ÌìÃÀÊÓƵ

Honolulu Mayor Peter Carlisle‘s $1.9 billion operating budget for next year paints a portrait of a city that is faring well in the short-term, but faces serious long-term money woes.

In presenting his budget to reporters on Wednesday, the self-proclaimed fiscal conservative said he plans to improve the city’s financial complexion by raising fees and two taxes.

For his spending plan to work, Carlisle makes a major assumption about labor negotiations — that he can win a minimum of 5 percent in savings from city workers.

The mayor campaigned on a platform that city government was a financial mess that he would clean up. But in December, he acknowledged the city was in better financial shape than he expected.

It turns out that it’s in much better shape. There was no shortfall at all.

“$40 million (of that estimated shortfall) was based on a July 2010 prediction that property tax revenue would decline in fiscal year 2012,” Carlisle said. “The projected $40 million budget gap failed to materialize. In addition, across the board agency spending restriction resulted in an additional savings of approximately $60 million … Between the two, the projected $100 million budget gap failed to materialize.”

Still, Carlisle decided to expand government spending.

Carlisle said a number of factors contributed to the city’s financial health:

• A hiring freeze
• Reducing overtime pay
• Restrictions on travel
• Limiting equipment purchases
• Fewer promotions

But notably absent was any mention of the previous administration.

“What I gave him and what I inherited from my predecessor was like night and day,” former Honolulu Mayor Mufi Hannemann told Civil Beat after the budget was released. “It was never going to be a $100 million deficit. I knew that. That’s why, on July 1, 2009, I instituted a hiring freeze. I wish I was in his shoes when I started.”

Without naming names, Carlisle blasted Hannemann’s treatment of the city’s long-term spending plans. The new mayor is slashing the city’s capital budget — that’s money for construction projects, not including rail — by 35 percent, from $805 million to $526 million.

Carlisle’s budget director, Mike Hansen, told Civil Beat after the budget presentation that the construction industry won’t be harmed by the cuts because the city’s rail project will create a spike in construction jobs. But the city’s chief rail planner, Toru Hamayasu, told reporters last week that the city doesn’t expect to get approval from the federal government to start the bulk of construction on the project until more than halfway through the 2012 fiscal year at the earliest.

Hannemann also argues that much of the money his administration spent on construction went toward sewer system upgrades, which enabled the city to reach a settlement after more than a decade of battling with the federal government.

Resolving those lawsuits was one of the accomplishments Carlisle touted in his State of the City address. Hannemann signed the global consent decree on his last day as mayor before he resigned to run for governor. The infrastructure improvements mandated in that agreement will cost the City and County of Honolulu billions of dollars in coming decades. But Carlisle said his biggest concerns are the city’s growing debt, and its ability to pay retired employees’ pensions and health benefits.

To chip away at those costs, while also eliminating mandated furloughs, Carlisle proposed cutting compensation for city workers represented by four unions by at least 5 percent, a figure he calls “the minimum amount” he’ll request.

Asked what happens if he doesn’t achieve his savings goal, Carlisle adopted his most serious tone of the afternoon.

“Then the city and county’s in a lot of trouble,” Carlisle said. “It will affect, essentially, how many people are working for the city and county, something that we would not like to have to confront.”

Managing Director Doug Chin said the city could also look at making health care more expensive for union workers, or eliminating temporary positions like contracted workers or other consultants.

Threatening lay-offs may have something to do with the fact that Carlisle said negotiations with unions are under way.

Carlisle will also have to convince the City Council to approve the cost burdens he wants taxpayers to shoulder. If the mayor gets what he wants, some homeowners property tax rates will increase from $3.42 to $3.50.

“That’s a proposal by the mayor,” Garcia told reporters after the mayor’s budget presentation. “It’s the council that sets the rate. Let’s make that understood. Even though he says $3.50 today, it may not be $3.50 tomorrow.”

The other tax hike would be for fuel. That tax would go up 6 cents total over three years, from 16.5 cents per gallon today to 22.5 cents per gallon in 2014. The money would be used for roads and to reduce debt.

He would also increase:

• Sewer fees by 4 percent
• The fee for obtaining a drivers license
• The price of a round of golf on a city course
• Admission to the Honolulu Zoo
• Rental fees for city auditoriums
• City workers’ monthly parking fee

The City Council’s Garcia said it’s important to have discussions about a “pay-as-you-go” model for city services. But he told Civil Beat the key take-away from the mayor’s budget presentation is that Carlisle inherited a “financial house” that wasn’t in as much disarray as Carlisle long claimed.

“We’re not as sick as we thought,” Garcia said. “That’s the biggest thing.”