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Hoffmann on the budgetary ‘puzzlement’

Kohala County Councilman Pete Hoffmann has issued the following statement:

In a former “lifetime” working for the Department of Defense in the Pentagon, I was assigned to an office responsible for the preparation of the annual Army Intelligence budget and the accompanying Congressional justification process.

After several months, I was able to wade reasonably well through the various ‘dark rooms’ and obscure passageways of a very voluminous series of documents and complicated accounts, made even more opaque due to any number of security classifications that limited individual access and public disclosure.

When I ended my ‘two year penance’ in this environment, I vowed I would never again tread these mysterious budgetary corridors and that clarity would remain a guiding principal in whatever budget venture I found myself. But then I came to the County of Hawaii, where clarity sometimes is a daily occurrence and politics adds another measure of vagueness.

Last week, the County Council struggled valiantly, spent considerable time, and managed to reach a low point on the road to fiscal awareness and responsibility. Three separate resolutions were on the agenda calling for some measure of fiscal/budgetary restraint.

You will remember, as the Mayor has told us, we are in a time of severe economic downturn. The Mayor also has mentioned the State will likely withhold our $17M Transit Accommodation Tax in the coming year. And you will remember the Finance Department has indicated we are some 10% lower in property tax collections, and we have heard County-wide unemployment is in, or near, double digits, furloughs are a real prospect for all County employees this year, and a significant economic shortfall of over $70M for the period 2009-2011 is conceivable.

I could be wrong, but I interpret this to mean “times are tough”, belt-tightening is recommended, and the County could find itself in deep economic ‘do-do.’

Why then should I be surprised to learn that the administration argued against each of the three resolutions on the table? The first proposal presented by Ms. Ford encouraged the administration to develop a retirement incentive plan for certain County employees as a method to possibly reduce future costs; emphasis please on the word ‘encourage’. This apparently was too strong a suggestion for the County, as Finance Director, Nancy Crawford ‘discouraged’ any pro-active measures in this direction.

We moved on to a proposal by Mr. Yagong to immediately implement a zero-hiring policy for the reminder of this fiscal year, i.e. until 30 June 2010. Once again, this was considered too tough, even though I think the Mayor has stated several times that he isn’t filling those vacant positions, and the administration knows full well that if a sudden emergency occurred, the Council could quickly take action to make whatever exception might be required.

Finally, Mr Yagong suggested that the Mayor transfer the allocations in the vacant funded positions to the Budget Stabilization Fund, thereby insuring that some funds would be set aside to cover 2010-2011 shortfalls. That also apparently was too much for our administration, as our Finance Director told us that the administration has yet to issue a statement of Fiscal Emergency.

Say what?? Didn’t we just list above the specific funding difficulties articulated by the Mayor and the administration? Didn’t he indicate that the budget might well be reduced by some $70M? Isn’t the threat of furloughs/lay-offs a ‘real’ emergency for many families? Unless there’s something here I can’t interpret, this all seems pretty severe. If this isn’t a fiscal emergency, I wonder what is?

To add to the mystery, we have the deepening puzzle of the fund balance for June 2009. That figure has been delayed, lost, or otherwise unknown for public consumption. (Dare I mention that ‘evil’ concept of transparency at this point!!)

Normally we know the fund balance for the previous fiscal year by 1 November. This year it remains a mystery. Indeed, the Finance Director has told me the administration can’t even estimate what that figure is at the moment. Remember, we must have that figure to tell us what our shortfall is for this fiscal year and to properly estimate the budget for 2010-2011.

So the plot thickens. We think we are in a budget crisis. However, the administration argues against even limited suggestions for fiscal constraint from the Council. The Mayor, I thought, very correctly, voiced serious concerns for the economic health of the County in the coming fiscal year.

However, no financial emergency has yet been declared by the finance folks. Tax collections are down we were recently informed in Council and an ad-hoc Committee formed to assist in discovering reasonable solutions to a full range of budget issues. But this administration doesn’t yet know (or won’t tell) what the previous year’s figures might be and won’t even venture an estimate of our situation.

While I may disagree with some of the issues advocated by the administration, I have never felt that our finance department is incapable of providing basic information. These are smart people and we are fortunate to have them working for the County. So I ask what could possibly be the reason for being unable to calculate a critical element in the previous year’s budget, six months after the close of that fiscal year? Are we in a budget crisis or not?

The Pentagon was somewhat murky, but Hilo is fast approaching intense darkness. I am reminded of the line the King of Siam intones in the Broadway play the “King and I”; sometimes life is a ‘puzzlement’.

Pete Hoffmann
County Councilman, Kohala

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