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Councilman Pete Hoffman’s Budget Rumblings and the “800 Pound Gorilla”

I know this is only November, but the first rumbles from the next budget ‘brawl’ have appeared. Perhaps that’s not such a terrible thing; after all, the budget should remain one of the principal legislative measures throughout the year, particularly in time of economic distress.

First we have the announcement of the Operating Fund Balance for the prior fiscal year 2010-2011 ending 30 June 2011. The Mayor indicated that we have in excess of $24M as a fund balance, as compared to a $14M projected balance. That isn’t bad and the administration has the right to ‘pat itself on the back’ a little, as it demonstrated fiscal restraint and budget management. The administration cited cuts in expenses, hiring delays, and other actions that reduced costs and made the fund balance larger than estimated. In that analysis, however, I heard nothing about the fact that the FY 2010-2011 budget featured increased property tax rates, thereby generating additional revenue to offset lower property tax assessments. I remember arguing strongly against such rate increases as being unnecessary and potentially damaging to future investment. That advice was ignored, although the tax rate increases proved unnecessary and ill-advised.

Now the Council has entered the early phases of the budget battle with a proposal to alter the mileage reimbursement program for Councilmen. This is touted as the first of several measures designed to tighten expenditures. Currently, Council members have the option to claim a $600 a month flat rate stipend for mileage or else itemize claiming a $.55 per mile reimbursement. For some years, I was the only Council member who itemized mileage, (I understand Ms. Smart now itemizes as well), calculating that it would be to my advantage, most of the times, since I drove many more miles on County business. Some months, however, particularly if I were off-island, that reimbursement would be less than $600. Those who received the flat rate most likely were not driving $600 worth of miles and it is to their advantage not to itemize.

Mr. Yagong’s proposal is to have all Council members itemize mileage and reimburse for that amount only, eliminating the $600 flat rate option. Sounds good to me. I can support that proposal and whatever other changes the Council Chair wishes to make on this issue. We will save a little money along the way. And I’m certain there are other budget measures that can be taken to reduce expenditures. The Council should be prepared to consider each in turn. Some have criticized this effort as ‘election year politics’. Perhaps so. Let’s remember, however, that all Council members are participants in a political process called County government. Politics are part of that system and, with an election year just around the corner, we can expect a rush of similar measures to dot the landscape in the near future.

With that in mind, I have no difficulty supporting such ‘budget savers’. My only comment would be that there are many other such ‘savings’ that could be proposed that have much deeper impact on our strained economy. Consider for example that approximately 65% of the County’s budget is in some manner connected with personnel costs. When will we as a Council recognize that if real savings are to occur, some dent must be made in staffing? I know. This is an election year and not a good time to advocate personnel reductions. But until the Council and the administration jointly address that “800 pound gorilla,” all other proposals pale in significance and the cries of ‘just another political ploy’ will gain meaning among County voters.

As difficult as it may seem, we must be willing to deal with the controversial items at the same time we are willing to propose the small ‘savings’. The public will not be satisfied until we do, and our credibility as a Council will continue to suffer accordingly. Finally, to put the Council mileage issue in perspective, if anyone’s interested while we are considering budget ‘savings’, let’s not forget that the County continues to subsidize golf to the tune of $833K during this fiscal year in which we’ve deferred (not saved) some $29M in expenses.

Last item: since I’ve mentioned golf subsidies, I now understand that the County might be willing to raise the fees at the Hilo Course slightly in order to offset costs and hopefully break-even. I couldn’t agree more, and while I’ve argued this point for the previous two budget cycles, I salute the County’s willingness to now recognize this first step makes perfect sense during these tough economic times. Might the second step be to eliminate the $500K golf subsidy for West Hawaii?

We can expect to hear more about budget matters as we move forward. We do need to make the small changes. We also must have the courage to address the bigger items as well.

Pete Hoffman

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