Hawaii Senate Bill SB1395

Hawaii 2025 Regular Session

• Introduced: 1/23/25
• Refer: 1/27/25
• Report Pass: 2/11/25
• Refer: 2/11/25
• Report Pass: 2/28/25
• Engrossed: 3/4/25
• Refer: 3/6/25
• Report Pass: 3/14/25
• Refer: 3/14/25

Caption

Relating To State Funds.

Summary

SB1395 addresses the use of interest earned by Hawaii’s emergency and budget reserve fund. Under the bill, when the reserve fund’s balance is above the state’s fund balance objective, the interest that would push the fund over that objective is redirected to the general fund instead of remaining in the reserve fund. The measure also adds a new budget requirement tied to that transfer: in the following fiscal year, the governor must request in the executive budget or supplemental budget that an amount of general funds equal to the transferred interest be spent on projects that address climate change impacts. The bill defines those projects broadly to include efforts that mitigate climate change, adapt to its effects, or improve resiliency. It amends both Chapter 37, Hawaii Revised Statutes, and section 328L-3 governing the emergency and budget reserve fund. The bill’s stated purpose is to help Hawaii respond to what the legislature describes as a climate emergency by channeling excess reserve-fund interest into climate-related public investment while preserving the reserve fund’s core balance objective. In practical terms, the bill changes how state fund interest is allocated in years when the reserve fund exceeds its target level. Instead of all interest staying in the reserve fund, the excess interest is credited to the general fund, and that amount is then linked to a future budget request for climate projects. The bill does not directly appropriate money by itself, but it creates a recurring executive budget obligation to propose spending equal to the amount transferred. The general sentiment reflected in committee votes appears supportive. The bill passed the Senate Agriculture and Environment Committee 3-1 and the Senate Ways and Means Committee 13-0, indicating broad backing after amendments. The committee record provided does not include transcript debate, so the available evidence suggests overall favorable treatment rather than detailed public argument in the record supplied. The main point of contention is likely the policy choice to redirect reserve-fund interest and tie it to climate spending, which could raise concerns about fiscal flexibility, reserve management, and the extent of the governor’s budget obligation. Supporters appear to view the measure as a targeted way to fund climate mitigation and resilience without reducing the reserve principal, while any opposition would likely focus on whether the state should preserve more earnings in the emergency reserve or avoid earmarking future general-fund spending.

Impact

The bill amends Hawaii law governing the emergency and budget reserve fund by creating a conditional transfer of interest earnings to the general fund when the reserve exceeds its balance objective. It also adds a new requirement in Chapter 37 that the governor request general-fund spending equal to the transferred interest for climate-related projects in the next fiscal year. The measure affects state budget preparation, reserve-fund administration, and the executive’s annual budget submission process, but it does not itself make an appropriation or mandate a specific project selection.

Sentiment

The available voting history suggests the bill was generally well received in committee. It advanced 3-1 in Senate Agriculture and Environment and then unanimously 13-0 in Senate Ways and Means after amendments. No committee transcripts were provided, so the record shows strong procedural support but does not reveal detailed floor-level or public testimony sentiment.

Contention

The likely areas of contention are fiscal and policy-based: whether excess interest from the emergency and budget reserve fund should remain in the reserve or be diverted to the general fund, and whether that money should be linked to climate-related spending. Supporters are focused on climate mitigation, adaptation, and resiliency funding, while potential critics may worry about reducing reserve growth, constraining budget discretion, or creating an indirect earmark through the governor’s budget request. The bill’s amended structure suggests lawmakers worked to balance reserve-fund protection with climate investment goals.