary to carry out the purposes of this section over the next following fiscal year shall lapse to the credit of the state general fund.] made pursuant to this section during the previous fiscal year."

SECTION 72. The University of Hawaii is hereby directed to discontinue the operation of the following administratively created special and revolving funds:

(1) The University of Hawaii Manoa campus center for student development special fund; and

(2) The University of Hawaii Manoa campus laboratory animal services special fund.

All unencumbered and unexpended balances remaining in each fund scheduled for repeal in this section shall be transferred to the credit of the state general fund prior to July 1, 2002. The university shall include in its budgetary request for each upcoming fiscal period, the amounts necessary to carry out the functions and activities formerly financed by the special and revolving funds discontinued under this section.

SECTION 73. All moneys for the operation, administration, and payment of personnel costs for the University of Hawaii press shall be paid exclusively out of the revenues generated by the University of Hawaii press revolving fund.

PART XVI. AMENDMENTS TO GENERAL LAWS

RELATING TO SPECIAL AND REVOLVING FUNDS

SECTION 74. Chapter 37, Hawaii Revised Statutes, is amended by adding a new section to be appropriately designated and to read as follows:

"37-   Special and revolving funds; automatic repeal. (a) Unless otherwise provided by the legislature in any law authorizing the establishment of any special or revolving fund as the means of financing:

(1) All special and revolving funds in existence as of June 30, 2002, shall be repealed on June 30, 2007; and

(2) All special and revolving funds created on or after July 1, 2002, shall have an effective duration of not more than five consecutive fiscal years;

provided that prior to the repeal of any special or revolving fund, the administrator of the fund shall deposit to the credit of the state general fund, all unencumbered and unexpended balances remaining in the fund.

(b) Prior to the regular session immediately preceding the date of the repeal of any special or revolving fund, the administrator of the fund shall submit to the legislature, the budgetary request necessary to carry out the functions, duties, and the operations of the program, activity, or undertaking previously financed under the proceeds of the special or revolving fund scheduled for repeal."

SECTION 75. Section 23-11, Hawaii Revised Statutes, is amended to read as follows:

"[[]23-11[]] New special or revolving funds. (a) Within five days after the deadline for the introduction of bills in each legislative session, the clerks of each house of the legislature shall transmit, to the legislative auditor for analysis, copies of all legislative bills that were introduced in their respective houses during that session that propose to establish new special or revolving funds.

(b) The criteria to be used by the auditor in analyzing each legislative bill shall include, but not be limited to, the extent to which the fund:

(1) Serves the purpose for which it is being created; and

(2) Reflects a clear link between the benefit sought and [changes] charges made upon the users or beneficiaries of the program, as opposed to serving primarily as a means to provide the program or users with an automatic means of support which is removed from the normal budget and appropriations process.

Each analysis shall set forth the probable effects of the proposed fund and shall also assess alternative forms of funding.

(c) No later than thirty days prior to the adjournment sine die of each legislative session, the legislative auditor shall submit the analysis of each transmitted legislative bill to each house of the legislature."

SECTION 76. Chapter 36, Hawaii Revised Statutes, is amended as follows:

1. By amending section 36-27 to read:

"36-27 Transfers from special funds for central service expenses. Except as provided in this section, and notwithstanding any other law to the contrary, from time to time, the director of finance, for the purpose of defraying the prorated estimate of central service expenses of government in relation to all special funds, except the:

[(1) Special out-of-school time instructional program fund under section 302A-1310;

(2)] (1) School cafeteria special funds of the department of education;

[(3)] (2) Special funds of the University of Hawaii;

[(4) State educational facilities improvement special fund;

(5) Convention center capital and operations special fund under section 206X-10.5;

(6)] (3) Special funds established by section 206E-6;

[(7) Housing loan program revenue bond special fund;

(8)] (4) Housing project bond special fund;

[(9) Aloha Tower fund created by section 206J-17;

(10)] (5) Domestic violence prevention special fund under section 321-1.3;

[(11)] (6) Spouse and child abuse special account under section 346-7.5;

[(12)] (7) Spouse and child abuse special account under section 601-3.6;

[(13)] (8) Funds of the employees' retirement system created by section 88-109;

[(14)] (9) Unemployment compensation fund established under section 383-121;

[(15)] (10) Hawaii hurricane relief fund established under chapter 431P;

[(16)] (11) Hawaii health systems corporation special funds;

[(17)] (12) Boiler and elevator safety revolving fund established under section 397-5.5;

[(18)] (13) Tourism special fund established under section 201B-11;

[(19)] (14) Department of commerce and consumer affairs' special funds;

[(20)] (15) Compliance resolution fund established under section 26-9;

[(21)] (16) Universal service fund established under chapter 269;

[(22)] (17) Integrated tax information management systems special fund under section 231-3.2;

[(23)] (18) Insurance regulation fund under section 431:2-215;

[(24)] (19) Hawaii tobacco settlement special fund under section 328L-2;

[(25) Emergency budget and reserve fund under section 328L-3;

(26)] (20) Probation services special fund under section 706-649;

[(27)] (21) High technology special fund under section 206M-15.5;

[(28)] (22) Public schools special fees and charges fund under section 302A-1130(f);

[(29)] (23) Cigarette tax stamp enforcement special fund established by section 28-14;

[(30)] (24) Cigarette tax stamp administrative special fund established by section 245-41.5; and

[(31)] (25) Tobacco enforcement special fund established by section 28-15;

shall deduct five per cent of all receipts of all other special funds, which deduction shall be transferred to the general fund of the State and become general realizations of the State. All officers of the State and other persons having power to allocate or disburse any special funds shall cooperate with the director in effecting these transfers. To determine the proper revenue base upon which the central service assessment is to be calculated, the director shall adopt rules pursuant to chapter 91 for the purpose of suspending or limiting the application of the central service assessment of any fund. No later than twenty days prior to the convening of each regular session of the legislature, the director shall report all central service assessments made during the preceding fiscal year."

