DEBT STRUCTURE
Types of Bonds Authorized by the Constitution
The Constitution of the State empowers the Legislature to authorize the issuance of four types of bonds
(defined by the Constitution as bonds, notes and other instruments of indebtedness): general obligation bonds
(defined by the Constitution as all bonds for the payment of the principal and interest for which the full faith and
credit of the State or a political subdivision are pledged and, unless otherwise indicated, including reimbursable
general obligation bonds hereinafter defined); bonds issued under special improvement statutes; revenue bonds
(defined by the Constitution as all bonds payable from revenues, or user taxes, or any combination of both, of a
public undertaking, improvement, system or loan program and any loan made thereunder and secured as may be
provided by law); and special purpose revenue bonds (defined by the Constitution as all bonds payable from rental
or other payments made to an issuer by a person pursuant to contract and secured as may be provided by law,
including a loan program to a state property insurance program providing hurricane coverage to the general public).
Under the Constitution, special purpose revenue bonds shall only be authorized or issued to finance facilities of or
for, or to loan the proceeds of such bonds to assist, manufacturing, processing or industrial enterprises, certain
not-for-profit private schools, utilities serving the general public, health care facilities provided to the general public
by not-for-profit corporations, early childhood education and care facilities provided to the general public by
not-for-profit corporations, agricultural enterprises serving important agricultural lands, or low and moderate income
government housing programs. All bonds of the State other than special purpose revenue bonds must be authorized
by a majority vote of the members to which each house of the Legislature is entitled. Special purpose revenue bonds
of the State must be authorized by two-thirds vote of the members to which each house of the Legislature is entitled.
Outstanding Indebtedness and Debt Limit
The Constitution provides that determinations of the total outstanding indebtedness of the State and the
exclusions therefrom shall be made annually and certified by law or as prescribed by law. 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 in the current or any future fiscal year, whichever is higher, to exceed a sum
equal to 18.5% of the average of the General Fund revenues of the State in the three fiscal years immediately
preceding such issuance. For the purposes of such determination, General Fund revenues of the State do not include
moneys received as grants from the federal government and receipts in reimbursement of any reimbursable general
obligation bonds which are excluded in computing the total indebtedness of the State.
In order to carry out the provisions contained in the Constitution, the Legislature enacted Part IV of
Chapter 39, HRS (“Part IV”), to require the Director of Finance to prepare statements of the total outstanding
indebtedness of the State and the exclusions therefrom and of the debt limit of the State evidencing the power of the
State to issue general obligation bonds and, prior to the issuance of any general obligation bonds, to find that the
issuance of such bonds will not cause the debt limit of the State to be exceeded. Part IV provides that such
statements shall be prepared as of July 1 of each year and submitted to the Legislature no later than December 1 of
such year. The July 1, 2014 statement is the most recent such statement prepared and submitted to the Legislature.
The summary statement of debt limit of the State evidencing the power of the State to incur indebtedness
sets forth the General Fund revenues of the State, exclusive of federal grants, for the fiscal years ended June 30,
2012, 2013 and 2014 and the net General Fund revenues after required exclusions, the average of the said three
fiscal years, and the limit of total principal and interest which may be payable in any fiscal year. The greatest
amount of principal and interest payable in any fiscal year on the outstanding general obligation indebtedness as of
November 1, 2014 and on the Bonds, after exclusions therefrom permitted by the Constitution, is $687,999,746 in
the fiscal year ending June 30, 2016.
As calculated from the State Comptroller's Bond Fund report as of September 30, 2014, the amount of
authorized but unissued general obligation bonds (including the Series EO Bonds and the Series EQ Bonds) is
$3,050,860,248. Such amount does not include general obligation refunding bonds such as the Refunding Bonds.
These authorized but unissued general obligation bonds are scheduled to be issued prior to June 30, 2017.
HIB5
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Hawaiian Tax-Free Trust