THE SENATE

S.B. NO.

2411

TWENTY-SEVENTH LEGISLATURE, 2014

 

STATE OF HAWAII

 

 

 

 

 

 

A BILL FOR AN ACT

 

 

relating to subsidies.

 

 

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

 


     SECTION 1.  Article VII, section 4, of the State Constitution provides in part:  "No grant of public money or property shall be made except pursuant to standards provided by law."  Chapters 6E, 42F, 103F, 304A, and 383, Hawaii Revised Statutes, implements this constitutional requirement by establishing standards and criteria for the award of a grant, as well as subsidy, to a private organization or individual.

     No substantive difference exists between a "grant" and "subsidy" in the Hawaii Revised Statutes and the state constitution does not require the establishment of standards for the grant of a "subsidy".  Therefore, the legislature finds that the term "subsidy" is not necessary.

     The purpose of this Act is repeal references to "subsidy" or "subsidies" as a type of funding award that may be made to a private organization or individual for a public purpose.

     SECTION 2.  Section 6E-35, Hawaii Revised Statutes, is amended by amending subsection (c) to read as follows:

     "(c)  To receive state funds, the State of Hawaii Museum of Monarchy History shall:

     (1)  Be licensed or accredited, in accordance with federal, state, or county statutes, rules, or ordinances, to conduct the activities or provide the services for which funds are appropriated;

     (2)  Comply with all applicable federal and state laws prohibiting discrimination against any person on the basis of race, color, national origin, religion, creed, sex, age, sexual orientation, or disability;

     (3)  Agree not to use the funds for entertainment or lobbying activities;

     (4)  Be incorporated under the laws of the State;

     (5)  Have bylaws or policies that describe the manner in which the activities or services for which a grant [or subsidy] is awarded shall be conducted or provided;

     (6)  Have been determined and designated to be a tax-exempt organization by the Internal Revenue Service; and

     (7)  Have a governing board whose members shall have no material conflict of interest and serve without compensation."

     SECTION 3.  Section 42F-101, Hawaii Revised Statutes, is amended as follows:

     1.  By amending the definition of "recipient" to read:

     ""Recipient" means any organization or person receiving a grant [or subsidy]."

     2.  By repealing the definition of "subsidy".

     [""Subsidy" means an award of state funds by the legislature, by an appropriation to a recipient specified in the appropriation, to reduce the costs incurred by the organization or individual in providing a service available to some or all members of the public."]

     SECTION 4.  Section 42F-102, Hawaii Revised Statutes, is amended to read as follows:

     "[[]§42F-102[]]  Applications for grants [and subsidies].  Requests for grants [and subsidies] shall be submitted to the appropriate standing committees of the legislature at the start of each regular session of the legislature.  Each request shall state:

     (1)  The name of the requesting organization[;] or individual;

     (2)  The public purpose for the grant [or subsidy];

     (3)  The services to be supported by the grant [or subsidy];

     (4)  The target group; and

     (5)  The cost of the grant [or subsidy] and the budget."

     SECTION 5.  Section 42F-103, Hawaii Revised Statutes, is amended to read as follows:

     "§42F-103  Standards for the award of grants [and subsidies].  (a)  Grants [and subsidies] shall be awarded only to individuals who, and organizations that:

     (1)  Are licensed or accredited, in accordance with federal, state, or county statutes, rules, or ordinances, to conduct the activities or provide the services for which a grant [or subsidy] is awarded;

     (2)  Comply with all applicable federal and state laws prohibiting discrimination against any person on the basis of race, color, national origin, religion, creed, sex, age, sexual orientation, or disability;

     (3)  Agree not to use state funds for entertainment or lobbying activities; and

     (4)  Allow the state agency to which funds for the grant [or subsidy] were appropriated for expenditure, legislative committees and their staff, and the auditor full access to their records, reports, files, and other related documents and information for purposes of monitoring, measuring the effectiveness, and ensuring the proper expenditure of the grant [or subsidy].

