BY MALIA ZIMMERMAN – Honolulu Mayor Peter Carlisle has cut $17 million in funding for 22 important safety and security programs in the fiscal year 2013 budget and beyond, but the city’s General Obligation Debt will skyrocket to as much as 28 percent as the city floats bonds to pay for the planned $5.3 billion steel on steel rail project.
That was the assessment yesterday from former Gov. Benjamin Cayetano, who is challenging Carlisle in the 2012 Honolulu mayoral primary.
“Just as we feared, Mayor Peter Carlisle’s CIP budget reveals dramatic reduction in spending levels for Fire and Police, Road Rehabilitation and Sewer Repair and Maintenance to accommodate the anticipated debt for rail construction,” said Cayetano.
At his press conference where he unveiled the information, Cayetano was flanked by three of nine members of his “truth squad” – Toy Arre, Malcolm Tom and Rod Haraga – all former cabinet members of previous mayors.
Compared to other cities like San Diego with its debt at 10 percent debt, Denver at 5.5 percent, Portland at 11 percent, and Hawaii’s state government at 12.5 percent, Honolulu will climb from about 10 percent to between 24 percent and 28 percent, Cayetano said.
The Honolulu City Council set a 20 percent debt ceiling limit, which is being ignored by the Carlisle administration, he said.
The exact amount of the debt will depend on cost overruns of the city’s rail project. Nearly $1 of every $3 collected by the city going to pay off the rail debt, Cayetano said.
The budget cuts, which include funding for a police emergency radio system, construction and maintenance of several fire stations and police stations, ocean safety and flood control programs, police car maintenance for 400 patrol cars, street lighting and bike lane improvements, are being made to keep Honolulu’s AA+ credit rating, said “truth squad” member Malcolm Tom.
Tom, who served as managing director under former Mayor Jeremy Harris, pointed out the rail project is the largest public works project in the state’s history, five times larger than the H-3 Freeway.
Rod Haraga, who served in the administrations of former Gov. Linda Lingle and Honolulu Mayor Mufi Hannemann and is backing Cayetano, addressed the condition of Oahu’s pothole-filled roadways, which continue to deteriorate.
Carlisle cut the road-repaving budget from $77 million to $45 million for Fiscal Year 2013, which Haraga said is exactly the wrong approach.
There needs to be an aggressive repaving program, said Haraga, who called the roadways “deplorable.”
Oahu needs about 3,500 lane miles of road repaved, but the cuts mean about 90 lane miles of road go without repairs, Haraga said.
Toy Arre, who worked for former Mayor Frank Fasi as his Finance Director, said yesterday: “As more of the city’s financial resources are diverted to rail, the city is forced to change its spending priorities. In the proposed Fiscal 2013 budget alone, approximately $17 million in public health and safety projects are on the chopping block. More cuts are slated in forthcoming years.”
Cayetano told Hawaii Reporter the city is so far behind on maintenance, his advisers say some $5 billion to $6 billion should be spent on sewer upgrades and repairs, $5 billion to $6 billion should go to water main repairs and upgrades, another $1.8 billion should be used for road repaving, and $800 million must go to storm drainage repairs.
Honolulu 950,000 people and 400,000 households cannot afford to pay for these basic repairs and the rail system – that kind of spending is “unsustainable,” Cayetano said.
“The City rail cost of $5.3 billion translates to $17,400 per household – $5,500 for every man, women and child,” Cayetano said.
When he unveiled his $1.953 billion city budget for FY 2013 in early March, Honolulu Mayor Peter Carlisle said he wants to “bend the debt curve downward”, get the city’s finances in order, and save more for he city’s rainy day emergency fund. See the full report on his budget here.
Carlisle, touting his fiscal conservatism, said he called “carefully balanced,” is $28 million or 1.5 percent more than his FY 2012 budget. It also includes a $577 million capital budget for the coming year, a 5.5 percent increase over his previous capital improvement budget, $295 million of which will go toward upgrades to the City’s wastewater system as mandated by the U.S. Environmental Protection Agency-driven federal consent decree.
The Honolulu City Council will have to approve the plan, which includes no residential property tax increase. Carlisle said to get the city on track financially, the city will deposit $20 million into the Rainy Day Fund, pay down more debt, invest in the city retiree healthcare fund, keep an eye on spending and invest in core infrastructure. The city administration plans to keep down salary costs with a 5 percent across-the-board labor cost reduction plan within each City agency.
Carlisle points out the rail funding comes from a separate city fund paid for by a 0.5 percent addition to the state General Excise Tax.
But Honolulu City Council member Ikaika Anderson, a proponent of the rail, expressed concern last week in a council hearing about the city budget that the city’s rail financial plan will take millions of dollars from city’s TheBus and Handivan services, forcing the council to raise property taxes to pay for these services. He called it an end run around a city ordinance that maintains city rail services are paid for with the GE tax.
In the same hearing, Honolulu Council Budget Chair Ann Kobayashi asked Honolulu Authority for Rapid Transportation interim director Toru Hamayasu to remove TheBus and Handivan funding in the rail budget, but Hamayasu said the agency needs to include that funding in the rail financial plan to satisfy requirements by the Federal Transit Administration.