Hawaii counties must again prepare to dish out raises to employees, this time to local fire fighters.
After binding arbitration, the Hawaii Fire Fighters Association was awarded a series of salary bumps over the next several years that will cost the counties millions of dollars.
For Honolulu, by far the largest of the four counties, the fiscal hit will be an estimated $88 million through Fiscal Year 2017. Honolulu has about 1,000 firefighters who are represented by the 2,000-member union.
While city officials have said they budgeted for the raises in the coming year, future years appear to be more uncertain, and talks are already underway to find new revenue sources, such as through new taxes or bus advertising.
A previous arbitrator’s decision to approve a $200 million collective bargaining agreement with the police union, the State of Hawaii Organization of Police Officers, is driving the need to raise more money in coming years.
But there seems to be a disconnect between government officials who say they can’t afford the continual increases in salaries and the independent arbitrators who keep awarding the pay raises.
R. Douglas Collins, the arbitrator who ultimately decided to award the HFFA pay raises, said the state and the counties can absorb the increased costs without new revenue.
He even noted the recent SHOPO decision, which also found that the government was “financially capable” of paying for the raises and that there was “little if any evidence to the contrary.”
“It is the opinion of a majority of the Panel that the Employer has the financial ability to meet the costs of the contractual changes recommended herein without the necessity of increasing existing taxes or fees or imposing new taxes or fees, or developing other new revenue sources,” Collins wrote in his 30-page decision.
Collins said government financial data and economic forecasts from the University of Hawaii, the state Council on Revenues and bond rating companies, such as Moody’s and Standards and Poor, helped bolster his decision. Those reports all supported the idea that Hawaii’s economy “will remain strong for the foreseeable future.”
But not everyone agrees everything is as rosy.
“I’d like to know where that pot of gold is,” said Honolulu City Councilwoman Ann Kobayashi, who chairs the Budget Committee. “There’s not a whole lot of money.”
Listening to City Council members and Honolulu Mayor Kirk Caldwell talk, one might believe there’s a fiscal crisis on the horizon.
Already, the city is facing a $28 million shortfall in the current fiscal year. Next year, is even worse as officials estimate a shortfall of $156 million.
The go-to solution appears to be tax and fee increases. In fact, the Caldwell administration has pushed a revamped tax structure and fee hikes from the beginning. The mayor’s inaugural budget — which included more spending than any prior city budget — had a built in hike in the county gas tax.
His measure failed, but that didn’t stop the administration from looking for more revenue. In July, the administration proposed 10 bills that if approved by the Honolulu City Council would have been the first step in raising tens of millions of dollars in taxes.
Only one of those bills passed, which should let the city increase the property taxes on homes worth more than $1 million, but that are not considered the primary residence of the owner.
Most recently, the administration noted that property values were increasing throughout Oahu. Caldwell called it a sign that the county’s economy was improving and that real estate values were rising.
Although that means more money for the city’s bottom line, Caldwell tempered his optimism.
“The increase in Oahu property values will help us narrow the budget shortfall but will not solve it,” Caldwell said in a Dec. 13 statement.
“We will not know exactly how much additional revenue the city will receive until appeals are concluded on February 1. Even in the best case scenario, we will still need to find cuts and revenue enhancement to minimize the budget shortfall’s impact on taxpayers while improving core city services.”
HFFA President Bobby Lee said his union relies on accounting experts to help develop its stance in negotiations. Lee says these accountants use real data and do their best to provide an accurate view of the state and city finances.
He also says it’s normal for both sides to present completely alternate views, especially when there’s millions of dollars at stake.
“It’s just a part of how each side plays its game,” Lee said. “Of course on our side the people we hire look to see where there is money, and on the other side they say there is no money.”
“There are times when there really is no money, and money is very, very tight,” he added. “With our raise, I haven’t heard a whole lot of noise.”