Report Title:

Appropriation; Hurricane Reserve Trust Fund

Description:

Restores $29 million to the Hurricane Reserve Trust Fund.

HOUSE OF REPRESENTATIVES

H.B. NO.

591

TWENTY-SECOND LEGISLATURE, 2003

 

STATE OF HAWAII

 


 

A BILL FOR AN ACT

 

relating to the hurricane reserve trust fund.

 

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

SECTION 1. The terrorist attacks of September 11, 2001, had devastating consequences for an already ailing Hawaii economy. The unprecedented grounding of all aircraft in the United States in the days immediately after the attack and the subsequent drop in visitor arrivals to Hawaii effectively destroyed any momentum Hawaii's economy had towards recovery. With increased numbers of unemployed individuals and decreased business activity due to the severe decline in tourism, Hawaii faced a $300,000,000 budget shortfall. Faced with the challenge of having to balance the budget while trying to preserve the most essential services, including services for the most vulnerable and needy of Hawaii's citizenry, the legislature passed Act 179, Session Laws of Hawaii 2002.

Act 179, in part, appropriated the sum of $29,000,000 in interest earned from the principal in the hurricane reserve trust fund (HRTF) which was established after Hurricane Iniki devastated Kauai and the leeward coast of Oahu in September, 1992. The HRTF was originally created to provide hurricane insurance coverage to Hawaii homeowners during a period when private insurance was unavailable or prohibitively expensive. Since private insurers reentered the market and hurricane insurance was once again available at reasonable prices, the HRTF remained unused and the legislature found it necessary to make the best possible use of all existing resources, including the HRTF.

However, the legislature finds that the HRTF remains capable of serving a vital purpose in protecting the state and its citizens from future hurricanes, especially if, as was the case in 1992, private insurers fail to renew existing homeowner hurricane insurance policies and discontinue the issuance of new homeowner policies which include hurricane insurance. Insurance companies may decide to reinstate this type of policy if another catastrophic hurricane such as Iniki were to strike Hawaii, or if worldwide events caused unforeseen economic consequences for insurance providers.

As noted by the department of commerce and consumer affairs, it is not a question of "if," but "when" the next hurricane will occur. The legislature concurs with this logic given the susceptibility of Hawaii to hurricanes, tropical storms, and strong winds.

Since early economic predictions from the state's leading economists look promising and it appears that a gradual economic recovery is occurring, the legislature finds that the necessity of transferring the interest received from the principal in the HRTF has waned and that a more prudent approach is to transfer moneys back into the HRTF.

Upon further consideration of its actions taken in 2002, the legislature finds and concludes that the HRTF needs to be preserved and strengthened, and that the funds that were removed from the HRTF in 2002 should be restored.

SECTION 2. There is appropriated out of the general revenues of the State of Hawaii the sum of $29,000,000 or so much thereof as may be necessary for fiscal year 2003 – 2004 to be deposited into the hurricane reserve trust fund.

SECTION 3. This Act shall take effect on July 1, 2003.

INTRODUCED BY:

_____________________________