Senate committee approves overhaul of Works of Art Special Fund after hours of testimony

The Senate Committee on Transportation and Culture and the Arts passed House Bill 13‑78 (HD2) with amendments after a lengthy hearing that drew dozens of residents, artists, arts organizations and state officials to the State Capitol.

Committee Chair Lee moved the measure forward and the committee adopted it with amendments; Vice Chair Elefante and Senator Kanuha recorded reservations, and one senator voted no. The committee’s action keeps the bill alive for further consideration while directing follow-up work with finance and legal staff.

The bill would clarify the State Foundation on Culture and the Arts’ responsibilities and change how revenue from the Works of Art Special Fund (the fund the legislature created to receive a percentage of certain capital project proceeds) can be used. Supporters said the change aims to protect federal funding streams and the long‑term viability of arts programs; opponents warned it would make the fund less secure by moving operating positions and programming toward general‑fund support.

Executive Director Karen Ewald of the State Foundation on Culture and the Arts urged the committee to oppose the bill in its current form and instead pursue administrative fixes and an audit. "Move the special fund positions and programs to general fund. But keep the language in the special fund as contingency due to risk of economic downturn," Ewald said, while also asking the committee to collaborate on a joint solution.

Deputy Attorney General Alyssa Kyle told senators that the measure raises implementation questions. She said the bill creates a cap on the Works of Art Special Fund but does not specify how the comptroller should segregate or transfer funds. Kyle warned improper use of tax‑exempt bond proceeds could jeopardize the bonds’ tax‑exempt status: "The excess funds are not to be used for operational costs and are only to be used for CIP costs since any other consequences could put the tax‑exempt status of the bonds at risk."

Artists, educators and arts administrators argued that a dedicated, stable funding source is essential for school programs, small community arts centers and long‑term positions. Testimony ranged from formal filings by the Hawaii Arts Alliance and Honolulu Museum of Art to dozens of individuals who said arts education and local arts employers would suffer if the steady funding stream were weakened.

Representatives of the Office of the Governor and the Department of Budget and Finance submitted written comments and attended to answer questions. Will Kane, senior advisor for the governor, said the office had concerns in writing. DBEDT staff stood on written testimony and did not endorse the measure as presented.

Several witnesses proposed alternatives to the bill’s current form. Karen Ewald and others suggested: conduct an audit of the special fund; establish accounting to track the source of deposits (tax‑exempt bond proceeds versus other revenue); move operational positions to general fund temporarily; and explore a cultural trust or other dedicated revenue sources. Former SFCA director Jonathan Johnson recommended reinstating a position to sort and monitor incoming funds so agencies could ensure tax‑exempt proceeds were used only for capital expenditures.

Speakers also raised specific numbers and timelines during testimony. One witness said the foundation’s five‑year average revenue and expense each are about $5,000,000; another noted the bill reportedly would appropriate $4,000,000 for two fiscal years but said that did not guarantee longer‑term support.

After public comment, Chair Lee proposed amendments that the committee adopted: clarifying that Works of Art Special Fund proceeds may be used for planning, design and construction of works of art and related appurtenances; allowing the foundation to hold and own property and dedicate revenue from such property to maintenance and operations tied to the foundation’s mission; and several non‑substantive technical fixes. The committee report will also record concerns about any change that would remove or reduce the fund’s dedicated nature and will encourage continued consultation with the attorney general, comptroller and budget staff.

Committee members and many testifiers asked for a delayed implementation and for further stakeholder meetings during the interim so a longer‑term, less disruptive solution can be developed. Several speakers urged the Legislature to preserve the Works of Art Special Fund’s role in supporting arts education and community programs while addressing any bond‑law clarity the attorney general requires.

The measure will proceed through the Senate process with a committee recommendation to pass with amendments. Senators who recorded reservations said they will continue to work with stakeholders to address the legal and fiscal questions raised in testimony.

The hearing included extended public comment from dozens of artists, arts educators, nonprofit leaders, museum staff and community members from across the islands.

Ending: The committee’s vote keeps HB 13‑78 alive while directing additional work to resolve legal and fiscal implementation questions; senators and stakeholders said they expect follow‑up meetings before the bill reaches final action.