Thursday, January 28, 1999

Council balks on using
bonds to pay salaries

By Gordon Y.K. Pang


The City Council has sent to its Budget Committee for reworking a proposal to use $2.5 million in bond money to help pay the salaries of some city employees.

Mayor Jeremy Harris and Budget Director Malcolm Tom, in response, warned that the city's $130 million operating budget shortfall will deepen an additional $5 million if the plan is not approved.

Council members, in voting unanimously to send the bill back to committee, said they want the city to develop a city-wide policy on when bonds should be taken out to pay for salaries.

The administration says the salaries of Design and Construction Department employees who deal with capital improvements should be paid directly from the projects, which are funded with bonds.

The plan calls for 146 positions to be funded up to 70 percent through bonds.

Several Council members criticized the administration for paying salaries with bonds, which are paid back over a period of between five and 30 years.

"We've crossed the line on this measure, we're now paying salaries with a credit card," Councilman Steve Holmes said.

"We cannot continue to mount debt," Councilman Jon Yoshimura said.

"We are sensitive to the high debt we've been grappling with," Budget Chairman John Henry Felix said in calling for the deferral.

Harris, during a news conference later in the day, said Council members last year approved the budget he submitted specifying the use of capital bonds for salaries.

"If they didn't want to balance the budget that way, they shouldn't have passed the budget that way," the mayor said. "And if they decide not to do that, it means the shortfall will have jumped to $135 million."

Harris said using construction money to pay the salaries of those associated with city projects is standard procedure elsewhere.

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