Saturday, May 29, 1999

Budget fight pits
mayor vs. gov

Harris threatens to work
against pay raises for UPW
employees if the state
withholds $11 million

By Gordon Y.K. Pang and Mike Yuen



Mayor Jeremy Harris says the city expects to gain a disputed $11 million from the state to help balance Honolulu's $1 billion operating budget.

If that doesn't happen, Harris said, he will recommend that the City Council not fund pay raises for United Public Workers employees.

Gov. Ben Cayetano said this week he will not release about $11 million to the city. The Legislature had approved the grants to help pay for the collective-bargaining contracts of UPW and Hawaii Government Employees Association workers.

Harris and the new City Council leadership have been banking on the $11 million to help balance next year's budget.

The mayor said he will ask Cayetano to reconsider his decision not to release the money.

But Cayetano said yesterday that the city is already getting a $27 million reduction from its contribution to the state Employees Retirement System because of higher earnings on investment.

The governor said he was not party to the Legislature's agreement to make up the rest of the funding for the salaries through an $11 million grant to the city and $4 million for the three other counties.

"I think the mayor at this particular point should be looking at ways to raise the money so that he can carry out his part of the bargain," Cayetano said.

Harris protests state's share

Harris said his second plan is to argue that the $27 million in savings in retirement contributions is too low.

The state paid 62 percent of the contributions this year and will pay 16 percent next year, Harris said. Meanwhile, the city's share is going from 24 percent to 58 percent, he said.

"They're unfairly distributing the money back," Harris said. "The state ends up with the lion's share."

If the savings are properly apportioned, the city would be able to meet its shortfall, he said.

But the governor's office says the figures are set by actuaries' calculations and cannot be manipulated.

Harris added that he talked to Cayetano about the disparity and "he has agreed to look into it" along with retirement fund officers. If no other solution can be found, Harris said he will recommend the Council not fund the UPW contract.

'Bite the bullet, make cuts'

Cayetano said that since the Harris administration was able to find $21 million in 10 days to balance the budget, it shouldn't be difficult to find an extra $11 million.

But according to Harris, his administration cannot locate any more cuts and it is too late to raise fees or taxes since there is not enough time for public hearings.

Council members were mulling options yesterday.

'The mayor should be
looking at ways to raise the money
so that he can carry out his
part of the bargain.'

Ben Cayetano

Both Yoshimura and Budget Committee Chairwoman Rene Mansho said pay raises for city workers could be one area where cuts can be made.

Ousted Council Chairman Mufi Hannemann said the Council needs to "bite the bullet and make the cuts -- there is plenty of fat in city government."

Meanwhile yesterday, the Council's Budget Committee made its recommendations for revenues in the upcoming budget.

Committee members were criticized by rental car businesses for recommending an increase in motor vehicle registration fees from $10 to $20. The increase in fees is expected to bring an added $10.9 million into the operating budget.

Condominium and small-business owners protested an increase in property tax rates designed to offset losses in revenues caused by falling assessments.

The increases for both registration fees and property tax rates were approved by the committee.

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