RELATING TO STATE BONDS.

HB2452

HOUSE OF REPRESENTATIVES

H.B. NO.

2452

THIRTY-THIRD LEGISLATURE, 2026

STATE OF HAWAII

A BILL FOR AN ACT

relating
to state bonds
.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF HAWAII:

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SECTION 1.

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Declaration of findings with respect to
the general obligation bonds authorized by this Act.
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Pursuant to article VII, section 13, of the
state constitution, which states:
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"Effective July 1, 1980, the legislature shall include a
declaration of findings in every general law authorizing the issuance of
general obligation bonds that the total amount of principal and interest,
estimated for such bonds and for all bonds authorized and unissued and
calculated for all bonds issued and outstanding, will not cause the debt limit
to be exceeded at the time of issuance", the legislature finds and
declares as follows:

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(1)
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Limitation
on general obligation debt.
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The debt
limit of the State is set forth in article VII, section 13, of the state
constitution, which states in part:
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"General obligation bonds may be issued by the State; provided that
such bonds at the time of issuance would not cause the total amount of principal
and interest payable in the current or any future fiscal year, whichever is
higher, on such bonds and on all outstanding general obligation bonds to
exceed:
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a sum equal to twenty percent of
the average of the general fund revenues of the State in the three fiscal years
immediately preceding such issuance until June 30, 1982; and thereafter, a sum
equal to eighteen and one-half percent of the average of the general fund
revenues of the State in the three fiscal years immediately preceding such
issuance."
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Article VII, section 13,
of the state constitution also provides that in determining the power of the
State to issue general obligation bonds, certain bonds are excludable,
including "[r]eimbursable general obligation bonds issued for a public
undertaking, improvement or system but only to the extent that reimbursements
to the general fund are in fact made from the net revenue, or net user tax
receipts, or combination of both, as determined for the immediately preceding
fiscal year" and bonds constituting instruments of indebtedness under which
the State incurs a contingent liability as a guarantor, but only to the extent
the principal amount of those bonds does not exceed seven per cent of the
principal amount of outstanding general obligation bonds not otherwise excluded
under said article VII, section 13, of the state constitution.

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(2)
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Actual
and estimated debt limits.
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The limit on
principal and interest of general obligation bonds issued by the State, actual
for fiscal year - and estimated
for each fiscal year from - to - ,
is as follows:

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Fiscal
�����
Net General

����������������
Year
�����
Fund Revenues
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Debt Limit

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For fiscal years - ,
- , - ,
- , and
- , respectively, the debt limit
is derived by multiplying the average of the net general fund revenues for the
three preceding fiscal years by eighteen and one-half per cent.
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The net general fund revenues for fiscal years
- , - ,
and - are actual, as certified
by the director of finance in the Statement of the Debt Limit of the State of
Hawaii as of July 1, , dated ,
.
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The net
general fund revenues for fiscal years -
to - are estimates, based on
general fund revenue estimates made as of ,
, by the council on revenues, the body assigned by article
VII, section 7, of the state constitution to make such estimates, and based on
estimates made by the department of budget and finance of those receipts that
cannot be included as general fund revenues for the purpose of calculating the
debt limit, all of which estimates the legislature finds to be reasonable.

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(3)
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Principal
and interest on outstanding bonds applicable to the debt limit.

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(A)
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According
to the department of budget and finance, the total amount of principal and
interest on outstanding general obligation bonds, after the exclusions
permitted by article VII, section 13, of the state constitution, for
determining the power of the State to issue general obligation bonds within the
debt limit as of April 1, , is as follows for fiscal
year - to fiscal year - :

���������������
Fiscal
���������������
Principal

���������������
Year
���������������
and Interest

�����������������

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The
department of budget and finance further reports that the amount of principal
and interest on outstanding bonds applicable to the debt limit generally
continues to decline each year from fiscal year -
to fiscal year - when the final
installment of $
shall be due and payable.

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(B)
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The
department of budget and finance further reports that the outstanding principal
amount of bonds constituting instruments of indebtedness under which the State
may incur a contingent liability as a guarantor is $ ,
all or part of which is excludable in determining the power of the State to
issue general obligation bonds, pursuant to article VII, section 13, of the
state constitution.

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(4)
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Amount
of authorized and unissued general obligation bonds and guaranties and proposed
bonds and guaranties.

