Honolulu’s financial health is “not pretty,” Mayor Peter Carlisle said Thursday in his first State of the City speech.

The mayor, who gave his address in the same Mission Houses Auditorium where he delivered an inaugural address four months ago, presented a stark portrait of a cash-strapped city with too little money in the bank. In case the numbers he quoted weren’t shocking enough, Carlisle used a visual aid to depict a “staggering” 74 percent spike in the city’s long-term debt over the past seven years.

“In fiscal year 2012, nearly one out of every five of your tax dollars will go to paying off the credit card principal and interest,” Carlisle said. “To say the least, this is over-dependence on the city’s credit card, and is financially unhealthy. It must be slowed.”

Financial stability is “the greatest problem facing the city today,” Carlisle told the audience of mostly city workers (U.S. Sen. Dan Inouye and Lt. Gov. Brian Schatz were also there). He said the municipality’s debt went from $193 million to $335 million in seven years, and would rise to $383 million in the coming fiscal year.

Carlisle said the uptick does not include the city’s rail project, but he made a point of rejecting a proposal before the Hawaii Legislature to dip into the city’s savings for rail. As Carlisle spoke, the Senate Ways and Means Committee voted to advance a measure that would allow lawmakers to borrow $200 million from the city.

“We must continue to urge the state Legislature not to divert the city and county’s share of various revenues into its own state funds,” Carlisle said. “Taking from Peter — literally, literally! — to pay Paul might seem tempting as a quick fix, but to the taxpayers … it is a zero-sum game.”

Carlisle later told reporters that, if necessary, city lawyers would get involved in fighting the state to keep it from borrowing rail money.

The city will also be responsible for paying $124 million for city workers’ pensions and $162 million in health benefits by 2016, while the city’s ability to pay for pensions and benefits has nosedived in the past decade, he said. That’s up from $97 million and $103 million, respectively.

“(In) 2000, the pension system covering government workers for the state and Hawaii’s four counties was 94-percent funded,” Carlisle said. “This year, by some measures, the funding ratio has declined to less than 60 percent.”

The city’s readiness for an emergency is even worse, Carlisle said. 

”The amount currently in the city’s fiscal stability or rainy-day fund: a paltry $29 million,” Carlisle said. “That is only enough to keep the city operating for five days.

The mayor is due to present his first budget on March 2, and he touched on some of the ways the city can tackle its financial crisis. Carlisle said he wants to introduce new fees and raise some existing fees, excluding bus fares.

He emphasized possible revenues from accepting credit-card payment in city parking lots, and savings from removing discounts for seniors at city golf courses.

“The richest people on this island have the same opportunity to buy a round of taxpayer subsidized golf on a public golf course as the poorest people on this island,” Carlisle said. “In fact, we should be taking the exact opposite approach.”

The mayor said the city would look to sell “a significant number” or parcels of land that aren’t earning the city any revenue but require city resources to maintain.

Other areas Carlisle explored in his hour-long speech:

  • The benefit of encouraging the film industry to use Hawaii as a location
  • Strides the city is making in putting more documents online
  • The city’s plan to launch an informational site about homelessness
  • A $2.5 million partnership with the state on affordable housing
  • How rail and transit-oriented development will help boost the economy
  • Mandated sewer upgrades
  • The Asia-Pacific Economic Cooperation as a major opportunity, and a major expenditure for the city
  • Public safety, and the creation of a family justice center for domestic violence victims
  • His administration’s advocacy for a new veterans court

Carlisle identified professionalism, transparency and cooperation as three of his overarching goals for the City and County of Honolulu. Near the start of his speech, he defended at length his decision to reappoint most of former Mayor Mufi Hannemann‘s Cabinet.

“This administration did not come into Honolulu Hale and sweep out the talented and experienced directors running city departments,” Carlisle said. “There was pressure to do so and we have been criticized for not doing so.”

And yet, with many of the same city leaders in place, Carlisle insists there has been a fundamental shift from “political expediency” to “professional management.” He told Civil Beat after his speech that his style of management is the thing he’s most proud of bringing to City Hall.

“Debt service will not go down overnight,” Carlisle said. “Pension and health fund payments will not go away. We all know that the state government is struggling financially as well. Decisions made both across the street at the State Capitol and here at City Hall will impact people’s lives. … Ultimately, the solution will call upon everyone to share in the sacrifice.”

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