How much in city operational dollars should go to Oahu nonprofit groups and how such funds should be divvied up are at the core of a clash between Mayor Kirk Caldwell and City Council leaders before Wednesday’s final vote on the city’s $2 billion operating budget.
The argument is over roughly $8 million that six Council members chose to add in "grants-in-aid" designated for specific nonprofits. Caldwell said he intends to withhold funds for grants that do not go through a recently established grant funding process.
The mayor and a minority of Council members say the city is already setting aside $5.5 million for nonprofits under the process approved by voters in the form of a City Charter amendment in 2012. The Charter amendment was introduced to help nonprofits in the wake of dwindling federal aid and requires the city to dedicate 0.5 percent of general fund revenues to a grants-in-aid fund made available to eligible nonprofit groups.
To qualify for a share, nonprofits need to prove that they serve the economically and/or socially disadvantaged or provide public benefit through arts, culture, economic development or the environment. Applicants would need to go through both the Department of Community Services and a newly formed Grants In Aid Advisory Commission that prioritizes the requests and submits its recommendations to the Council, which will make the final decision.
Caldwell and the minority Council members say those same rules should apply when the Council considers additional funds. One of those Council members, Breene Harimoto, is proposing a change to the budget that nixes $6.5 million of the $8 million in additional grants-in-aid.
While he supports providing some grants-in-aid money to nonprofits, Harimoto said, those receiving the additional earmarked nonprofit funding are essentially being allowed to bypass the vetting process the Council chose for those that need to apply through the fund. The additions "violate the very process we created (with the Charter amendment) because we are adding line items outside of the process," he said.
Harimoto instead wants the money to pay for restoration of lost bus service and to provide backup funding for unfunded personnel matters such as police and fire recruit training classes.
But Council Chairman Ernie Martin and Council Budget Chairwoman Ann Kobayashi, in a news release Friday, said it is Caldwell who should be criticized for not wanting to help nonprofits that are hurting in the wake of steep cuts in federal Community Development Block Grant funding that the groups have depended on for years.
While losing tens of millions in federal grants, "these nonprofits are serving a critical need in our community," they said in the release. "The city benefits from their work with the homeless, substance abuse recovery, at-risk youth, our kupuna, and countless other services that the city cannot effectively provide."
Kobayashi said many of those receiving the earmarked dollars have already been vetted through the CDBG process. In the past few weeks, no one has called to object to the additional nonprofit funding, while many have called to keep the funding in, she said.
Councilman Ron Menor is proposing a different amendment to the budget as a compromise position — retaining all $8 million in additional grants-in-aid but requiring they be placed in the grants-in-aid fund. By deleting all specific earmarks for nonprofits, all and any nonprofits will need to go through the same vetting process, he said.
"I believe that the City Council established a process for the consideration and review of grant-in-aid items, and that process should be followed in the context of the budget," Menor said.
Council Vice Chairman Ikaika Anderson is introducing a third option: an amendment slashing the additional earmarks in half. The $4 million taken out would go to pay for cash construction projects; Kobayashi proposed using bonds to pay for some cash-funded capital improvement projects to help balance the operating budget. The Council was criticized by Caldwell for borrowing money to pay for short-term improvements.
In his "middle ground" version, Anderson said, Council members who put in grants for specific nonprofits can still claim some money for their groups, while he expects the mayor will be more likely to accept his version because it would allow for money to be restored for cash CIPs.