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(A)
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As
calculated from the state comptroller's bond fund report as of ,
, adjusted for:

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(i)
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Appropriations to be funded by general
obligation bonds or reimbursable general obligation bonds as provided in Act 250,
Session Laws of Hawaii 2025 (the General Appropriations Act of 2025) to be
expended in fiscal year 2025-2026, adjusted for additional appropriations
provided in House Bill No. (the Supplemental Appropriations
Act of 2026);

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(ii)
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Lapses as provided in House Bill No.
, (the Supplemental Appropriations Act of 2026);

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(iii)
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Appropriations to be funded by general
obligation bonds or reimbursable general obligation bonds as provided in Act 227,
Session Laws of Hawaii 2025 (the Judiciary Appropriations Act of 2025),
adjusted for additional appropriations provided in
Bill No. (the Judiciary Supplemental Appropriations Act of
2026); and

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(iv)
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Lapses as provided in
Bill No. , (the Judiciary Appropriations Act of 2026);

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the
total amount of authorized but unissued general obligation bonds is
$
.
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The total
amount of general obligation bonds authorized in this Act is
$ .
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The total amount of general obligation bonds
previously authorized and unissued, as adjusted, and the general obligation
bonds authorized in this Act is
$ .

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(B)
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As reported by the department of budget and
finance the outstanding principal amount of bonds constituting instruments of
indebtedness under which the State may incur a contingent liability as a
guarantor is $ , all
or part of which is excludable in determining the power of the State to issue
general obligation bonds, pursuant to article VII, section 13, of the state
constitution.

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(5)
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Proposed
general obligation bond issuance.
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As
reported therein for the fiscal years ‑ ,
- ,
- ,
- , and
- , the State proposes to issue
$ in general
obligation bonds during the first half of fiscal year
- ,
$ in general
obligation bonds during the second half of fiscal year
- ,
$ in general
obligation bonds semiannually during fiscal years -
and - , and
$ in general
obligation bonds semiannually during fiscal years
- and
- .
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Generally, it has been the practice of the
State to issue twenty‑year serial bonds with principal repayments
beginning in the third year, the bonds payable in substantially equal annual
installments of principal and interest payment with interest payments
commencing six months from the date of issuance and being paid semi‑annually
thereafter.
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It is assumed that this
practice will continue to be applied to the bonds that are proposed to be
issued.

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(6)
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Sufficiency
of proposed general obligation bond issuance to meet the requirements of
authorized and unissued bonds, as adjusted, and bonds authorized by this
Act.
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From the schedule reported in
paragraph (5), the total amount of general obligation bonds that the State
proposes to issue during the fiscal years
- to
- is
$ .
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An additional
$ is proposed to be
issued in fiscal year - .
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The total amount of
$ that is proposed
to be issued through fiscal year
- is sufficient to meet the
requirements of the authorized and unissued bonds, as adjusted, the total
amount of which is
$ reported in
paragraph (4), except for
$ .
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It is assumed that the appropriations to
which an additional
$ in bond issuance
needs to be applied will have been encumbered as of June 30,
.
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The
$ that is proposed
to be issued in fiscal year -
will be sufficient to meet the requirements of the June 30,
, encumbrances in the amount of
$ .
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The amount of assumed encumbrances as of June
30, , is reasonable and conservative, based upon an
inspection of June 30 encumbrances of the general obligation bond fund as
reported by the state comptroller.
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Thus,
taking into account the amount of authorized and unissued bonds, as adjusted,
and the bonds authorized by this Act versus the amount of bonds proposed to be
issued by June 30, , and the amount of
June 30, , encumbrances versus the amount of bonds
proposed to be issued in fiscal year
- , the legislature finds that
in the aggregate, the amount of bonds proposed to be issued is sufficient to
meet the requirements of all authorized and unissued bonds and the bonds
authorized by this Act.

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(7)
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Bonds
excludable in determining the power of the State to issue bonds.
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As noted in paragraph (1), certain bonds are
excludable in determining the power of the State to issue general obligation
bonds.

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(A)
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General obligation reimbursable bonds can be
excluded under certain conditions.
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It is
not possible to make a conclusive determination as to the amount of
reimbursable bonds which are excludable from the amount of each proposed bond
issued because:

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(i)
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It is not known exactly when projects for
which reimbursable bonds have been authorized in prior acts and in this Act
will be implemented and will require the application of proceeds from a
particular bond issue; and

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(ii)
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Not all reimbursable general obligation bonds
may qualify for exclusion.

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However,
the legislature notes that with respect to the principal and interest on
outstanding general obligation bonds, according to the department of budget and
finance, the average proportion of principal and interest that is excludable
each year from the calculation against the debt limit is
per cent for approximately ten years from fiscal year
- to fiscal year
- .
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For the purpose of this declaration, the
assumption is made that per cent of each bond issue
will be excludable from the debt limit, an assumption that the legislature
finds to be reasonable and conservative.

