Honolulu Mayor Rick Blangiardi proposed the deferral of employee retirement benefit payments and slashing the city’s capital budget by more than 25% in an effort to balance the island’s pandemic-hit finances.
Blangiardi’s plan, outlined Tuesday at a press conference, would keep the city’s operating budget steady at $2.91 billion, with cuts making up for lost revenues, although he stressed the city’s 8,000-plus employees would not face layoffs or furloughs.
The deferral of future health benefits for retirees alone would save $139.7 million, according to a budget summary. The mayor didn’t call for any real property tax rate increases.
“We think we can operate efficiently, and we think we can eliminate waste,” Blangiardi said in announcing his first budget proposal since taking office in January.
The city has instituted a hiring freeze for approximately 2,000 vacant positions that amounts to $42 million, although exceptions can be made on a case-by-case basis, and the freeze does not apply to first responders, Blangiardi said.
“Our operating philosophy, first and foremost, was to protect our employees,” he said.
City revenues have taken a hit, including over $45 million in tax revenue from hotels and other lodging that virtually disappeared amid the pandemic.
Meanwhile, employee fringe benefits and collective bargaining costs continued to grow. The mayor’s budget summary stated that contributions to the Employee Retirement System are $4.4 million higher this year than last year due to pay increases and “spiking” – the excessive use of overtime to boost retirement pay.
Blangiardi said this is a particular problem at the Honolulu Police Department.
However, Blangiardi said real property tax collections, the city’s main revenue source, were “holding steady.”
“It’s kind of hard to predict,” he said. “People are on installment plans … We can only hope people continue to make those payments. We’re counting on that.”
Despite the financial challenges, Blangiardi said Honolulu hasn’t touched its rainy day fund.
Operating and capital budget proposals are subject to the approval of the Honolulu City Council.
Council Budget Chair Calvin Say said members will immediately begin to review the budget documents, and hearings will start next Friday.
“My priority is to ensure that the FY22 Budget process remains a collaborative process, with involvement of the City Administration, all Councilmembers, and most importantly, input from the general public,” he said in a written statement. “We stand committed to improving quality of life for residents throughout Oahu.”
The mayor sought to cut the capital improvement budget to $1 billion from $1.4 billion last year, but he didn’t provide specifics in the press conference or his budget summary.
“I’m not focused on how much less. I’m focused on what we have and what we’re going to do with it, OK?” he said.
Civil Beat emailed his office after the press conference to inquire about the cuts but didn’t hear back on Tuesday afternoon.
The administration proposed cutting $14.5 million for the operations and services budget for the bus and Handi-Van, which have seen a drop in ridership during the pandemic. The capital budget listed $45.8 million for the acquisition of buses and Handi-Van vehicles, much of which will be covered by federal relief funds.
The budget summary didn’t detail a plan for funding the Honolulu rail project other than promising that the mayor will “work closely and strategically” with stakeholders and regulators.
Blangiardi noted, however, that the project had just secured $70 million via the federal COVID-19 relief bill.
The city plans to continue to fund mandated sewer and wastewater improvements, including $434 million for major Honolulu and Sand Island wastewater treatment plant projects under consent decree requirements of the Environmental Protection Agency, Department of Health and other groups.
The capital budget also included $118 million to rehabilitate various highways and streets, including $30 million for the widening of Salt Lake Boulevard and $15 million for roadway improvements on Farrington Highway.
The city also planned to invest $10.4 million in Intelligent Transportation Systems, which include installation of broadband fiber-optic networks to remote, and presently underserved communities such as Waianae, Nanakuli and Maili.
Blangiardi also allocated money for park improvement projects, including $1.2 million to design, construct and inspect wastewater improvements for Hanauma Bay Nature Preserve, where the mayor wants to increase the admission fee from $12 to $25 for visitors over the age of 13.
At a time when experts expect homelessness to get worse, spending to address it in Honolulu will remain stagnant, according to the mayor.
Related funding includes $8.1 million, some of which are state funds, for the continuation of the Housing First program, $1.3 million for services related to the Hale Mauliola Housing Navigation Center at Sand Island and $900,000 for services at the Punawai Rest Stop in Iwilei.
Asked whether the city will offer more, less or the same number of Housing First vouchers, Blangiardi said he didn’t know. His office did not respond to a follow-up inquiry.
Over $400,000 was budgeted for programs like the landlord engagement program and transportation to help with the housing, transporting, and treatment of Honolulu’s chronically homeless population.
His budget summary also noted $37.5 million was available for the renovation and/or development of low-income affordable housing.
Despite the flat-lined funding, Blangiardi’s budget summary said he was “committed to taking bold steps” to address homelessness, including expanding the Office of Housing to be the Office of Housing and Homelessness. It could gain two positions at a cost of $87,032: an affordable housing coordinator and a homelessness coordinator.
Blangiardi listed cleaning up Chinatown on his list of budget priorities, noting that the city will use existing operating and capital funds to improve sidewalks and curbs, pave streets, replant trees, remove graffiti and rehabilitate properties and reduce crime. The summary doesn’t mention a dollar amount.
“Chinatown is a gem that, unfortunately, has lost some of its luster,” said Alex Kozlov, director of the Department of Design and Construction.
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