(Courtesy Councilman Pete Hoffmann)

No amount of wishful thinking can alter the fact that the current economic downturn will likely continue through 2010 unabated in Hawai’i County. For County government the issue remains how substantial will be the budget crisis and what must we do to balance the budget in fiscal year (FY) 2010-2011? The Mayor has, I believe correctly, issued the necessary warnings; things will be much worse that the current fiscal year, significant reductions must be made in previous ‘budget sacred cows’ (the Police Department budget for example), the County will face an unprecedented economic emergency, etc. There is nothing wrong with issuing these warnings, in fact I would suggest that more of them would be useful. No one should act surprised when/if these reductions occur. With deference to our friends in the Finance Department, permit me to offer a few suggestions as we approach the next budget discussion:

The Council has suffered through a period of several months of constant turmoil, highlighted by some acrimonious exchanges with the administration. Regardless, the budget crisis now allows both the Council and administration to work in close harmony on the most critical piece of legislation we will face in the coming half-year. I suggest it’s a good opportunity for all to recognize the need for cooperation and to work much closer together on budget preparation than in previous years. We are in this together.

We need to know, as soon as possible, some realistic estimates as to the potential shortfall the County will face next FY. I’m still uncertain what our General Fund Operating Balance is for the previous FY, i.e. the funds left over from FY 2008-2009. In our current budget, we estimated a $16M+ operating balance which could be used during this year. If that estimate is too high, we have problems already which will impact the upcoming budget analysis. Normally, we know the fund balance by now. Hopefully, the administration will tell us soon what that figure is.

In most instances, particularly during ‘good times’, the budget debate becomes one primarily of dollars and cents. There’s nothing wrong with that approach, but I would suggest that in these difficult economic conditions, the emphasis should be on priorities of service rather than mere dollar figures. The administration and the Council must determine what we wish to finance, what we wish to see cut back, and what we can do without entirely. We need to sit down and decide what County services are absolutely required and what services are just nice-to-have in these economic conditions. That requires some tough decisions be made. That requires more than a casual glance at personnel positions, overtime levels and the usual budget banter. Prioritizing services provides all a fundamental basis of what this County must accomplish, as well as the resources to see that effort to completion. Some departments may suffer more than others, some ‘untouchable’ budget lines may have to be touched and altered more than just a little. The days of ‘across the board percentage cuts’ simply won’t produce the type of budget we need at this time. And I would suggest that process begin immediately.

Some rumors place the budget totals for FY 2010-2011 at another $50M+ lower than our current budget. If true, and there’s nothing as yet that indicates that figure is wrong, both the Council and administration should determine that all budget lines are ‘on the table’ for review, particularly personnel related expenses. Let’s agree now that furloughs might be inevitable, that no vacant funded positions are permitted, that travel is practically eliminated, that overtime simply isn’t a reality for most departments, etc. I don’t necessarily wish to see these type of decisions made, but since personnel related costs are a significant portion of the County budget, any reductions to meet a $50M shortfall must consider these expenses. Let’s also state for the record that the possibility of some tax increases is also a consideration. I don’t want to advocate that either, but recognize it may have to be included in any budget balancing act we undertake.

I believe that we will likely face a very arduous process given the economic climate. Hopefully, the administration takes a slightly different approach on this topic and seeks to work extensively with the Council at every phase of budget preparation. Our County faces an unusual situation that requires different solutions. Let’s begin now.