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(B)
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Bonds constituting instruments of indebtedness
under which the State incurs a contingent liability as a guarantor can be
excluded, but only to the extent the principal amount of those guaranties does
not exceed seven per cent of the principal amount of outstanding general
obligation bonds not otherwise excluded under subparagraph (A) of this
paragraph; provided that the State shall establish and maintain a reserve in an
amount in reasonable proportion to the outstanding loans guaranteed by the
State as provided by law.
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According to
the department of budget and finance and the assumptions presented herein, the
total principal amount of outstanding general obligation bonds and general
obligation bonds proposed to be issued, which are not otherwise excluded under
article VII, section 13, of the state constitution for the fiscal years
- ,
- ,
- ,
- , and
- are as follows:

����������������������������������
Total amount
of

������������������������������
General
Obligation Bonds

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not otherwise
excluded by

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Article VII,
Section 13

������������
Fiscal Year
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of the State Constitution

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Based on the
foregoing and based on the assumption that the full amount of a guaranty is
immediately due and payable when such guaranty changes from a contingent
liability to an actual liability, the aggregate principal amount of the portion
of the outstanding guaranties and the guaranties proposed to be incurred, which
does not exceed seven per cent of the average amount set forth in the last
column of the above table and for which reserve funds have been or will have
been established as heretofore provided, can be excluded in determining the
power of the State to issue general obligation bonds.
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As it is not possible to predict with a
reasonable degree of certainty when a guaranty will change from a contingent
liability to an actual liability, it is assumed in conformity with fiscal
conservatism and prudence, that all guaranties not otherwise excluded pursuant
to article VII, section 13, of the state constitution will become due and
payable in the same fiscal year in which the greatest amount of principal and
interest on general obligation bonds, after exclusions, occurs.
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Thus, based on such assumptions and on the
determination in paragraph (8), all of the outstanding guaranties can be
excluded.

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(8)
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Determination
whether the debt limit will be exceeded at the time of issuance.
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From the foregoing and on the assumption that
all of the bonds identified in paragraph (5) will be issued at an interest rate
not to exceed per cent in fiscal years
through , it can be determined
from the following schedule that the bonds that are proposed to be issued,
which include all authorized and unissued bonds previously authorized, as
adjusted, general obligation bonds, and instruments of indebtedness under which
the State incurs a contingent liability as a guarantor authorized in this Act,
will not cause the debt limit to be exceeded at the time of such issuance:

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Greatest
Amount

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Time of Issuance
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and Year of

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and Amount to be
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Debt Limit
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Highest
Principal

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Counted Against
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at Time of
����������
and
Interest

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Debt Limit
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Issuance
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on
Bonds and Guaranties

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(9)
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Overall
and concluding finding.
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From the facts,
estimates, and assumptions stated in this declaration of findings, the
conclusion is reached that the total amount of principal and interest estimated
for the general obligation bonds authorized in this Act, and for all bonds
authorized and unissued, and calculated for all bonds issued and outstanding,
and all guaranties, will not cause the debt limit to be exceeded at the time of
issuance.

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SECTION
2.
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The legislature finds the bases for
the declaration of findings set forth in this Act are reasonable.
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The assumptions set forth in this Act with
respect to the principal amount of general obligation bonds that will be
issued, the amount of principal and interest on reimbursable general obligation
bonds that are assumed to be excludable, and the assumed maturity structure
shall not be deemed to be binding, it being the understanding of the
legislature that such matters must remain subject to substantial flexibility.

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SECTION
3.
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Authorization for issuance of general
obligation bonds.
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General obligation
bonds may be issued as provided by law in an amount that may be necessary to
finance projects authorized in House Bill No. (the Supplemental
Appropriations Act of 2026), and
Bill No. (the Judiciary Supplemental Appropriations Act of 2026);
passed by the legislature during this regular session of 2026 and designated to
be financed from the general obligation bond fund and from the general
obligation bond fund with debt service cost to be paid from special funds;
provided that the sum total of general obligation bonds so issued shall not
exceed $ .

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Any law to
the contrary notwithstanding, general obligation bonds may be issued from time
to time in accordance with section 39-16, Hawaii Revised Statutes, in such
principal amount as may be required to refund any general obligation bonds of
the State of Hawaii heretofore or hereafter issued pursuant to law.

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SECTION 4.
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The provisions of this Act are declared to be
severable and if any portion thereof is held to be invalid for any reason, the
validity of the remainder of this Act shall not be affected.

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SECTION 5.
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In printing this Act, the revisor of statutes
shall substitute in section 1 and section 3 the corresponding act numbers for acts
identified therein.

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SECTION 6.
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This Act shall take effect upon its approval.

INTRODUCED BY:

_____________________________

Report Title:

State
Bonds; State Budget

Description:

Authorizes issuance of general obligation bonds.
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Makes findings required by Article VII,
Section 13, of the Hawaii State Constitution to declare that the issuance of
authorized bonds will not cause the debt limit to be exceeded.

The summary description
of legislation appearing on this page is for informational purposes only and is
not legislation or evidence of legislative intent.