Review of Special Funds, Revolving Funds, Trust Funds, and Trust Accounts of the Department of Budget and Finance
Hawaii State Auditor Report No. 18-17, November, 2018 (excerpts)
We reviewed twenty-nine special funds, trust funds, and trust accounts administered by the Department of Budget and Finance and found one special fund did not meet criteria and should be closed….
WE ALSO NOTED that B&F did not file statutorily required reports for non-general funds and for administratively created funds. Accurate and complete reporting will greatly improve the Legislature’s oversight and control of these funds and provide increased budgetary flexibility….
Mass Transit Special Fund
(special fund) Section 248-2.7, HRS
This fund meets the criteria of a special fund and serves the purpose for which it was originally created. The fund was created in 2017 as part of the First Special Legislative Session but it was not established until January 1, 2018. The fund is used to collect a portion of the Transient Accommodations Tax (TAT) and surcharge on State tax revenues beginning January 1, 2018 to December 31, 2030, to provide a source of funding for capital costs incurred by the Honolulu Authority for Rapid Transportation (HART) in its design and construction of the rail project. HART is a semi-autonomous government unit of the City and County of Honolulu (County) created to develop and construct the rail system.
Revenues are from the TAT and surcharges. All interest earned on the moneys in this fund are credited to the general fund. Expenditures to the County are for reimbursement of capital costs incurred by HART as allowed under Section 46-16.8(e), HRS. The Director of Finance shall disburse moneys from the fund to the County that are certified by the Comptroller as an acceptable use of the funds.
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Overpayment Collections to Office of Hawaiian Affairs – Ceded Lands
(trust account) Administratively established
This account meets the criteria of a trust account and continues to serve the purpose for which it was originally created. Administratively created in 2012, the account is used as a holding account for overpayment refunds from the Office of Hawaiian Affairs (OHA) for ceded lands and to make up shortfalls in meeting the State’s obligation to OHA. Act 178, SLH 2006, provides for $3,775,000 to be transferred from departments or agencies that collect receipts from lands within the public land trust. Executive Order 06-06 delineates the procedures for these quarterly transfers and requires that, if receipts transferred to OHA exceeds $3,775,000, B&F must notify OHA. OHA must transfer the overpayment into a carry-forward trust holding account established by the Director of Finance.
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Public Utilities Commission Special Fund
(special fund) Section 269-33, HRS
This fund does not meet the criteria for a special fund because it no longer serves the purpose for which it was originally created. Statutorily created in 1994, the fund was administered by the Public Utilities Commission (PUC) and used to pay for all operating expenses of the PUC and the Division of Consumer Advocacy of the Department of Commerce and Consumer Affairs (DCCA), and for costs incurred by DCCA to fulfill its limited oversight and administrative support functions. Section 269-33, HRS, provides that all moneys in excess of $1 million remaining in the fund at the end of each fiscal year shall lapse to the credit of the general fund.
In FY2016, pursuant to Act 108, SLH 2014, the PUC was placed within DCCA for administrative purposes only. The moneys in the fund were transferred to DCCA to effectuate the transfer from B&F. The PUC has stated that it no longer uses the fund, and B&F asserted that there has been no transactional activity in this fund since the PUC’s transfer to DCCA. The fund should be closed and the remaining balance lapsed to the general fund.
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