If the City and County of Honolulu ever needed a cap on annual spending growth, that time is now.

NOTE: pick the correct link

Mayor Kirk Caldwell鈥檚 recently approved budget for fiscal year 2020 called for a $220 million increase in county expenditures over the previous year, and the plan is to pay for it through .

This type of budgeting is unsustainable. The City and County of Honolulu鈥檚 fiscal 2020 operating budget is 6.15% greater than it was , which by contrast more than in fiscal 2018. Between 2016 and 2020, the county鈥檚 average annual increase .

In contrast, Honolulu鈥檚 private-sector gross domestic product increased during that same period at .

Ideally, the county would cap its spending at or below the local GDP. This is known as a , which a report by the International Monetary Fund correctly points out can help under control during healthy economic times and be better prepared for potential economic downturns.

If Honolulu lawmakers had capped the county鈥檚 annual spending growth at 2% beginning with the fiscal year 2020 budget, they could have saved nearly $300 million by 2025, assuming previous revenue trends continue.

To their credit, the mayor and council members have made efforts to increase Honolulu鈥檚 reserves over the past five years, though they could be doing more. Currently, the county has emergency savings 鈥 or a 鈥渇iscal stability fund鈥 鈥 of $142 million. That is only 5% of the county鈥檚 $2.8 billion , but it鈥檚 a larger proportion than in 2015, when the fund totaled $72 million, .

Honolulu Hale city and county Honolulu.
Hey, big spender: Honolulu Hale. Cory Lum/Civil Beat

To cover the increased spending of their latest budget, the mayor and council targeted . On the surface these taxes would appear to go easy on most Oahu residents, but it鈥檚 not that simple.

Added costs could endanger the already-declining hotel industry, resulting .

In addition, said Suzanne Young, CEO of the Honolulu Board of Realtors, 鈥渁ny increase in the Residential A property tax will be absorbed by owners or passed on to renters. If those costs are too prohibitive, then property owners will sell. And that means a loss of .鈥

Struggling Residents

Residents already are struggling to make ends meet, leading to at least 27,000 Oahu residents since 2010. The latest GoBankingRates annual report found that Hawaii residents are once again the most likely in the entire nation to be .

Raising taxes and fees to accommodate the county鈥檚 spending binge will only make it harder for Oahu鈥檚 remaining residents. Those who leave take their earning power with them, meaning the county will have fewer taxpayers to help pay its bills.

In order to balance the budget and promote a healthy economy, Honolulu County should prioritize its spending and eliminate waste, fraud and abuse, so as to incentivize efficiency and ensure stable taxes and fees for Oahu鈥檚 already beleaguered taxpayers.

Implementing a smart spending cap would be a smart way to help make that happen.

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