Council approves budget; sets aside $8.3 million more for nonprofits

Published On: Jun 05 2013 07:00:00 PM HST

The back-and-forth budget battle between key members of the Honolulu City Council and Mayor Kirk Caldwell wrapped up Wednesday, with much of the focus centered on additional funding for nonprofit groups.

Led by Chairman Ernie Martin, the council added $8.3 million to grants-in-aid funding, augmenting the $5.5 million already set aside by the city. Caldwell insisted the earmarks are not being properly vetted by the Grants in Aid Advisory Commission, and he said the additional funds would not be released.

"We have sent letters out to all the people who applied to let them know don't count on the money," said the mayor. "But more importantly, we also sent a letter off that said please apply through the grants-in-aid process."

Last November, voters approved an ordinance that requires the city to give nonprofits a half percent of general fund revenues every fiscal year. For the current budget cycle, that amounts to about $5.5 million, which is then parceled out to nonprofits by an up or down vote by the newly created commission.  

During the budget hearing, Martin disputed Caldwell's claim that grants-in-aid earmarks are not being properly vetted, saying the process was received the necessary oversight during Budget Committee hearings. He also said the ordinance approved by voters was never meant to set a cap on the amount of funding for nonprofits.

"When I drafted that charter amendment, it was never intended that that be the sole source of support for our nonprofit community," said Martin. "That was just the minimum baseline."   

Before the $2.16 billion operating budget (Bill 11, CD2, FD1) passed by a vote of 7 to 1, council members introduced four separate floor drafts in an attempt to amend the bill. Councilman Breene Harimoto's proposal focused on cutting the $8.3 million in additional funding to nonprofits, while a separate draft by Councilman Ikaika Anderson sought to remove $4.3 million from the earmarks. Meanwhile, Councilman Ron Menor's measure sought to bring the additional $8.3 million worth of earmarks within the privy of the Grants in Aid Advisory Commission.

In the end, a floor draft by Budget Chairwoman Ann Kobayashi was approved, which keeps the additional funding for nonprofits intact.  Kobayashi's floor draft also specifies that $65 million given to the administration for vacant positions cannot be transferred for other uses without prior notification to the council.    

"So at least then the whole process is transparent because before, they'd have this vacant funded pot, and they would just use it for whatever," said Kobayashi. "The public didn't know how the money was being spent."

Caldwell objected to the added oversight by the council, calling it an encroachment on his power as mayor. He said the council's restriction could impact the timely hiring of lifeguards during the busy South Shore summer surf season, and chastised Kobayashi for authoring the floor draft less than 24 hours before Wednesday’s hearing.

"It does restrict our ability to address filling positions quickly," said the mayor. "But, I do think it's an intrusion on the executive branch, and of course I appreciate it. I used to be in the legislative branch, so this push-pull goes both ways."   

The council also passed a $635 million capital improvement budget, but Caldwell was concerned that $17.8 million set aside to purchase trucks and other equipment with a maximum lifespan of 12-years, was being funded with 25-year bonds, which will eventually cost the city $32.7 million.   The mayor likened it to purchasing a car with a 30-year mortgage.

Kobayashi said she was satisfied with the budget process, noting the council did not raise any fees or taxes. However, the operating budget that was approved is $72 million more than what Caldwell had requested, and the CIP budget is $12.5 million more than the mayor's request.

Caldwell said an additional $70 million in the council's operating budget comes from the $142 million sale of the city's affordable housing complexes under former Mayor Peter Carlisle. The $70 million is being used to completely retire the city's affordable housing bonds.  

"They're adding more things (and) new stuff," said Caldwell. "I think before we add new stuff, let's take care of what we already have. So, I think I was actually a little more fiscally conservative and responsible in terms of working with what we have."

The mayor was pleased the city's spending plan addressed what he calls his five priorities: repaving roads, refurbishing parks, restoring bus routes, fixing sewers and building rail better. The new fiscal year begins July 1, and runs through June 30, 2014.


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