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Hawaii lawmakers to examine $5.7B special funds

Anita Hofschneider, Associated Press

HONOLULU (AP) -- Nearly one-fourth of the Hawaii Legislature's $23.8 billion budget proposal is made up of special funds that lawmakers are planning to scrutinize in the coming months.

State departments have hundreds of separate accounts channeling money into specific initiatives, and they need more attention and oversight, Finance Committee Chairwoman Sylvia Luke said.

The Democrat from Honolulu said she wants the committee to perform thorough research now so it can tackle the issue when the Legislature reconvenes in January.

This year's final budget proposal sitting on the governor's desk includes about $5.7 billion in special funds.

That's $2.8 billion in fiscal year 2014 and $2.9 billion in fiscal year 2015 for money that isn't counted as general funds.

Special funds are created to provide dedicated revenue streams for particular initiatives, but critics say the funds don't always stay true to their original purpose or meet other legal criteria to justify their existence.

The state auditor said in a report last year that special funds need greater scrutiny and some should be repealed. The auditor criticized several accounts, including one that uses revenue from the conveyance tax to fund natural resource protection.

Gov. Neil Abercrombie lobbied the Legislature this year to expand that fund to provide more money for watershed protection, but his initiative failed. Lawmakers decided instead to cover the cost through the general funds and capital improvement funds, more in line with the auditor's recommendation.

Fiscal conservatives have been calling for greater scrutiny of special funds for decades.

Lowell Kalapa from the Tax Foundation of Hawaii said lawmakers use the accounts to circumvent the state's constitutional limit to general fund spending, allowing the government to grow faster than it should.

The funds, he said, lack accountability because they aren't analyzed as carefully as general fund appropriations.

Sen. Sam Slom, the only Republican member of the state's 25-person Senate, has been refusing to vote for new special funds since he joined the Legislature 17 years ago.

Slom said he's glad to hear the House is formally investigating the accounts, following a trend of increasing scrutiny in the last few years in both chambers.

"It is a poor budgeting method," he said. "It hides a lot of money from taxpayers."