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MAYOR CARLISLE: NO PROPERTY TAX RATE INCREASES
(Thurs., Mar. 1, 2012)—Mayor Peter Carlisle today unveiled a carefully balanced spending plan for the coming fiscal year that focuses on core City services and responsible savings, and includes no property tax rate increases.
“This plan keeps the City moving forward and helps prepare for the future,” Carlisle said. “We need to spend wisely on the services our residents depend on, make sure our infrastructure is well-maintained, decrease our debt, and save money for rainy days.”
The $1.953 billion proposed operating budget for 2013 is only 1.5 percent higher than the current year’s budget, despite significant increases in the price of fuel and electricity. The new budget holds the line on salary costs by continuing an across-the-board labor cost reduction of five percent within each City agency.
The new budget also builds on efforts initiated for the current year to slow the growth of general debt service. The City took advantage of low interest rates and bond refunding opportunities to generate savings that will lower the City’s debt service by $7 million in the new fiscal year.
The proposed budget adds $20 million to the Fiscal Stability Fund, to begin a multi-year effort to fund the reserve at the optimum level of eight percent of annual General Fund and Highway Fund operating expenditures, and help protect Honolulu’s excellent bond ratings.
“Saving for a rainy day is not only good policy, it is the right thing to do,” Carlisle said. “We need to steadily grow our reserves and keep our finances strong for future generations. The commitment to savings will also help preserve our excellent bond ratings, which helps save even more money.”
The proposed Capital Improvement Program (CIP) budget of $577 million represents a 5.5 percent increase over the current year to fund city projects, including $295 million for projects that will improve the City’s wastewater system and comply with a federal consent decree. Significantly, the portion of the CIP budget representing new general and highway projects to be funded with general debt financing is $153 million, down from a five-year average of $234 million. This is a 35 percent decrease from the five-year average, and 17 percent less than the $185 million budgeted for the current year.
The CIP budget also reduces bond funding by shifting approximately $13 million from bond to cash funding for items including major equipment, reconstruction of sidewalks, bus rehabilitation, and certain land expenses. This will eliminate over $9 million in finance charges. The movement from bond to cash funding is an effort to better match the useful life of bond-financed equipment to the life of the bonds. This will prevent the City from paying debt service for 25 years for items with a useful life of 12 years or less.
Media contact: Louise Kim McCoy, Mayor’s Office, 768-7798.