City budget has
$4.2M shortfall

An administration proposal
fails to account for pay increases
and pension fund contributions

The proposed city budget is $4.2 million short because of higher-than-expected employee pay and pension benefits, and the City Council has only a week to find the money to plug it.

City Budget Director Mary Patricia Waterhouse told the Council's Budget Committee that $3.3 million is needed for pay raises and $900,000 for corresponding higher state pension fund contributions.

The administration had not notified the Council of any projected shortfall.

"I don't understand how all of a sudden we are notified about this," said Budget Chairwoman Ann Kobayashi. "Are you still putting the budget together for '06? It was submitted to us in March. But are you still working on it?"

The Council is scheduled to take a final vote on Mayor Mufi Hannemann's budget June 6. But because the final budget document needs to be ready six days before the vote, the Budget Committee has one week to either find more revenue, make more cuts or a combination of both.

"I apologize because I thought you had gotten the memo of 3.3 (million dollars). And then we just discovered this (additional state Employee Retirement System obligation)," Waterhouse said.

The city's white-collar workers won annual 5 percent pay raises for the next two years through binding arbitration last month, after the Hannemann administration had submitted a proposed $1.35 billion operating budget to the City Council. The city's blue-collar and ambulance workers followed that by negotiating similar salary increases.

Kobayashi told Waterhouse the administration needs to identify how it is going cover the shortfall because it submitted a budget that is not balanced.

Councilman Romy Cachola asked Waterhouse, "If you cannot find the money, are you going back and cut some of the departments you already funded?"

Waterhouse said part of the shortfall can be covered by an additional $2 million the city anticipates collecting in delinquent property taxes. She said that is the amount the city traditionally collects over what it budgets.

As for the rest, Kobayashi said the Council is going to try to work something out with the administration.