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The Honolulu Advertiser

Posted on: Sunday, February 20, 2005

Mayor will bring grim fiscal tidings

By Jerry Burris

Here's a heads up for you on Mayor Mufi Hannemann's first State of the City address, coming Thursday.

Plan on hearing a lot of "Eeyore" and not much "Pollyanna."

That is, the message will be somber, serious and somewhat grim about the near future for Honolulu and its taxpayers.

The reason? Hannemann says he has inherited a city government that is teetering on the edge of a financial abyss. The fix, he says, will require cuts in popular city programs, new or higher fees and — as distasteful as it might be — even more borrowing on top of an already heavy debt load.

As for a general rollback on property taxes: Forget it.

As reported yesterday by City Hall reporter Robbie Dingeman, Hannemann has come to the conclusion that his predecessor, Jeremy Harris, left the city in fragile financial shape.

The conclusion is based on a six-week review of city finances and operations by a broad-based team of City Hall insiders and outside analysts headed by senior policy adviser Paul Yonamine and John Zabriskie, a senior private-sector audit specialist.

Their conclusion: Things are dicey now and "are going to get worse before they get better."

Essentially, they argue that the Harris administration kept a lid on growth in the city operating budget and limits on property tax hikes through fancy bookkeeping, deferred spending and fast-paced borrowing and lending among and between various city funds. In short: All this footwork delayed, but did not deal with, the fiscal day of reckoning.

To a degree, this should come as no surprise. Harris was rightfully proud of his administration's ability to keep up with, and indeed, expand city services and programs without increasing the budget.

Because Honolulu's economy is in good shape right now, the auditing team said, the city is in adequate fiscal health for the time being. But the trend lines "decline rapidly," they say.

This precipitous decline, they took pains to point out, will not be the result of outside forces but rather is directly "due to prior actions." Thank you, Mayor Harris.

One statistic: Debt service now amounts to around 25 percent of the city's billion-dollar-plus operating budget, more than any other budget item, including public safety. Unfortunately, they said, to catch up on deferred construction projects the slice of the budget devoted to repaying debt will have to go even higher.

That means less money for other things, including Hannemann's frequently cited "nice to have" but not "necessary to have" luxuries such as "vision" teams and Sunset on the Beach.

Some of this doom-and-gloom may be political strategizing. That is, it's better to reduce expectations at the outset and then, if things go right, exceed them or at least have someone else to blame when new taxes and borrowing are ordered.

But it also means that Hannemann believes the city has been partying hearty for several years and now it is time for someone — you — to pay the tab.

Jerry Burris is The Advertiser's editorial-page editor.