Gathering Places
Gathering Places
Even though the state budget comes in at $3.4 billion and the Honolulu County budget runs about $1.3 billion, we taxpayers know relatively little about how that money is managed. Maybe it's time we found out more. Taxpayers know
very little about
where their money goesWe know the general fiscal picture and how much money goes to programs that we're particularly interested in. Every so often the media will report on a newsworthy expenditure, like security for the recent Asian Development Bank meeting, or a scandal, like the Ewa housing project. For the most part, however, we don't really know much about the flow of money in government.
In a recent "Raising Cane" column, Rob Perez focused on an obscure but important part of money politics in Hawaii, namely the special purpose revenue bond. This a financial device that allows nongov- ernment organizations, including profit-making companies, to raise funds through tax-exempt bonds with the state acting as guarantor.
A quick examination of state documents on the Internet reveals that Governor Cayetano's Budget and Finance Department (B&F) has been more cautious about issuing such bonds than the Legislature, which (fortunately) can only authorize but not issue the bonds.
For example, even though the Legislature authorized $2.6 billion in these bonds in the last biennial budget, B&F issued less than half ($1.2 billion), almost all for public purposes such as health care, water projects and utilities. During the just-concluded session, the Legislature authorized another $232.5 million in special purpose bonds.
In addition to a Science & Technology International $10- million bond authorization, other legislative largesse would benefit organizations such as Kahala Senior Living Community ($142 million), Ohana Foundation ($100 million), Rickmar Properties ($38 million), Kauai Coffee Co. ($10 million), Hawaii Gold Cacao Tree Inc. ($10 million) and Aloha Studios Inc. ($10 million).
Assuming that these and other beneficiaries are worthwhile enterprises, it would nonetheless be useful to hear from legislators why they gave special treatment to them when other, presumably equally worthwhile ventures and perhaps their competitors, do not get legislative backing.
Other parts of government warrant closer reporting. The state's huge pension fund, which at $8 billion (down from nearly $11 billion two years ago) operates in the same league as Bank of Hawaii, First Hawaiian Bank and Kamehameha Schools. The pension fund is among the wealthiest entities in Hawaii, yet, except for occasional stories in the papers, remains a mystery in the way it makes its investments, loans and consultant fees.
Other organizations that could bear more scrutiny might include the Hawaii Community Development Authority, whose appointed board makes important decisions about land use in Kakaako and has the power to make assessments on property owners.
Still other candidates for review might be the Hawaii Strategic Development Corp., which invests taxpayer money in private ventures, and its sister agency, the High Technology Development Corp. Almost any investment in high-tech is risky, so what criteria does the state use in backing individual companies? The business press has lately reported a rise in accounting skullduggery among big companies. How do public officials protect taxpayer money against that kind of problem?
There's that old standard, the nonbid contract, more reporting about which would be fascinating. In bond management, the state seems to be doing a good job. The B&F has earned an A-plus rating from Standard and Poor, and an AA3 from Moody's.
Honolulu enjoys good credit ratings, though recent efforts by Mayor Harris and Council Chairman Yoshimura to more than double the bond commitments from $268 million in 2000 to $580 million next year raise questions that are surely not independent of their bids for higher public office.
These credit ratings are important not only because they tell investment banks and other potential creditors whether Hawaii is a good risk, but because they are free of politics. The ratings people couldn't care less who the governor or mayor may be. They just want to know that the state and counties can pay their debts.
Articles about money are not usually sensational or even remotely exciting, but they can tell much about how public officials are carrying out the trust we taxpayers have placed in them. This is especially important as we approach a campaign year in which voters will have a chance to select occupants for almost all elective offices in the state. Certainly an important question will be whether the candidates are responsible when it comes to spending our money.
Webster K. Nolan is a retired
features editor of the Star-Bulletin.