Report Title:

Funding; education

Description:

Creates a dedicated source of funding for education by dedicating personal income tax revenues for education.

HOUSE OF REPRESENTATIVES

H.B. NO.

499

TWENTY-SECOND LEGISLATURE, 2003

 

STATE OF HAWAII

 


 

A BILL FOR AN ACT

 

relating to taxation.

 

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

SECTION 1. The legislature finds that Hawaii is unique in having no dedicated revenue stream to finance public education. The practice of annual legislative determination of the amount of general funds public schools can claim has major disadvantages. First, annual determinations make it impossible for schools to rationally plan budgets. Long term planning for programs and innovations are useless if there is a threat of a lack of funding every year. Second, annual determinations make education compete annually with other pressing needs or popular proposals that draw legislative attention. These situations make it difficult for legislators to properly prioritize the funding of public education.

The purpose of this Act is to create a dedicated revenue stream for public education by dedicating personal income tax revenue to the basic financing of public education. This proposal approximately mirrors what is a legislative and economic reality. The state department of taxation collected $1,071,590,823 in personal income taxes in fiscal year 2002, $1,104,819,257 in fiscal year 2001, and $1,064,556,365 in fiscal year 2000. The legislature appropriated $1,276,260,153 in general funds to education programs in fiscal year 2002, $1,090,955,086 in fiscal year 2001, and $824,892,496 in fiscal year 2000. Although not an exact fit, dedicating personal income tax revenues as minimal funding for public education would seem to form a base funding level that would allow for improved planning and budgeting.

SECTION 2. Section 235-119, Hawaii Revised Statutes, is amended to read as follows:

"§235-119 Taxes, state realizations. All income taxes shall be for the use of the State and shall be paid into the state treasury at such times as the director of finance shall direct, except for income taxes imposed by Part III of this chapter. Income taxes imposed by part III of this chapter shall be deposited into the Dedicated Education Revenue special fund."

SECTION 3. Chapter 302A, Hawaii Revised Statutes, is amended by adding a new section to be appropriately designated and to read as follows:

"§302A- Dedicated Education Revenue special fund. (a) There is established the Dedicated Education Revenue special fund to be administered by the department of education. The fund shall consist of:

(1) Income taxes imposed by Part III of chapter 235; and

(2) Supplementary funds appropriated by the legislature for the purposes of this chapter.

(b) The fund shall be used for the purpose of funding local school boards per the formulae developed by the state superintendent of education and the state board of education to the greatest extent possible, then department expenses.

(c) In administering the fund, the department shall maintain records of all expenditures and disbursements made from the fund.

(d) The department shall submit to the governor and the legislature an annual report on the activities under the fund no later than twenty days prior to the convening of each regular session.

(e) The department may adopt rules under chapter 91 necessary to carry out this section."

SECTION 4. Section 36-27, Hawaii Revised Statutes, is amended to read as follows:

"§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) School cafeteria special funds of the department of education;

(3) Special funds of the University of Hawaii;

(4) State educational facilities improvement special fund;

(5) Convention center enterprise special fund under section 201B-8;

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

(7) Housing loan program revenue bond special fund;

(8) Housing project bond special fund;

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

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

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

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

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

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

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

(16) Hawaii health systems corporation special funds;

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

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

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

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

(21) Universal service fund established under chapter 269;

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

(23) Hawaii tobacco settlement special fund under section 328L-2;

(24) Emergency and budget reserve fund under section 328L-3;

(25) Probation services special fund under section 706-649;

(26) High technology special fund under section 206M-15.5;

(27) Public schools special fees and charges fund under section 302A-1130(f);

(28) Cigarette tax stamp enforcement special fund established by section 28-14;

(29) Cigarette tax stamp administrative special fund established by section 245-41.5;

(30) Tobacco enforcement special fund established by section 28-15;

(31) Sport fish special fund under section 187A-9.5;

(32) Neurotrauma special fund under section 321H–4;

(33) Deposit beverage container deposit special fund under section 342G-104; [and]

(34) Glass advance disposal fee special fund established by section 342G-82; and

(35) Dedicated Education Revenue special fund established by section 302A-

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. "

SECTION 5. Section 36-30, Hawaii Revised Statutes, is amended by amending subsection (a) to read as follows:

"§36-30 Special fund reimbursements for departmental administrative expenses. (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) School cafeteria special funds of the department of education;

(4) Special funds of the University of Hawaii;

(5) State educational facilities improvement special fund;

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

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

(8) Domestic violence prevention special fund under section 321-1.3;

(9) Spouse and child abuse special account under section 346-7.5;

(10) Spouse and child abuse special account under section 601-3.6;

(11) Funds of the employees' retirement system created by section 88-109;

(12) Unemployment compensation fund established under section 383-121;

(13) Hawaii hurricane relief fund established under chapter 431P;

(14) Convention center enterprise special fund established under section 201B-8;

(15) Hawaii health systems corporation special funds;

(16) Tourism special fund established under section 201B-11;

(17) Compliance resolution fund established under section 26-9;

(18) Universal service fund established under chapter 269;

(19) Integrated tax information management systems special fund under section 231-3.2;

(20) Hawaii tobacco settlement special fund under section 328L-2;

(21) Emergency and budget reserve fund under section 328L-3;

(22) Probation services special fund under section 706-649;

(23) High technology special fund under section 206M-15.5;

(24) Public schools special fees and charges fund under section 302A-1130(f);

(25) Cigarette tax stamp enforcement special fund established by section 28-14;

(26) Cigarette tax stamp administrative special fund established by section 245-41.5;

(27) Tobacco enforcement special fund established by section 28-15;

(28) Sport fish special fund under section 187A-9.5; [and]

(29) Neurotrauma special fund under section 321H-4; and

(30) Dedicated Education Revenue special fund established by section 302A-

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

SECTION 7. This Act shall take effect on July 1, 2004.

 

INTRODUCED BY:

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