Council to vote
on spending limitsThe city budget director
warns that the two bills
are "irresponsible"
City Council members say they want to radically change the budget process, allowing better financial planning of programs like parks maintenance and bus fares.
But Mayor Jeremy Harris' administration says the City Council measures could lead to cuts to city services that would upset Oahu residents.
"There will be very substantial services that would be eliminated, very deep cuts in services," said city Budget Director Ivan Lui-Kwan.
The Council votes tomorrow on two bills introduced by Councilman Charles Djou. The bills would establish a spending limit on the operating budget and a limit on the amount of debt the city can incur with its construction budget.
Also moving is a proposed amendment to the City Charter that would convert the city budget to a biennial rather than annual basis.
All three proposals are based on the state budget process. Five of the nine Council members are former state legislators.
"The motive behind all of this is pretty simple: It's that we have a fiscal mess on our hands in city government, and I think a lot of taxpayers are baffled," Djou said. "Placing a spending ceiling and a debt ceiling is an effort to try and get a handle around the budget process."
Djou said his hope is that the legislation will force the City Council and the mayor to focus on city priorities. "I think really what got us into this mess in the first place has been that the city has gone off and spent a whole heck of a lot of money on what I call a lot of glamour projects and not focused in on these core priorities."
Djou said states like Colorado have a spending ceiling and have been able to weather bad economic times better than other jurisdictions.
But Harris administration officials said the spending and debt ceilings would be restrictions that would cause problems and force the Council and administration to fund only fixed costs and prevent them from transferring funds to cover emergencies or pay raises.
"These bills constitute the most irresponsible bills being considered to date by this City Council," said Lui-Kwan.
Under the spending-ceiling proposal, the new budget would be based on the previous budget, locking the city into funding fixed employee costs of retirement, health and workers' compensation contributions, he said. Under the proposal, the budget would leave out more than $30 million and could also lead to employee layoffs, Lui-Kwan said.
Lui-Kwan countered Djou's contention that the city is in a fiscal mess by pointing to the recent upgrade of the city's bond rating, which allows for better interest rates when the city borrows money. Lui-Kwan said Djou's bills would hurt the bond rating.
Ann Kobayashi, Council Budget Committee chairwoman and former chairwoman of the Senate Ways and Means Committee, said that working on a two-year budget instead of an annual budget would allow departments to carry out budgets instead of constantly having to worry about preparing a new budget each year.
"We have to always be open to change. We would always look at what would make the process easier and more efficient," she said.
But Lui-Kwan said the state and city have different sources of revenue and that real property taxes, the city's main source of revenue income, are set annually. "It makes more sense to do it every year, do your budget every year, because we update our valuation every year."
