Posted on: Friday, April 19, 2002

EDITORIAL
Budget shuffle cannot continue much longer

For some time now, it has become apparent that budget-writers at both the city and state levels have been engaged in a very artful kind of shell game as they struggle to keep out of the red.

It hasn't been an easy decade for either the city or the state, with a stagnant economy producing tax revenue that was hardly enough even to maintain the status quo.

At the same time, no politician was in the mood for increasing taxes on a community that had enough economic problems already.

One solution to this terrible budget squeeze is to cut government spending, and both the city and state have done that, although critics would say the cuts have been woefully short of what is needed. In other words, government has remained bigger than the economy that supports it.

That's because leaders have been reluctant to truly cut government back to the size that the current economy can support. They continue to hope things will improve and the tax dollars will begin flowing again. In other words, it was unbearably painful to consider cutting popular programs because of a "temporary" economic slowdown.

So the hard decisions were put off and a mad scramble ensued to find temporary or one-shot sources of cash to keep the ship afloat. Sometimes it involved accounting strategies, such as changing assumptions on the amounts that had to be set aside for retirement or health payments.

Sometimes it meant dipping dangerously close to zero on carryover balances, which can hurt when it comes to borrowing money. Other times it came to dipping into funds that ostensibly were set aside for other, specific purposes.

None of this is illegal, and when there is a legitimate one-time, temporary problem, such one-time temporary fixes make more sense than digging deep into the meat of government programs.

But the endgame is fast approaching, both for the city and state.

In Honolulu, the Harris administration has proposed tapping into the sewer fund, built up through sewer fees attached to water bills. The fund is supposed to pay for badly needed upgrades to the city's aging sewer system.

Without use of sewer fund dollars, officials warn, there will be shutdowns at parks and pools, cancellation of the popular Sunset and Brunch on the Beach programs and a likely substantial increase in property taxes.

Well, yes. When you hold the line on increasing taxes year after year yet maintain the line on services and city functions as costs increase, something eventually will have to give.

At the state, the big push this year is to take chunks of money out of a variety of special funds, ranging from the Hurricane Relief Fund to — this is the latest — using the $20 million or so received in settlement payments from the gas price lawsuit.

That makes little sense, since the settlement funds were supposed to go into the highway fund, which is already short and in need of yet another increase in gasoline taxes to make it whole again.

At some point, the shuffling of dollars from one place to another in hopes of a better tomorrow will have to stop. The public will have to understand that the choice comes down to fewer services or higher taxes.

Neither option is appealing, but it's reality.