Conservationists say Hawaii will lose millions of dollars in federal and private matching money for important agricultural, conservation and cultural heritage protection projects if House Bill 1741 becomes law. The bill, introduced by Speaker Calvin Say, would dramatically reduce funding for the the Land Conservation Fund, perhaps by as much as 60 percent as a result in decreased conveyances anyway. The Trust for Public Land, a conservation group, says “this is the worst time to suspend the Land Conservation Fund because land prices will go down and the public will forgo a once-in-a-lifetime opportunity to protect lands with tremendous agricultural, conservation and cultural/heritage value.”

The Land Conservation Fund, the Natural Area Reserve Fund and the Rental Housing Trust Fund provide protection for the Ceded land reserves, the management of watersheds and invasive species control. Regeneration of native forests as well as management of forest reserves are also covered by these funds. They also provide support for the Youth Conservation Corps and the development of affordable rental housing.

Mao Farms, whose 11 acres were purchased using the Land Conservation Fund, brings organic produce to the market and provides a venue for educating youth on the rigors and rewards of entering the agricultural field. Farm manager Gary Maunakea-Forth would like to see conservation efforts like Mao Farms expand than be suspended for six years. Other purchases by the fund include Moanalua Valley, Hamakua Marsh Wildlife Sanctuary and the Honouliuli Forest Reserve. The Office of Hawaiian Affairs says the Land Conservation Fund “contributed enormously to the preservation of lands important to Native Hawaiian people, their culture, and our collective island heritage.”

Technically, the bill temporarily suspends the earmarking of 10 percent of the conveyance tax revenues into the Land Conservation Fund; reduces the earmarking of the conveyance tax revenue to the Rental Housing Trust Fund from 30 percent to 15 percent; and reduces the earmarking of the conveyance tax revenue to the Natural Area Reserve Fund from 25 percent to 15 percent between July 1, 2009 and June 30, 2015. On July 1, 2015, all earmarking would revert back to the amounts prior to the suspension. As a result of the suspension or reduction in earmarking, additional funds will be deposited into the general fund to address the states budgetary shortfall.

Proponents of HB 1741 argue this measure underscores the pitfalls of the earmarking of revenues. “Revenues are automatically diverted and squirreled away without any legislature intervention,” said Lowell Kalapa of the Tax Foundation of Hawaii. He believes earmarking reduces flexibility in the use of available revenues which contributed to the current financial quagmire facing state officials. “With earmarking, there is no oversight and there is no accountability on the designated program or its manager. The money automatically flows to them.”

Say sees no viable alternative to HB 1741 other than raising the general excise tax to address the state’s budgetary shortfall, a move which he said would be unpopular and one that he doesn’t endorse. “I’m just trying to be responsible,” he said.

The Department of Taxation recommended passing the measure by the House in order to continue discussions regarding the state’s revenues. If the measure passes, the department estimates the gain in revenue to the general fund to be about $12 million for fiscal year 2010 to FY 2015. The House Finance Committee passed HB 1741 with amendments on February 26. It now goes to the Senate.