Thursday, February 24th, 2011 | Posted by Greg Wiles |  Print This Article

Carlisle Uses State of City Address to Outline Financial Woes, Hopes

Peter Carlisle

Honolulu Mayor Peter Carlisle opened his first State of the City address by practicing what he preached: After pledging to run an open and honest administration, the city’s 13^th mayor launched into a sober assessment of the financial problems it is facing.

“It’s not a pretty picture,” said Carlisle, who listed hundreds of millions of dollars needed for the city’s rising debt service, infrastructure needs and pension costs.

“There are no easy ways out. The easy choices have already been made and now the hard decisions remain.”

Carlisle, like other government executives, is trying to figure out how to deal with financial problems at a time when revenues aren’t growing robustly. Carlisle noted tough choices lie ahead that everyone has to share in.

In November, shortly after taking office Carlisle had said the city was facing a more than $100 million budget shortfall. The city’s finances have taken a hit as real estate values dropped while its costs have continued to rise.

“The time has come to have a mature and honest conversation about these painful truths,” said Carlisle.

“Ultimately the solution will call upon everyone to share in the sacrifice.”

The mayor outlined a series of troubling budget issues, including a steady rise in city borrowing costs -- debt service rose by 74 percent over seven years, from $193 million to $335 million.

This amount is expected to climb by another $48 million in 2012, when almost one out of every five tax dollars will go to principal and interest payments.

The city also is facing a mounting bill for pension and health benefit fund payments, with amounts owed the Hawaii Employees’ Retirement System rising from $97 million this year to $124 million in 2016.

Likewise, the city’s contribution to the health benefits trust fund will rise by $59 million to $162 million in 2016.

The mayor said his first executive budget will be presented on March 2 and include measures to reduce the city’s borrowing costs, increasing user fees and asking city workers to keep up operations with lean department budgets.

Carlisle said the city is looking at increasing charges for a number of services that aren’t fully paid for through user fees with the exception of The Bus.

For example, he noted that golfers over age 60 pay a weekday rate of $4.50 for a round of golf, with taxpayers subsidizing the rest of the costs.

Among other plans, the city is developing plans to divest itself of functions beyond its core services, including the offering of 12 affordable housing properties to qualified firms that would continue to operate them low-cost housing. Such a move would allow the city to retire a number of financial obligations, Carlisle said.

The city is also looking at selling off remnant parcels it owns along with other non-productive pieces of real estate that cost money and manpower to maintain.

The mayor used the speech to discuss a number of other initiatives, including promoting Honolulu’s film industry and  an opportunity to showcase Honolulu during the upcoming Asia Pacific Economic Cooperation conference in November. He also talked about the city looking for ways to become more efficient, including better use of technology, whether it be in facilitating road repairs or cutting energy costs through photovoltaic and other projects.

Carlisle ended his address on a positive note, thanking people who had prayed for him and noting Honolulu remains one of the most desirable places to live in the world.

He explained that Monocle, a magazine that circulates internationally, had recently identified Honolulu as the highest ranking city in the U.S. in a quality of life survey.

“Honolulu is recognized as one of the most livable cities on the Planet Earth with the potential to get better and better and better,” Carlisle said.

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Author: Greg Wiles

Greg Wiles is a long-time business journalist who currently works for Hawaii Reporter. His previous experience includes the Honolulu Advertiser and Bloomberg News.

Greg Wiles has written 69 articles for us.