Six weeks after announcing that the city was facing a $450 million operating budget shortfall, Mayor Kirk Caldwell and his top lieutenants Tuesday said they would deliver a balanced budget proposal to Mayor-elect Rick Blangiardi’s administration when it takes over Saturday.
That achievement, Caldwell said, was done without needing to propose any employee layoffs, furloughs or increases in property taxes or fees.
“We’ve done cuts across every department but maintained core services, which is critical particularly in cities and counties because they are the things you need just to live, to get by day to day,” he said.
Economic forecasters projected that the downturn in the visitor industry and other businesses caused by the COVID-19 pandemic would result
in the city losing about
$45 million in its share of hotel room tax revenue, Caldwell said.
The current year’s operating budget is $2.9 billion while the package for the coming year will fall somewhere between $2.2 billion and $2.6 billion.
The Honolulu City Charter doesn’t require the mayor to submit a budget to the Honolulu City Council until March, but Caldwell said he thought it was important to hand over a balanced budget to Blangiardi. It will be up to the incoming administration to make any changes, he said.
Manuel Valbuena, acting director of the Department of Budget and Fiscal Services, said nearly all city
departments and agencies were required to slash their current year’s expenses
by 10%, a savings of about $58 million, he said.
The city is also buoyed by the state’s decision to allow the counties to defer their annual contributions to post-employment health benefits for retiring government workers by a year,
resulting in about $84 million in savings, Valbuena said.
That means the overall fund balance, or carryover amount, is projected to be about $142 million, he said.
For the fiscal 2022 year, which begins July 1, a 10% cut in department expenses will save about $77 million while an additional $84 million will be saved from deferring post-employment benefits, Valbuena said. The city is also anticipating receiving about $50 million from the federal government in additional coronavirus relief funds for pandemic-related transportation services, he said.
The administration is also proposing that all solid-waste funds be consolidated, “and as such, HPOWER reserves will be used to help offset some of the refuse shortfalls so the general fund will not subsidize those funds,” Valbuena said.
Additionally, about
$73 million will be taken from”other provisional
debt service transfers” to help balance the budget,
he said.
Last month Valbuena pointed to the need to budget $140 million to $160 million for rail operations for the first time as one source of concern. But with the opening of the initial East Kapolei-to-Aloha Stadium segment now pushed back from late 2020 to no earlier than mid-2021, at least some of roughly $55 million that’s been budgeted in the current year and $102 million next year might not need to be spent.
“We want to start revenue service, but until it starts we don’t have to expend as much on operation and maintenance because it’s not operating as a system,” Caldwell said. “Once it is, we have budgeted to cover it, but there is savings when we are not starting service, as unfortunate as that is.”
Caldwell praised Valbuena and former BFS Director Nelson Koyanagi, who retired earlier this year due to health reasons, for insisting that the city adhere to conservative fiscal practices that helped the city to achieve the balanced budget.