     (b)  In addition, a grant [or subsidy] may be made to an organization only if the organization:

     (1)  Is incorporated under the laws of the State; and

     (2)  Has bylaws or policies that describe the manner in which the activities or services for which a grant [or subsidy] is awarded shall be conducted or provided.

     (c)  Further, a grant [or subsidy] may be awarded to a nonprofit organization only if the organization:

     (1)  Has been determined and designated to be a nonprofit organization by the Internal Revenue Service; and

     (2)  Has a governing board whose members have no material conflict of interest and serve without compensation.

     (d)  If a grant [or subsidy] is used by an organization for the acquisition of land, when the organization discontinues the activities or services on the land acquired for which the grant [or subsidy] was awarded and disposes of the land in fee simple or by lease, the organization shall negotiate with the expending agency for a lump sum or installment repayment to the State of the amount of the grant [or subsidy] used for the acquisition of the land.  This restriction shall be registered, recorded, and indexed in the bureau of conveyances or with the assistant registrar of the land court as an encumbrance on the property.  Amounts received from the repayment of a grant [or subsidy] under this subsection shall be deposited into the general fund."

     SECTION 6.  Section 42F-104, Hawaii Revised Statutes, is amended to read as follows:

     "[[]§42F-104[]]  Contracts for grants [and subsidies].  An appropriation for a grant [or subsidy] shall be disbursed by a contract between the state agency designated the expending agency for the appropriation by the legislature, and the recipient of the grant [or subsidy].  The contract shall be effective as of the first day of the fiscal year for which the funds for the grant [or subsidy] are appropriated, provided that up to one-fourth of the total amount appropriated may be disbursed prior to the execution of the contract."

     SECTION 7.  Section 42F-105, Hawaii Revised Statutes, is amended to read as follows:

     "[[]§42F-105[]]  Allotment.  Contracts to disburse and appropriations for grants [and subsidies] shall be subject to the allotment system generally applicable to all appropriations made by the legislature."

     SECTION 8.  Section 42F-106, Hawaii Revised Statutes, is amended to read as follows:

     "[[]§42F-106[]]  Monitoring and evaluation.  Every grant [or subsidy] shall be monitored by the expending agency to ensure compliance with this chapter and the public purpose and legislative intent of the grant [or subsidy]."

     SECTION 9.  Section 103D-102, Hawaii Revised Statutes, is amended by amending subsection (b) to read as follows:

     "(b)  Notwithstanding subsection (a), this chapter shall not apply to contracts by governmental bodies:

     (1)  Solicited or entered into before July 1, 1994, unless the parties agree to its application to a contract solicited or entered into prior to July 1, 1994;

     (2)  To disburse funds, irrespective of their source:

         (A)  For grants [or subsidies] as [those terms are] defined in section 42F-101, made by the State in accordance with standards provided by law as required by article VII, section 4, of the state constitution; or by the counties pursuant to their respective charters or ordinances;

         (B)  To make payments to or on behalf of public officers and employees for salaries, fringe benefits, professional fees, or reimbursements;

         (C)  To satisfy obligations that the State is required to pay by law, including paying fees, permanent settlements, subsidies, or other claims, making refunds, and returning funds held by the State as trustee, custodian, or bailee;

         (D)  For entitlement programs, including public assistance, unemployment, and workers' compensation programs, established by state or federal law;

         (E)  For dues and fees of organizations of which the State or its officers and employees are members, including the National Association of Governors, the National Association of State and County Governments, and the Multi-State Tax Commission;

         (F)  For deposit, investment, or safekeeping, including expenses related to their deposit, investment, or safekeeping;

         (G)  To governmental bodies of the State;

         (H)  As loans, under loan programs administered by a governmental body; and

         (I)  For contracts awarded in accordance with chapter 103F;

     (3)  To procure goods, services, or construction from a governmental body other than the University of Hawaii bookstores, from the federal government, or from another state or its political subdivision;

