Idle Land and Natural Resource Funds

by Tom Yamachika, President, Tax Foundation Hawaii

Earlier this year, we started looking at reports of agencies that have administratively established special funds.  We noted some fairly large nest eggs controlled by the Department of Education and the Department of Agriculture and Biosecurity.  This week we will turn our attention to the Department of Land and Natural Resources because we wouldn’t want them to feel left out!  Their report to the Legislature is here.

Page 14 of the report discusses the State Parks Special Fund.  It’s a perfectly legitimate special fund which takes in camping, lodging, parking and entry fees as well as lease rents and commercial use fees.  It uses the money to supplement operational expenses, repairs and maintenance, contracts and services, lifeguard contracts and recurring costs for the management and operation of state parks.  In 2024 and 2025, its expenses have averaged about $10 million, and the revenues it brings in are around $20 million annually.  At the end of both fiscal years, it had an unencumbered balance north of $30 million. 

Do we really need to have a wad that big just sitting in the special fund?

Page 18 of the report describes the Special Land and Development Fund.  It receives rents from land leases and permits, fees from quarrying activities and geothermal royalties, concession fees, and renewable energy lease rents.  Managing these lands requires some expenses, such as for the demolition of the Uncle Billy’s Hilo Bay Hotel.  Interestingly, the statute establishing the fund allows for excess moneys to lapse to the general fund if the Department of Budget and Finance determines that there is an excess.  At the end of 2024 and 2025, there was an unencumbered balance of $40 million.  Budget and Finance, are you listening?

Page 42 of the report describes the Turtle Bay Conservation Easement Special Fund.  An earmark off the transient accommodations tax feeds this fund, and the fund is supposed to service the general obligation bonds that were issued to buy the Turtle Bay conservation easement in 2015.  For the last four fiscal years, revenues have been a little more than $3 million and expenses have been about $2.5 million annually.  The fund has built up $10 million, and its balance has steadily increased over the years.  Again, if revenues consistently exceed expenses and both are relatively stable, how do we justify letting $10 million languish while the rest of the State has to beg for money?

Last but not least, page 49 describes an administratively created fund consisting of donations, gifts, and grants from private and governmental entities, which includes settlement proceeds.  The fund is used “primarily as a holding account for various receipts and expenditures,” which makes it sound suspiciously like a slush fund.  It’s definitely a holding account in another sense, however; there is an unencumbered balance of a little more than $20 million that has remained stable over the last two fiscal years.

To the doubters out there, it’s true that I cherry-picked numbers out of the report.  It’s possible that there are reasons why the Department needs to sequester the $100 million that is described in this article.  (But I don’t think so!)  If the Department has such great reasons, however, it needs to tell us taxpayers and our elected legislators what those reasons are so we all can make good fiscal decisions for our state, such as putting money to good use elsewhere if it’s now just parked in an account.