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FOR IMMEDIATE RELEASE                                       May 25, 2005

Release M-37






Honolulu Mayor Mufi Hannemann’s administration today reassured the City Council that the City has the funds to cover higher-than-expected collective bargaining cost increases, despite what has been said by some City Council members and media reports.


Since it submitted the proposed FY 2006 budget to the Council on March 1, the administration in fact, has identified almost $8 million, more than enough to cover Council members’ concerns. 


The administration’s $1.356 billion proposed operating budget for next fiscal year was balanced when submitted and remains balanced today.  It took the unprecedented step of including $23 million for anticipated collective bargaining increases. The budget was submitted to the Council almost three months ago, before contracts were negotiated or arbitrated with the major public worker unions.


            As those contracts were resolved, the Hannemann administration recognized that the amounts it had projected for raises in pay and benefits for members of the Hawaii Government Employees Association and the Hawaii Fire Fighters Association were underbudgeted by $3.3 million.


On April 19, the administration informed the City Council chairman and Budget Committee chairwoman in writing about the shortfall. The mayor also indicated his administration would work with the  City Council to find ways to meet those added costs. In addition, the financial impact of the contract with the United Public Workers, the final union to settle with the state and the counties, has become apparent. Another $1 million is needed to cover that union’s salary and benefit increases.


Through the Department of Budget and Fiscal Services, the administration today notified the Council how the additional $4.3 million in general fund expenses can be covered:


·       $2 million would come from reductions in the fund for salary adjustments and vacation payments. This is the fund that’s used to pay for unused vacation when an employee leaves the City.

·       $2 million in payments the City expects to collect in delinquent property taxes from past years. 

·       $300,000 from the recent settlement of a disputed contract from Fiscal Year 2004.




In addition, the Hannemann administration noted the availability of another $3.6 million it had budgeted for a revision in the City’s real property tax “circuit breaker” law, which provides tax relief for very low-income property taxpayers. At the Council’s request, the administration has agreed to postpone the change and work with the Council on a new proposal.


“That $3.6 million, along with the additional $4.3 million to cover increased costs, should assuage the Council’s concerns as it finalizes the City budget for the coming fiscal year,” said Mayor Hannemann. “We trust that the Council members will appropriate taxpayer dollars wisely and consider possible savings for a rainy day.”








      Bill Brennan, 527-6928



Wednesday, May 25, 2005

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