Sometimes, as the saying goes, you surrender a battle to win the war.
Not to drape a cliched cloth over a serious subject, but that’s what we’d recommend the county do by passing the $491 million budget.
Admit defeat and prepare for the next fight.
Sure, council members can sharpen their pencils and save some nickles when going over the line items — we’re all for that. They could start by cutting out their gratuitous contingency funds. In layman’s terms, the contingency fund is a $675,000 piggy bank council members can dip into and spend every year in their districts however they see fit. Sounds like a wonderful fund to have doesn’t it? In the real world, it’s called an allowance.
Enough already, times are tight. Taxes are going up, and as far as we can tell, there’s no long-term solution in sight.
The proposed 2017-18 fiscal plan — which will be passed in June and go into effect July 1 — is based on a 6.5 percent tax increase and doubles the minimum tax from $100 to $200. From that, coupled with rising property values, the county expects to collect an additional $36.9 million in property tax revenue in the next fiscal year.
And the gas tax likely is going to go up, too. Mayor Harry Kim didn’t factor a gas tax raise into this year’s budget, but he’s seeking a 116 percent increase later this year. It would rise first from 8.8 cents a gallon to 19 cents, with increases of 2 percent in each of the next two years until it reaches 23 cents.
Here’s the problem: The county needs every penny of it. Kim realized that quickly. He pledged no tax increases on the campaign trail then flipped his stance as soon as he was elected and got a look at the books.
So we’re hit with tax raises this year, but what about next? Big picture, nothing much looks good.
We will imbibe quickly and do what every neighbor island does and blame the state. The state is sticking it to us by not sharing the wealth fairly from the transient accommodations tax — the TAT, or hotel tax, as it’s called.
Those dollars collected from mostly visitors used to be split more evenly, but then the recession hit and lawmakers took the bulk for Oahu. They pledged to return to the old formula once times got better but reneged. Every year since, counties have asked for a return, and every year the Legislature declines.
Here’s where counties have a legitimate gripe. Under the old formula, Hawaii County would have netted around $35 to $37 million a couple of years ago. Since then, the tax base has gone up, so today, it would be even more.
Under the new formula, however, last year Hawaii County got $19 million; this year $17 million. The reason for the reduction this year is all the more Oahu-centric — Honolulu needs more money to pay for its $10 billion rail project, a project with a potholed past that is shaping up to by Hawaii’s version of Boston’s Big Dig.
So getting back to those raised taxes and the $37 million it’s expected to generate. Of that, about $16 million is from an uptick in property values, with the rest from tax increases.
So, $20 million is attributed to the tax hike, which, theoretically, would not have been needed had the TAT gone back to the old formula as the difference between today’s collection and the old formula is about, you guessed it, $20 million.
It’s such a raw deal it almost seems blatant.
But screaming into the wind doesn’t get us anywhere. Counties have tried, and nobody’s listening. Now it’s up to us to do something and we say look further down the road. The Legislature isn’t returning the TAT, the sooner we recognize that fact the clearer our thinking will be: It’s gone.
So what can we control?
Let’s look at public employees and their raises and pensions. They’re always going up. Kim is right when he says that’s why the tax raises are needed. He was faced with 4 percent increases in salaries negotiated statewide.
But fighting against public employee raises is fighting against a stacked deck as well. When salaries are negotiated at the state level, each county gets one vote at the bargaining table if they have employees in that particular bargaining unit. The governor, however, gets four votes. It’s why union and union political support remain Samson-like strong.
And what’s worse, the counties’ employee salaries go by the state salary schedules. What the state gets, the county gets, which is a swell deal for neighbor island county workers, who get the same as Honolulu’s but live in a place with a cheaper cost of living.
We look around that bargaining table and wonder who, exactly, is representing the taxpayer?
We don’t know what the solution is — perhaps comprising a citizen committee to represent at least one outside vote — but we suggest looking into it. It could be years, and the state could give it the same backhanded slap they gave counties with the TAT, but at least we’re looking.
Because if nothing is done, where is this going to end up? The formula is one structured to never come down.
In the meantime, we ask again, what can the county control now? The answer: employees, the county has 2,800 of them.
And in this half-billion-dollar budget, Kim wants to add seven more. It seems like a drop in the canyon but seven more employees now is seven more salaries and pensions on the books for decades, which is where almost all the money is going now. It’s seven more employees whose union will negotiate for raises and who, unless the power structure at the table changes dramatically, will get them.
We’d say no to those and we’d look at whittling the 2,800 total down as finely as we could. We recognize they’re all valuable in some fashion, and it’s never fun letting people go. But sometimes — not to drape another layer of cliche over the subject — leaders have to make the really tough decisions.