Record city budget draws fire
By Robbie Dingeman
Advertiser City Hall Writer
As an election year looms in 2002 for Honolulu's mayor and some of his colleagues seeking higher office, the City Council is expected to give final approval to a $581.2 million construction budget, the most expensive in city history.
The budget is $1 million more than the previous record budget approved in 1992. Last year's construction budget was $299 million.
Seven of nine council members are barred by term limits from running for re-election, but Mayor Jeremy Harris has his sights set on governor. Councilman Duke Bainum is running for mayor and Council Chairman Jon Yoshimura is running for lieutenant governor, both with Harris' support. Councilman John DeSoto is also considering a lieutenant governor's bid.
Some of those not running again consider part of their legacy to be what the massive construction budget will build.
With such a large amount of money being proposed, however, the Tax Foundation of Hawaii has concerns about the debt, especially when long-term government bonds are involved.
Foundation president Lowell Kalapa said all bonds must still be repaid.
"It's not like it's free money," he said. "Should the city's ability to pay not increase as fast as the rate of increase in scheduled principal payments, subsequent generations of policy makers and taxpayers will be forced to make the difficult choices of reducing services and projects or raising taxes."
Delaying debt repayments to increase the amount of operating funds in order to issue more debt, he said, "is hardly honest and accountable."
Kalapa says that turning control of about $60 million to community "vision teams" and neighborhood boards may be popular but allows those with narrower interests to control the money rather than elected officials.
"I think that's in a sense pandering to the communities, a way to engender fondness or support," he said.
City spokeswoman Carol Costa said Kalapa's approach "would force today's taxpayers to pay an inequitable share of the cost of city improvements that will be enjoyed by taxpayers for many years to come."
Costa, speaking for the Harris administration, said the city considers the life of the project when determining the capital budget and the city has shifted its policy this year so that purchases of equipment such as computers and automobiles will be paid through shorter-term financing rather than long-term bonds.
City Council Budget Chairman Steve Holmes said the city has been responsible in working to restructure debt in appropriate ways that are financially sound.
Holmes said he's reassured because city budget officials meet with bond-raters annually to discuss what the city is doing and would react to wrong turns. "They're standing in judgment of the city's budget policies."
He acknowledges that some of the land-acquisition and parks projects — such as the creation of Kahalu'u regional park in his Windward district — are being done now to coincide with his last few months in office.
"Sure, I threw in money to finally bring (the Kahalu'u park) to its completion," Holmes said. "I guess I am hoping that that will be my legacy to the community as I go out the door."
Economist James Mak, a professor at the University of Hawai'i, said he can't tell if the large expenditures are in the public's interest without taking a detailed look at the current budget proposal.
The nature of the projects would help to determine the wisdom of the plan, he said.
"If you invest in a project that's going to yield benefits for 20 years, it makes sense to spread out the payments over 20 years," Mak said. "But if you're just stretching it out but these benefits are largely consumed today, then you're imposing a burden on future generations that they shouldn't have to bear."
Council Chairman Yoshimura points to more than $200 million worth of the budget going to much-needed improvements to the city's aging sewer system.
Yoshimura said that he and some of the other Council members entered office facing plummeting real-property tax values and city revenues. Many have favored community projects for years but not had the opportunity to launch them. "We are now able to do some of those projects that we have wanted to do for a long time."
Beleaguered City Councilman Andy Mirikitani, under federal indictment on charges that include theft, bribery and extortion, is estranged from most of the other Council members, but is not shy about voicing concerns about the capital budget.
Mirikitani said the spending plan is much larger than in recent years and "it doesn't make sense to increase the city's debt load so dramatically."
"This seems to be driven by politics," Mirikitani said, "and an upcoming gubernatorial campaign rather than the public's interest."
