Recent collective bargaining agreements reached with United Public Workers and the Hawaii Government Employees Association appear to be budget busters for the city, and that's even before arbitration awards for police officers and firefighters become part of the equation.
In an April 23 letter, Managing Director Ember Shinn asked members of the City Council to reconsider Mayor Kirk Caldwell's 5-cent per gallon fuel tax increase, which was originally meant to fund the repaving of roads. In the letter, Shinn notes that the mayor's proposed operating budget did not include increases for collective bargaining agreements, and revenue enhancers are needed.
"I ask that you reconsider a fuel tax increase or if not, that you consider increasing other rates to generate the needed revenue to allow enactment of a balanced budget," wrote Shinn.
When asked about Shinn's letter Tuesday, Caldwell said it was in direct response to his gas tax proposal being defeated by the City Council back in March.
"That letter was sent down saying we had proposed a fuel tax increase, (and) it was shot down without even a hearing in a committee," the mayor told KITV4. "Now we're saying what are their proposals to enhance revenue?"
Budget Committee chair Ann Kobayashi said it's unlikely the council would revisit the mayor's gas tax proposal or any other revenue enhancer, even though that's what the mayor's administration is demanding.
"We don't want anyone to be taxed out of their home, and it seems to be getting that way," said Kobayashi. "The best way is to cut back, (and) that's what most people do when they have an increased budget."
Caldwell said he always keeps in mind Oahu's high-cost of living, but countered that residents have come to expect a certain level of service from the city, and he's committed to making them better. That's why he said he made the unpopular decision to try and raise the city's gasoline tax.
"We proposed a revenue enhancement to help address the issue of repaving our roads, something that people are crying out to have done," said Caldwell. "That means that money that would have gone towards road repaving will have to come out of the general fund, which means there's not as much money to cover these collective bargaining contracts."
However, council Vice-chair Ikaika Anderson believes there's enough money in the city's budget to cover collective bargaining increases and keep existing city services intact. Anderson said the mayor's $60 million request for vacant positions was cut in half, and he doubts the remaining $30 million could be spent entirely by the administration.
"So, our math and the history that we've looked at tell us that the money is there for collective bargaining increases, if and when in fact that money is necessary to pay them," said Anderson.
Under a developing City Council policy, city directors would be required to ask Shinn to release funds from a provisional account for new hires within a department. The council hopes to set up the provisional account in conjunction with passage of the budget.
"There's no way that they're going to use all of that $30 million in the provisional account to pay for additional hires, (so) they can also use that for collective bargaining increases," explained Anderson.
Meanwhile, Caldwell is also concerned about what a new budget may do to Honolulu's AA bond rating. The mayor said if rating companies don't believe the city is controlling costs or enhancing revenue, the city's bond rating could be in danger. "If we don't do both, our bond rating can be jeopardized," said Caldwell.
Anderson agreed with the mayor that the city's bond rating is an important issue, and that's why he said it's critical for the city to scale back its aggressive hiring goals. He said city departments that must pay collective bargaining agreements can simply scale back on the number of new employees.
"With the budget that the City Council is proposing, there is enough money to account for any raises," said Anderson. "I share the mayor's concern with our bond rating, and I would agree that we do need to ensure that we see some carry over."
Meanwhile, Anderson is attempting to push through a bill that would create a county highway user fee in place of the city's 16.5-cent gas tax. It's unclear the level of support the measure has among his colleagues, but Anderson is insistent that road repairs should not be contingent on additional revenue, since the city can simply issue more bonds.
The mayor and the City Council are racing to beat a deadline for approval of a new budget. A council hearing on June 5 is when a majority of budget bills are scheduled to pass final reading. Under the city charter, a budget must be passed by June 15.