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Officials clash over ‘raid’
on HPOWER fund

By Gordon Y.K. Pang
Star-Bulletin

City Councilwoman Donna Mercado Kim is questioning the administration for "raiding" $23 million from the HPOWER fund to balance the city operating budget.

But Finance Director Roy Amemiya defended the move to use the special fund to help pay refuse collection costs. The alternative, Amemiya said, is to balance the city's $1 billion budget by raising property tax rates.

The clash came yesterday during the first of a series of budget presentations by the administration to the Council Budget Committee.

A bill now moving with the budget allows the city to use the HPOWER special fund for operation, maintenance and repair of the refuse collection and disposal program. The fund now has $90 million.

Amemiya said the waste-to-energy plant and refuse hauling are part of the same solid-waste disposal function. Using the HPOWER fund helps free funds in the city's general fund that normally would go to solid-waste expenses.

"It makes sense," Amemiya said after the meeting. "They're supplying the fuel for the energy. And the whole thing is one big, interrelated process."

Kim said the administration is misleading the public by implying it has cut back on expenditures.

"In reality, instead of cutting back, we're just raiding some of these funds to balance the budget," Kim said. "In essence, these are monies that perhaps should have gone back to the ratepayers."

The solid-waste disposal companies, which pay the tipping fees into the HPOWER fund, pass on the cost to their customers, Kim said.

Amemiya said the HPOWER special fund money isn't as critical as it once was.

The fund was set up in 1990 to pay for the operation, maintenance and repair, and bond payments of the facility. It also anticipated that the city would need to fund a replacement facility possibly as early as 2010.

Amemiya said the city's advisers now estimate HPOWER can run another 20 years and at a lower cost than originally anticipated.

The city also was given the option to buy back the facility in 2010, and initial estimates ranged from $30 million to $60 million, Amemiya said. And recently, the forecast is it will be closer to $10 million.

"This came at a good time because I didn't want to raise property taxes, and the mayor was dead set against it," Amemiya said after the meeting.

The administration needs an ordinance to use the money for solid-waste collection expenses.

Councilman Duke Bainum said the proposed use of the fund money appears justified, but Kim's concerns could be addressed by restricting the use of those funds to next year's budget and "not open it up as a piggy bank."

The city has previously used the HPOWER fund to help offset the cost of solid-waste collection: $23.2 million in fiscal 1998 and $24.3 million in 1999.

Bainum, as budget chairman in 1997, warned the administration then not to be dependent on one-time revenue sources.

But circumstances are different now, Bainum said, citing the new estimates for replacement and buyback costs for HPOWER. Add to that the forecasts that property-tax revenues will rise next year and he'd rather use the special-fund money for the upcoming budget instead of raising property-tax rates, he said.

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City & County of Honolulu