Council members’ budget moves aimed at gaining more power over spending in districts

Hawaii County Council members plan to spread a lot of aloha throughout their districts, even as the county nears the limits of its borrowing power.

The council on Wednesday unanimously approved $100,000 in contingency funds for each member to donate at their discretion, with council approval, to nonprofits and county departments, more than triple the amount allocated in Mayor Harry Kim’s original budget.

Then council members struck a deal with the Finance Department for up to $5.5 million in bonding for each council member to use for road projects in his or her district.

The eleventh-hour plan was proposed by Kohala Councilman Tim Richards. It will take $3.5 million from the general excise tax currently allocated to the Department of Public Works but not yet assigned for projects. DPW was eyeing engineering for phase 3 of Ane Keohokalole Highway with some of that money, said Finance Director Deanna Sako.

The money would be used instead to leverage a $50 million bond.

“We’ve had a substantial growth in our budget. We have a substantial amount of money that goes into capital project funds with not a whole lot of oversight or direction coming from us,” Richards said. “We’re trying to get our arms around spending and trying to get the confidence of the communities and trying to get transparency going forward.”

Council Chairman Aaron Chung of Hilo supported the plan.

“The whole idea behind the general excise tax was not to balance the budget,” Chung said. “It was to be able to use money for road improvements.”

Sako, who at one point had to ask for a recess so she could do some calculations in her office, said Thursday she didn’t get much notice of the plan and didn’t have time to prepare. Just as important, she said, was that the public didn’t get a chance to weigh in on the plan either.

Richards’ amendment was time stamped at 8:49 a.m. Wednesday, 11 minutes before the 9 a.m. start of the budget meeting.

Council members have often said they should have more spending power because they’re closer to their districts, their communities and their constituents so they better know what’s needed. The county has a single-member district organization, where each council member is elected only by voters within their geographic district.

Mayor Harry Kim takes a different view of the unusual arrangement. Generally, bond authorizations are sent from the administration to the council, with a project list tacked on so the council can see where the money’s going.

“The whole island is my district. It’s my job to know the whole island,” Kim said. “Every single bond issue should be well-coordinated; otherwise you have nine independent systems in regard to the use of bond money.”

The planned $50 million bond issue, which must be voted on by the council before the money becomes available, comes on the heels of a $47 million bond advanced Monday by the council Finance Committee.

Before that, the county’s outstanding debt, including bonds, state revolving loans, bank notes and bonds reimbursable by the Department of Water Supply, stood at $475.2 million, a 33.7% increase from the $355.4 million debt in 2008.

The county’s bond debt ratio, based on all debt approved by the County Council, will be at 12.7% once those bonds are approved, Sako said Thursday. That’s getting close to the 15% ceiling set by state law and recommended by the Government Finance Officers Association. The bonds have a low interest rate of 3% to 3.5% because they’re backed by the full faith and credit of county taxpayers.

The contingency funds and bonding plan were just two council moves demonstrating members’ desire to be more hands-on. The council also amended the budget to require $8.3 million in overtime to come before the council, and it made some personnel shifts to create more oversight of money transferred within the county.

Most of the changes came as last-minute amendments with little public notice, as is common when the council works on the budget. Kim on Thursday morning was still considering options.

“It took me aback a little bit,” Kim said. “I have to review the whole thing. I do know I have line-item authority and I need to look at it.”

Is the council overstepping its bounds by venturing into the administrative arena?

This is how the county charter, the fundamental governing document, addresses the separation of legislative and executive powers:

“The legislative powers of the county shall be vested in the county council. Its primary function shall be legislation and public policy formulation, as distinct and separate from the executive administration of county government. … The executive powers of the county shall be vested in and exercised by the executive branch, which shall be headed by the mayor, and administered by the managing director … .”

Email Nancy Cook Lauer at ncook-lauer@westhawaiitoday.com.