POSTED: 10:21 a.m. HST, Jun 7, 2011
LAST UPDATED: 10:27 a.m. HST, Jun 7, 2011
Gov. Neil Abercrombie will likely have to exhaust the state's hurricane relief savings to balance the current fiscal year's budget, according to his finance director.
About $117 million in the Hawaii Hurricane Relief Fund could be spent to help pay off an estimated $232 million shortfall by June 30, which is the end of the current fiscal year, said Budget Director Kalbert Young.
The Associated Press previously reported in March that hurricane savings may be emptied.
The rest of the money needed to balance the budget is being raised by restricting departmental operating costs by 10 percent and spending money from various other government reserve funds.
"To be prudent, we are desirous of leaving whatever is possible in the HHRF, but realistically ... I would have to concede that all, if not nearly all, of the HHRF would have to be utilized," Young said.
The fund was started as a way for residents and businesses to get insurance coverage if companies stop issuing policies after a major hurricane, similar to what happened when Hurricane Iniki devastated parts of Kauai and Oahu in 1992.
But following a decade of growth from real estate fees and other sources, the fund went dormant in 2002, after insurance companies returned to the Hawaii market.
"Every homeowner in Hawaii should already have hurricane insurance, which would cover any claims when a hurricane hits," said Abercrombie spokeswoman Donalyn Dela Cruz. "HHRF is only needed for those who purchase a home after a hurricane has struck and only if no private insurance is available."
The Hawaii Legislature passed a measure last month authorizing the governor to first spend $42 million from the hurricane savings, and then drain it entirely if needed. The bill also allows the state government to issue up to $75 million in revenue bonds to recapitalize the hurricane fund if needed.
Beginning in 2013, the fund will be automatically replenished using general excise tax revenues.
"There's a misunderstanding about the fund that if utilized, there won't be money in the event it is needed. This is untrue," Dela Cruz said.
It's still unclear whether the government will be able to leave some money saved in hurricane fund, Young said.
The amount of hurricane money that will be spent depends on how much in taxes the state collects and how much savings the state gets from spending restrictions.
The state is on track to balance the budget after Abercrombie planned to limit spending and tap government reserves over the last three months of this fiscal year, Young said.
In one of Abercrombie's first acts after taking office in December, he spent another $67 million from the hurricane relief fund to pay for a deal to eliminate 17 planned teacher furlough days in the 2010-2011 school year.