Bills aim to control city debt, spending
By Johnny Brannon
Advertiser Staff Writer
Saying city borrowing and spending must be brought under tighter control to ensure stability and prevent major tax increases, a city councilman has proposed to put strict limits on annual expenditures and debt payments.
"It's really an effort to restrain the urge to spend with a credit card," Councilman Charles Djou said. "We have a fiscal hangover and we've got to enforce some tight discipline to sober up our budget."
One bill Djou sponsored would require that spending to pay off general obligation bonds be no more than 18.5 percent of the city's annual operating budget.
The city has earmarked nearly 18 percent of this year's $1.178 billion budget for debt service. Nearly all that money will pay off bond principal and interest, with the rest paying off other debt.
City projections show that debt service could be up to 20.3 percent of the annual budget by 2008, while the percentage spent on core services would shrink.
Djou said too much had been spent in recent years on beautification projects such as landscaping, neighborhood signs and canoe halau.
"I think the public can see that a lot of the debt that was incurred produced a lot of nice but unnecessary projects," Djou said.
A second bill would tie allowable expenditures to the estimated growth rate of the city's economy. The council gave both bills initial approval on Wednesday and referred them to the Budget Committee for a hearing.
Mayor Jeremy Harris and Budget and Fiscal Services Director Ivan Lui-Kwan haven't had an opportunity to review the bills yet, a spokeswoman said.
If enacted, either measure could be suspended by a two-thirds vote of the City Council.
The principal amount of outstanding city bonds, notes and loans was $2.742 billion as of late August, when $250 million in new bonds were issued at an interest rate of about 4.85 percent.
The city's credit ratings remain excellent, largely because O'ahu's property tax base is very strong.
Reach Johnny Brannon at jbrannon@honoluluadvertiser.com or 525-8070.