     (4)  To procure the following goods or services which are available from multiple sources but for which procurement by competitive means is either not practicable or not advantageous to the State:

         (A)  Services of expert witnesses for potential and actual litigation of legal matters involving the State, its agencies, and its officers and employees, including administrative quasi-judicial proceedings;

         (B)  Works of art for museum or public display;

         (C)  Research and reference materials including books, maps, periodicals, and pamphlets, which are published in print, video, audio, magnetic, or electronic form;

         (D)  Meats and foodstuffs for the Kalaupapa settlement;

         (E)  Opponents for athletic contests;

         (F)  Utility services whose rates or prices are fixed by regulatory processes or agencies;

         (G)  Performances, including entertainment, speeches, and cultural and artistic presentations;

         (H)  Goods and services for commercial resale by the State;

         (I)  Services of printers, rating agencies, support facilities, fiscal and paying agents, and registrars for the issuance and sale of the State's or counties' bonds;

         (J)  Services of attorneys employed or retained to advise, represent, or provide any other legal service to the State or any of its agencies, on matters arising under laws of another state or foreign country, or in an action brought in another state, federal, or foreign jurisdiction, when substantially all legal services are expected to be performed outside this State;

         (K)  Financing agreements under chapter 37D; and

         (L)  Any other goods or services which the policy board determines by rules or the chief procurement officer determines in writing is available from multiple sources but for which procurement by competitive means is either not practicable or not advantageous to the State; and

     (5)  Which are specific procurements expressly exempt from any or all of the requirements of this chapter by:

         (A)  References in state or federal law to provisions of this chapter or a section of this chapter, or references to a particular requirement of this chapter; and

         (B)  Trade agreements, including the Uruguay Round General Agreement on Tariffs and Trade (GATT) which require certain non-construction and non-software development procurements by the comptroller to be conducted in accordance with its terms."

     SECTION 10.  Section 103F-101, Hawaii Revised Statutes, is amended by amending subsection (a) to read as follows:

     "(a)  This chapter shall apply to all contracts made by state agencies and may be used by county agencies to provide health or human services to Hawaii's residents; provided that this chapter shall not apply to:

     (1)  Contracts to award grants [or subsidies] of state funds appropriated by the legislature to a specific organization or individual;

     (2)  Transactions between or among government agencies, including but not limited to agreements, contracts, and grants;

     (3)  Transactions expressly exempt from the requirements of this chapter; and

     (4)  Transactions that the chief procurement officer determines are exempt under rules adopted by the policy board."

     SECTION 11.  Section 304A-2351, Hawaii Revised Statutes, is amended by amending subsection (c) to read as follows:

     "(c)  Neither the trust established by the university pursuant to subsection (a), nor any trustee thereof, shall be a department, office, agency, board, commission, bureau, instrumentality, committee, authority, or office of the State or any of its political subdivisions, or otherwise deemed a public or quasi-public entity, nor shall the initial funding of, or a transfer to, the trust constitute a state grant [or subsidy].  The trust shall not be subject to laws or rules governing state and other public or quasi-public entities, including but not limited to chapters 23, 36, 37, 38, 40, 42F, 76, 78, 84, 89, 91, 92, 92F, 103, and 103D."

     SECTION 12.  Section 383-128, Hawaii Revised Statutes, is amended by amending subsections (f) and (g) to read as follows:

     "(f)  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.

     (g)  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."

     SECTION 13.  Statutory material to be repealed is bracketed and stricken.  New statutory material is underscored.

     SECTION 14.  This Act shall take effect on July 1, 2014.

 

INTRODUCED BY:

_____________________________

 

 


 


 

Report Title:

Subsidy; Deletion

 

Description:

Deletes references to "subsidy" in the chapters establishing standards and criteria for the award of grants to private organizations and individuals.  Makes conforming deletions.

 

 

 

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