The most recent phase of the County’s annual budget skirmish concluded on 18 May with some interesting outcomes. Regardless how one views the Council actions this year, I feel we’ve done a little better than our normal “rearranging the deck chairs on the Titanic” routine. Hours of discussion and testimony did recommend some amendments to the Mayor’s second budget, although I’m not certain the Council did enough to warrant unanimous applause.

Council members have criticized the Mayor’s budget submissions this year as deferring expenses rather than saving anything. I agree. The Mayor deferred some $29M in expenses to other budget cycles. If those deferments were added to his proposed budget of $367M, that would mean the budget would total approximately $396M. Not much of a ‘savings’ in my opinion, in fact somewhat higher than our current fiscal year budget of $374M. But I don’t disagree with all of the Mayor’s proposed deferments, particularly those associated with debt service payments and the payroll delay. Those are reasonable one-time deferments and are common budget mechanisms employed by almost all other government entities.

The complete elimination of the GASB45 payment is another issue, however. As indicated previously, I called for at least a partial use of the GASB45 expense as a ‘bill-payer’ in prior-year budget skirmishes. I was sharply criticized, told it would cost the County in penalties, that it violated some rules, and otherwise I was dismissed completely. This year, GASB45 becomes the Mayor’s ‘salvation’ and source of the largest deferment that balances his budget. What a difference a year makes!!

The Council in its deliberations focused on the GASB45 elimination. I maintain a partial deferment is OK, but not the entire amount. Towards that end, the Council amended the budget to take $2.7M from the Budget Stabilization Fund, approx. $1M from the Open Space Fund, $200K from overtime accounts, and $5.6M from OCE accounts, the latter amount being referred back to the administration to determine where those cuts would be made. In addition, $500K from the West Hawaii Golf program could also be used as an offset to the GASB45 deferment. In total, the Council decided that the $29M deferment proposed by the Mayor be divided into thirds: we left approx. one third or $9M alone (the payroll delay and the debt service payment). We added back approx. one third or $10M to the GASB45 account. And we agreed to defer one third or $10M of the GASB payment.

Are we happy? Maybe not, but as I mentioned previously, we did a little better than rearrange deck chairs, even though we did kick a sizeable ‘can’ down the road a little. I’ll admit I wasn’t overly excited about referring $5.6M back to the Mayor, requesting that he tell us where the cuts be made. I would have been more pleased if the Council determined the location of these decreases. But in previous budget discussions we did suggest some compromise on a variety of budget issues (Hamakua land sale, GASB45 last year, hiring freeze, and a more aggressive elimination of most vacant funded positions, to name a few), none of which met with favorable consideration. Whether or not we can consider this ‘throwback’ normal budget procedure is arguable, but there seemed to be little recourse to insure that some reduction in the $29M deferred expenses is made.

And exactly what is the result of this “budget tap dance?” Since no one chose to address the “800 pound gorilla” in the room (personnel costs), the $10M in Council amendments adds up to a little less than a 3% adjustment to the Mayor’s budget (that totals $367M). Unless some significant change occurs at the next Council meeting on 1 June, we amended a few items and agreed to most of the administration proposals. The question now: if the budget passes second reading on 1 June, will the Mayor accept the less than 3% in changes made by the Council or will the deck chairs be returned to their original positions?

(Commentary submitted by Councilman Pete Hoffmann)