Mayor jabs council over budget add-ons

Published On: May 29 2013 06:27:00 PM HST

One week before the City Council is scheduled to approve the city's $2.71 billion operating and capital improvement budgets, Honolulu Mayor Kirk Caldwell held a news conference Wednesday to highlight the ballooning budget for nonprofit groups, also known as grants-in-aid.

"There are going to be times when we disagree," the mayor told reporters. "It's not going to be something personal, it's going to be about policy, and I think here we have some disagreements on policy."

The mayor presented a chart during his news conference that shows how the city's grants-in-aid budget has exploded from $1.2 million in fiscal year 2011 to the proposed $13.8 million for the upcoming fiscal year, which begins July 1.

Under a charter amendment approved last November by Oahu voters, a half percent of the city's general fund must be awarded to nonprofit groups every year. For the current budget cycle, that amount totaled $5.5 million. However, council members added an additional $8.3 million with little oversight from the newly-created Grants-in-aid Committee, which decides whether to award grants to nonprofits based on an up or down vote.

"Instead of following the process of this charter amendment going through this grants-in-aids process… they have added almost another $10 million on top of that with no openness (and) no transparency," said Caldwell. "This usurps the will of the people and the very process the council put in place."

However, Budget Committee Chairwoman Ann Kobayashi said the mayor failed to submit a balanced budget, since Caldwell's spending plan counted on a nickel per gallon increase to the city's 16.5-cent per gallon fuel tax.

"He sent us what he called a balanced budget, basing it on phantom money, $15 million from a fuel tax that didn't exist," said Kobayashi.   

On June 5, council members Ikaika Anderson and Breene Harimoto are scheduled to introduce floor drafts to the capital budget that calls for the additional $8.3 million in grants-in-aid funding to be dropped. Kobayashi believes the two measures will be defeated, since federal grant money to nonprofits has been severely scaled back.

"Instead of the $22 million we used to get from the federal government, this year we got $9 (million). So, there's a lot of needy people out there," Kobayashi insisted.   

The effort to increase funding to nonprofit groups is being spearheaded by Council Chairman Ernie Martin, who was unavailable for comment Wednesday. Last week, one of Martin's aides told KITV4 that nonprofits in his district stand to reap $2.58 million in additional grants-in-aid funding, with the remaining dollars going to other council districts, or organizations that operate island wide.  

However, the mayor didn't restrain his criticism of the council to grants-in-aid spending. Caldwell also faulted the council for using bonds to purchase $17.8 million worth of equipment like trucks that have a service life of only seven to 12 years. He called those purchases "fiscally irresponsible," since taxpayers will eventually shell out $32.7 million over 25 years of debt service. Caldwell added the move could also threaten the city’s AA+ bond rating.

"This is like getting a mortgage on your home, and then using it to buy a truck," said Caldwell.

The mayor also denounced the council for balancing the budget by using $10 million from a retirement account for city workers (OPEB), and taking another $6.2 million from the city's rainy day fund.

"This is about being fiscally prudent, by watching every single dollar (and) by not kicking the can down the road, letting some other person, some other generation worry about it," said Caldwell.


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