Municipal debts have grown alarmingly across the country, and Honolulu is no exception. While some cities are teetering toward bankruptcy, Mayor Peter Carlisle is taking a responsible path of proposing reduction in borrowing, holding relatively steady on property taxes and moderately increasing an array of fees for targeted public services. Overall, the $1.932 billion plan looks sound, as it seems to tackle structural changes that will yield long-term benefits.
Pensions and health care obligations nationwide by cities, as well as states, have been devastated as tax revenues have shrunk and demands for services have grown, presenting the cities with enormous budget challenges. Honolulu’s long-term debt plus interest in the past seven years has ballooned from $193 million to $335 million and is expected to hit $383 million in the 2012 fiscal year.
Carlisle said in his State of the City address that the city "must sharply reduce its long-term borrowing for long-term projects." To that end, he is aiming to limit annual capital improvement spending to $125 million.
The economic stimulus to be created by the rail system, paid by revenue from a general excise tax surcharge, should enable the city to go slow on other construction projects.
To raise needed revenue, Carlisle has chosen to increase user fees, complying with a sensible 2006 Council resolution that called for such fees to pay for the entire cost of services. Those include:
» Increasing monthly sewer fees by $2.74, 4 percent more than today’s rate of $68.39.
» An additional $2 annually atop the $3-per-year cost of a driver’s license.
» A $2 increase of today’s green fees of $16 on weekdays and $20 on weekends at municipal golf courses. Monthly cards for up to 10 rounds paid by golfers at least 60 years old or disabled would increase from the current $45 to $80, a sharp increase but still a bargain for avid golfers.
» Honolulu Zoo entrance increases of $1 to $4.
» Increasing monthly parking fees by $13 from the current $35 for civil-service city employees, compared with an average of more than $200 paid by private-sector commuters for unreserved parking downtown.
House Speaker Calvin Say introduced a bill by anonymous request in the 2006 Legislature calling for a study of state, county and private parking places but the proposal quickly died.
Dirt-cheap parking fees by public employees have been sacred, and Carlisle is to be commended for finally challenging them.
» Increasing the city gasoline tax, now 16.5 cents a gallon, by six cents over the next three years, which may be hardly noticeable if oil prices continue to rise because of Mideast instability. Making the increase more palatable is that the revenue is to be entirely directed at road maintenance.
Carlisle is not calling for a significant increase in property taxes, the city’s principal source of revenue, except to return to a uniform rate for both resident and non-occupant homeowners. At $3.50 per $1,000 of property value, the rate would be 8 cents higher for owner occupants; for nonoccupant homeowners, the rate would be 8 cents lower.
Major variables in Carlisle’s budgetary wish list are that public employee salaries can be decreased by 5 percent in union contracts, and that the ailing state won’t raid the city’s portion of the hotel room tax. We echo those sentiments.
City Council Chairman Nestor Garcia has observed that the Council and Carlisle appear to be "in sync." That united front may well come in handy as residents and others start checking their wallets to see how much deeper they must dig.