2. By amending section 36-30(a) to read:

"(a) Each special fund, except the:

(1) Transportation use special fund established by section 261D-1;

[(2) Special out-of-school time instructional program fund under section 302A-1310;

(3)] (2) School cafeteria special funds of the department of education;

[(4)] (3) Special funds of the University of Hawaii;

[(5) State educational facilities improvement special fund;

(6)] (4) Special funds established by section 206E-6;

[(7) Aloha Tower fund created by section 206J-17;

(8)] (5) Domestic violence prevention special fund under section 321-1.3;

[(9)] (6) Spouse and child abuse special account under section 346-7.5;

[(10)] (7) Spouse and child abuse special account under section 601-3.6;

[(11)] (8) Funds of the employees' retirement system created by section 88-109;

[(12)] (9) Unemployment compensation fund established under section 383-121;

[(13)] (10) Hawaii hurricane relief fund established under chapter 431P;

[(14) Convention center capital and operations special fund established under section 206X-10.5;

(15)] (11) Hawaii health systems corporation special funds;

[(16)] (12) Tourism special fund established under section 201B-11;

[(17)] (13) Compliance resolution fund established under section 26-9;

[(18)] (14) Universal service fund established under chapter 269;

[(19)] (15) Integrated tax information management systems special fund under section 231-3.2;

[(20)] (16) Insurance regulation fund under section 431:2-215;

[(21)] (17) Hawaii tobacco settlement special fund under section 328L-2;

[(22) Emergency and budget reserve fund under section 328L-3;

(23)] (18) Probation services special fund under section 706-649;

[(24)] (19) High technology special fund under section 206M-15.5;

[(25)] (20) Public schools special fees and charges fund under section 302A-1130(f);

[(26)] (21) Cigarette tax stamp enforcement special fund established by section 28-14;

[(27)] (22) Cigarette tax stamp administrative special fund established by section 245-41.5; and

[(28)] (23) Tobacco enforcement special fund established by section 28-15;

shall be responsible for its pro rata share of the administrative expenses incurred by the department responsible for the operations supported by the special fund concerned."

SECTION 77. Chapter 37, Hawaii Revised Statutes, is amended by adding a new section to be appropriately designated and to read as follows:

"37- Revolving and special funds; limitations on use. Notwithstanding any law to the contrary:

(1) A revolving fund may be used only when there exists a clear link between the program and the sources of revenue to be dedicated toward its support, and only when the use of a revolving fund would be essential to the successful operation of the program; and

(2) A special fund may be used only when there exists a clear link between the program and the sources of revenue to be dedicated toward its support, and only when the use of a special fund would be essential to the successful operation of the program."

SECTION 78. On July 1, 2002, the director of finance shall transfer the following sums to the state general fund from the corresponding sources identified:

(1) State motor pool revolving fund, section 105-11, Hawaii Revised Statutes: $__________;

(2) Agricultural loan reserve fund, section 155-14, Hawaii Revised Statutes: $__________;

(3) Agricultural loan revolving fund, section 155-14, Hawaii Revised Statutes: $__________;

(4) Dwelling unit revolving fund, section 201G-411, Hawaii Revised Statutes: $__________;

(5) Rental assistance revolving fund, section 201G-223, Hawaii Revised Statutes: $__________;

(6) State disaster revolving loan fund, section 209-34, Hawaii Revised Statutes: $__________;

(7) Hawaii innovation development fund, section 211E-2, Hawaii Revised Statutes: $__________;

(8) Driver education and training fund, section 286G-2, Hawaii Revised Statutes: $__________;

(9) School special fees special fund, section 302A-1130, Hawaii Revised Statutes: $__________;

(10) Research and training revolving fund, section 304-8.1, Hawaii Revised Statutes: $__________;

(11) Libraries special fund, section 312-3.6, Hawaii Revised Statutes: $__________; and

(12) Special fund for disability benefits, section 392-61, Hawaii Revised Statutes: $__________.

SECTION 79. On July 1, 2002, the director of finance shall transfer to the credit of the state general fund all unexpended or unencumbered balances remaining in any special or revolving fund scheduled for repeal on July 1, 2002, under this Act.

SECTION 80. If any provision of this Act, or the application thereof to any person or circumstance is held invalid, the invalidity does not affect other provisions or applications of the Act, which can be given effect without the invalid provision or application, and to this end the provisions of this Act are severable.

SECTION 81. Statutory material to be repealed is bracketed and stricken. New statutory material is underscored.

SECTION 82. This Act shall take effect on July 1, 2002.

INTRODUCED BY:

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