Council members caught off guard by projected deficit
“How did it suddenly appear,” said Budget Chairwoman Ann Kobayashi.
According to Honolulu Mayor Kirk Caldwell, the city is facing a budget deficit of $26 million just a few months into the current fiscal year, which began July 1.
News of the shortfall caught City Council Budget Chairwoman Ann Kobayashi by surprise when she was asked about it last Friday.
"How did it suddenly appear?" said Kobayashi. "We put in monies for projected increases for electric, water (and) salaries, so I don't know what this $26 million is."
In an email to KITV4, city spokesman Jesse Broder Van Dyke said the projected shortfall is the result of a perfect storm of three factors, which he listed as follows:
- insufficient revenue increases
- additions by the Council to grants-in-aid and operating expenses
- collective bargaining increases
Broder Van Dyke said part of the problem is that the Council balanced the $2.16 billion operating budget by using funds set aside for vacant funded positions. The budget that passed in June contains $65 million to cover vacant funded positions, as well as any collective bargaining increases for city workers.
"At this point, the $26 million in cuts are still a work in progress and the administration intends to brief all the council members and all the departments before making a public announcement," wrote Broder Van Dyke.
As of Monday afternoon, Councilman Ikaika Anderson said he had not been briefed by any administration official about the projected deficit. Anderson spoke with Kobayashi and Council Chairman Ernie Martin before being approached by KITV4.
"The City Council did send the mayor a balanced budget, that is fact," said Anderson. "If in fact the mayor feels there are certain priorities that he cannot meet, than let's sit down and talk and see what we can come up with."
Leading up to final passage of the budget on June 5, Caldwell repeatedly warned the Council about adding an additional $8.3 million to the city's grants-in-aid program, as well as the Council's failure to pass a nickel per gallon increase to the fuel tax, which would have generated $15 million in additional revenue.
Kobayashi said the Council did not include revenue from a fuel tax increase as part of its budget, so she's perplexed as to why any shortfall would exist.
"First of all, I want to know what this shortfall is so that we can work on it, and look at where we might have to trim," she said. "We have the highest gas rate in the nation, so we shouldn't touch that. But, let's move on. Let's keep running this city as efficiently as possible."
Just last week, the Hawaiian Humane Society was forced to scale back some of its enforcement operations after the city failed to increase the nonprofit's $2.3 million budget by $800,000.
Anderson told KITV4 he's anxious to find out more about the city's projected budget deficit, but said he would resist any effort that increases the financial burden on taxpayers.
"It's my preference that we talk about cutting services, as well as consolidating existing services, before asking the taxpayer for more money," said Anderson.
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