As Mayor, I believe I have a duty to tackle Honolulu’s challenges with common sense fiscal planning. It’s simple and straightforward: we must save more, pay down debt, and keep a close eye on expenditures. My team and I are getting the city’s fiscal house in order through a carefully balanced spending plan that focuses on core services and responsible savings, and includes no property tax rate increases.
Bending the debt curve downward.
For every dollar the city borrows, we must pay back $1.75 over time. Before I took office in October 2010, the city’s borrowing for capital improvement projects was, in a word, unsustainable. But last year, with the city council’s support, my administration reduced the non-essential capital improvements projects funded with general borrowing by $6 million. Next year, taking advantage of low interest rates and debt re-funding opportunities, the city’s debt service, for the first time in eight years, will be lower than the year before – by about $7 million.
Funding future obligations.
City retirees are eligible for health coverage, but this cost is funded on a pay-as-you-go basis, which has created an unfunded obligation in the post-employment health care fund. We must set aside funds to chip away at this problem instead of passing it on to the next generation. After several years, the previous administration had only saved $40 million in total. Last year we added another $40 million toward pre-funding this liability – nearly doubling the balance in one year – and next year we propose to add over $40 million more. At this rate, after ten years we will have more than one-half billion dollars in the fund.
Saving for a rainy day.
The city’s future financial health depends on growing our reserves today, so we have proposed to add $20 million to the city’s fiscal stability or “rainy day” fund in the next year. This commitment will also help preserve our excellent bond ratings, which in turn will save even more.
Protecting the city’s credit rating.
The most important measure of a city’s financial stability is its bond rating – an assessment of its credit worthiness by nationally-recognized independent credit rating agencies. At a time when many cities across the nation are receiving ratings downgrades, the bond rating companies recently affirmed the city’s excellent rating of “AA+”. One agency cited our diversified economy, stable revenue base, proven conservative management, success at controlling costs, and financial flexibility. A strong credit rating translates to savings. In October the city obtained one of its lowest interest rates ever on a wastewater bond, which will save taxpayers millions of dollars.
Excellence in purchasing practices.
In 2012, for the first time, the city’s Purchasing Division earned certification and an Outstanding Agency Accreditation Achievement Award from the National Institute of Governmental Purchasing. in recognition of excellence in public procurement through rigorous standards and best practices. Purchasing award was mentioned in “accomplishments” section.
No property tax rate increases.
The benefit of responsible fiscal management is as profound as it is simple: no property tax rate increase. That is our goal, and we will accomplish it.