City charter amendments aim for consistency, parity

Next week, when you go to vote, you will not only be voting for candidates in various City, State and Federal races; you will be also asked to approve or reject two proposed amendments to Honolulu’s City Charter.  Often times the language of these amendments can obscure the underlying intent.  We have received many calls and emails from constituents seeking clarification on the proposed amendments as well as the “pros and cons” of each one. 

The first question, relating to a grants-in-aid program, asks whether or not ½% of the City’s general fund revenues should be reserved to be awarded, by the City, “to non-profit groups to provide services to economically and/or socially disadvantaged populations or provide services for public benefit in the areas of the arts, culture, economic development or the environment.”

If this charter amendment is approved then a commission would be established to advise the city on grants to be issued.  There are several additional provisions in the amendment which layout the structure for the grant program, membership of the commission and how funds are to be distributed.  There is also a provision that would allow the Council, by a 2/3rds vote, to waive this provision should a “public calamity” occur. 

As far as the “pros and cons” of this proposed amendment, on the one hand, this is certainly a worthwhile endeavor and the broad range of non-profit programs that could participate is very enticing.  Additionally, by setting aside a set amount it ensures consistency in that there will always be some level of funding available for non-profit groups and their programs.  This amendment would also ensure that the funds are equally distributed across all nine of the City Council districts.   

On the other hand, the City Council has always strived to produce a lean budget that ensures basic services are funded and most of the unnecessary spending is cut out.  So if we’re going to take ½% from our general fund revenues to fund this program that ½% will have to be made up from somewhere else; either increasing taxes or cutting services.  In the current fiscal year, ½% of the general fund equals about $6M.  We should always be cautious when imposing a limitation on the financial autonomy of the City.  Several years ago the voters approved a charter amendment that set aside ½% of real property tax revenue for the purposes of providing and improving affordable housing.  Again, a very worthy cause but very little of that money has actually been spent and with the City having just sold the bulk of its affordable housing projects it’s a little unclear what we’re going to be doing with this money – especially as we are required to continue to collect it every year.

The second proposed amendment is actually a lot simpler than the language suggests: this amendment would simply allow the Council the ability to create special funds without the Mayor first proposing such a fund. 

Under the current structure of the charter, if a new special fund is to be created the Mayor must first propose (or support) the creation of such a fund.  The Council cannot create special funds on its own. 

Historically, special funds have primarily been created to help keep track of revenue and expenditures related to certain fees.  Although it may seem a little cumbersome to have a special fund for every fee, it helps to provide transparency and ensure that fees being collected are fair to the taxpayer (i.e. no more than the actual cost of the service being provided).  It also helps to ensure that those monies being collected are being used for their stated purpose. 

Some have expressed concern that if the Council is vested with the power to establish special funds on its own, this may led to an excessive growth in the number of these funds which could make the budget process and the budget itself, very confusing.  However this argument presumes that the Council’s legislation, which would be required to establish a special fund, is somehow immune from a Mayoral veto; it’s not. 

The overarching issue with this question is one of parity.  The Council is a body comprised of representatives, elected by their constituents, to protect their interests and it stands to reason that, when it comes to protecting the financial interests of our taxpayers, the Council should have the same power as the administration.