Harris’ Legacy: Lots Of Red Ink

Rick Hamada
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Wednesday - March 03, 2005

A recent KHON-TV report said, “Honolulu Councilmember Charles Djou says tax hikes are likely imminent. On Feb. 18, Mayor Mufi Hannemann announced the city is going broke. Djou says the council will now look at ways to dig the city out of its financial hole. That may include raising the vehicle and gas taxes, the sewer rates and the general excise tax.”

This information, although timely, is not news. Consider my report to you in June 2003: “The City and County of Honolulu is broke. The latest budget battle was a game of patty-cake compared to what the city is facing next year. The City Council and the administration had a daunting task for fiscal year 2003. The predictions at the beginning of the budget cycle included a shortfall of $160 million. The obvious question at the outset was, ‘Where the hell are we gonna find a $160 million?’

“At the Small Business Hawaii annual expo, the questions asked of councilmembers left little to the imagination. When asked if Honolulu councilmember Ann Kobayashi would support a tax increase to help with budget issues, she replied, ‘Why? The administration tells us there is nothing to worry about. So, no. I am not for an increase.’”

That column continued to explain how the Harris administration shifted funds to cover deficits.

“Property taxes were increased this year by $23 million. Fees were increased to get into Hanauma Bay, ride TheBus and to hook up sewers. The real story of this budget cycle is not the increase in taxes and fees … It is that this budget was balanced primarily by the raiding of special funds and shifting of monies to the city general fund, all of which are gone.”

To paraphrase the remainder of the column:

Over a two-year period, the Harris administration raided approximately $100 million from the sewer fund to balance the budget.

About $33 million taken from vacant positions.

Another $18 million used from the solid waste fund.

These funds are empty.

Consider excerpts of my column on May 22 last year regarding city finances:

“We had been told by the (Harris) administration that we would be foolish not to take advantage of borrowing money at historically low rates. In fact, we restructured our debt by borrowing money to pay back money we borrowed. For the short term, this may make sense. But the administration spread out the payments over the years — the years the mayor will be long gone and out of office.”

That column detailed the escalation of what we will be paying in debt service in the coming years:

Fiscal year 2005: $192.9 million FY 2006: $251.5 million FY 2007: $273.2 million FY 2008: $315.0 million FY 2009: $327.2 million FY 2010: $343.7 million

“We are staring at financial ruin,” it continued. “You will be asked to generate over a quarter-million dollars to satisfy our debt until the year 2010. This averages to about $50 million over the next five fiscal years. Where will the money come from? Taxes.”

There is a wonderful line in the movie When Harry Met Sally. A magazine writer tells a fan, “I’ve never been quoted me back to me before.” Same here. I am not dredging up past columns to say “I told you so.” I do so to illustrate that many of us have been seeing this slow-moving train wreck for years.

Despite the protestations from supporters of former Mayor Jeremy Harris, the financial facts are facts.

A huge financial mess was left by the previous administration, and now Mayor Hannemann and the City Council have to clean it up.

And you and I will be the ones to pay.

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