Special Funds Raiding Hawaii’s Taxpayers: Grassroot Institute Study Exposes $1.4 Billion in Excess Balances

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While numerous voices in and out of the local political establishment are calling for an increase in the General Excise Tax to cover any future budget shortfalls, a Grassroot Institute of Hawaii study has identified $1.4 billion in unspent excess balances sitting in special funds.

According to the study, 186 special funds spread across twenty different departments hold an estimated $1,412,357,203 in unspent revenues over and above their operational requirements. Some of the special funds were tagged by the auditor almost a decade ago for repeal.

Citing a lack of transparency on the part of state government regarding the special funds, the study’s authors, Danny de Gracia, II and Kyle Shiroma, took it upon themselves to review worksheets from the Department of Budget and Finance and to itemize all the special funds to see just what they contained.

“With the State’s information presented so cryptically it would intimidate anyone short of an accountant, few members of the public know just how many special funds exist, what their purpose is and how much money the State of Hawaii has in these funds,” said de Gracia. “If the estimates provided by the Department are correct, the state has more than just pocket change stuck in its seats.”

The Department of Transportation is reported as having $582,449,161 in unspent special funds (41% of the state’s excess balances), Department of Labor and Industrial Relations has some $327,412,159 unspent (23%) and the University of Hawaii holds another $119,225,732 (8%) making them the top holders of excess revenues.

The worksheets show figures such as $6,968,895 unspent in the Works of Art Special Fund (AGS 881) for public aesthetics and art education – a fund which was advised by the Auditor to be repealed in 2001 and its balances lapsed into the General Fund.

“If these excess balances were divided equally among the population, there would be checks of close to $1,100 going to every man, woman and child in Hawaii,” said Jamie Story, the Institute’s President. “Before the State looks for more money, it needs to make effective use of its existing funds and show more transparency in its records.”

The study, Exposing Hawaii’s Special Funds, can be found at the GRIH website: www.grassrootinstitute.org. The mission of the Grassroot Institute of Hawaii is to promote individual liberty, free market economic principles and limited, more accountable government.

Submitted by the Grassroot Institute of Hawaii

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2 COMMENTS

  1. This is exactly why we need to audit every department of government. If they receive money from tax payers, they need to be totally transparent and audited either every year or every other year. Someone needs to be held accountable for this. The mony needs to be immediately recouped and placed back in the general fund.

  2. Jamie and Malia:

    This is exactly the scenerio that I have for years been highlighting what was at the core of some of the existing conditions within DOT.

    DOT, specifically airports, are required by federal mandates to be fully self supporting. To prove our ability to be self sustaining to the Federal Agency exercising oversight of Highways, Harbors and Airports require these departments to create Master Plans looking 20 years into the future and regularly updating them (usually at 5 year intervals). These approved master plans also serve as the source document for projects eligible for Federal Assistance to add/improve, maintain, or increase capacity, safety, and security of the nationals transportation infrastructure. The FAA take the eligible projects from these Master Plans for all commercial services airports nationally and develop their National Integrated Plan for Airports to assure a safe, secure, and efficient transportation infrastructure nationally.

    The Master Plan show the public why each project is required, when the project should be implemented, the environmental (Noise, Air and Water etc.) and how these projects will be funded. The final batter has therefore, been approved by the public and government and placed into the oven for baking. When removed you have an airport that benefits the flying public and represents your community to the world. In simple terms, Master Plans serve as the recipe for a giant layer cake and each layer is related to the layer below it and the one above it.

    However, when tinkering with any portion of the recipe you weaken a layer or the entire cake and create an airport with potential safety/security problems, or an airport project forced into the cake when it can not yet be supported, creating a lopsided cake being presented to the public and in the case of Hawaii an international public asking embarrassing questions and giving the wrong impression of Hawaii to the rest of the world.

    Therefore, sound management practices require the Master Plan to be continually reviewed because any change in the basic ingredients economic changes, caused by various reasons (demand the number of enplanements), improved technologies, increased security requirements, etc. allow management to adjust the recipe or find a suitable ingredient to meet the changes, now not later.

    Because the airport needs to make the necessary adjustments based on demand (amount of persons using the airport), economic, technologies or changes in Federal Policies agency exercising fiscal, safety, and security control over the projects/activities identified by their funding source

    Therefore, a State Legislature that tinkers with the Airports Special Fund can create a surplus on the bottom line of the budget,by not allowing the expenditure of a project listed in the Master Plan when it is needed. Conversely, to create a deficit, of any amount, implementation of any number of projects is approved.

    In reality the funds do not impact the actual amount of money in the special fund it just means many projects are not included in the proper lay of out cake, creating a cake that is not appealing to anyone and because the project may have been required earlier management is playing catchup. Also if the project is one of those in the future the technology may not be available, or the Federal budge is not prepared to assist with funding therefore leaving the Airport to find more funds to pay for the project or deferring another project using its funds to pay for this project now vice when it was scheduled to receive 40% Federal funding later.

    Pay me now or pay me later.

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