Ka Wai Ola - Office of Hawaiian Affairs, Volume 14, Number 3, 1 March 1997 — A brief history: the ceded lands trust [ARTICLE]

A brief history: the ceded lands trust

In 1959, as a compact of Hawaii's statehood, the United States government clearly stated that all of the puhlie lands whieh were onee part of the nation of Hawai'i, and that are now part of the State of Hawai'i, are to be considered a puhlie land trust. These trust lands, and the proceeds and ineome from those lands, were to be used to benefit native Hawaiians and for other specific purposes. It was not until 1978, however, that Hawai'i finally implemented the pubhc land trust required by the Admission Act. Article XII, Section 4, of the State Constitution, provides that the lands granted the state by Section 5(b) of the Admission Act, "shall be held by the state as a public trust for native Hawaiians and the general public." Anel, Article XII, Section 6, and Chapter 10, Hawai'i Revised Statutes, describes how native Hawaiians will benefit from the public trust. The law intends and clearly states: Hawaiians will share in the revenue generated from the public trust. Despite this mandate, the state has been reluctant to meet its obligation to Hawaiians. Consider the following: • For 19 years following statehood, Hawai'i failed to establish the pubhc land trust mandated by the Admission Act. lnstead, it co-mingled its general funds with revenue generated from the ceded lands, and used the money as it chose. • Following the 1978 state constitutional convention, whieh created OHA, and the legislative decision that the pro rata portion of the puhlie land trust due OHA is 20 percent, OHA began receiving quarterly transfers from the state. • For the first ten years, from 1981 through 1990, an average of $1.4 million was transferred to OHA eaeh year. Early on, OHA reahzed this was far less than the amount it was due. OHA commenced discussions with the state to discuss its eoneem, but no agreement could be reached. OHA sued the State. The Hawai'i Supreme Court determined that legislative clarification of Section 10.13.5, HRS was needed to resolve fiscal statutory inconsistencies and to establish the funding for OHA. • In 1990, the passage of Act 304 followed more than two years of intense negotiations, and the ceded land revenue transfers OHA received between 1991 and 1996 increased to an average of $12.3 million per year. • In 1993, Act 35 authorized the issuance of $136.5 million in general obligation bonds to satisfy the state's obligation to native Hawaiians for use of ceded lands between 1981 and 1990. • Between 1994 and the end of 1996, OHA's average revenue transfers from the ceded lands rose to $18.7 million per year, whieh included sizable "spikes" to make up for shortages from previous years. It had finally become clear that for many years the state failed to pay the full entitlement it owed native Hawaiians. • In 1994, Act 14 was passed to resolve the state's breach of the Hawaiian Home Lands Tmst. Although lengthy negotiations produced agreement between the state and the Department of Hawaiian Home Lands that the breach amounted to $1 .2 billion, a compromise was stmck whieh required the state to pay DHHL $600 million. Another example of recognition that the state had failed to meet its trust obligation to Hawaiians. Last year, the State Administration and some legislators began suggesting the revenue Hawaiians receive from the ceded land tmst is too great, and that these revenue transfers to OHA, based on the 20% formula and the agreements reached in Act 304, will bankrupt the state. What is not communicated, however, is the fact that OHA does not receive 20% of all revenue derived from the public land tmst. Act 304 clearly provides that the revenue OHA receives excludes "... any ineome, proceeds, fees, charges or other moneys derived through the exercise of sovereign functions and powers..." Act 304 identifies the "sovereign" revenues as: taxes, regulatory or licensing fees, fines, penalties or levies, registration fees, moneys received by any public educational institution, inter-agency and intra-agency administrative fees or assessments, moneys derived from or i provided in support of penal institutions and programs; grants, carry-overs and pass-throughs; federal moneys; mon- t eys collected from the sale or dissemination of govemment j publications; and, Department of Defense proceeds on state improved lands. I i I 1 i