Paradise lost: Honolulu taxpayers drowning in crystal clear sea of debt

 IN DEBT: A high angle twilight view of Kapiolani Beach Park and the high-rise hotels along the shoreline of Waikiki, Honolulu.

by Malia Zimmerman, Watchdog.org,  July 26, 2013

HONOLULU — Honolulu is far from the rusty ruins of Detroit, literally and, in things such as esthetics and unemployment data, figuratively as well.

But the Hawaiian capital shares some of the same dubious traits as the broken Motor City.

Honolulu, fiscal watchdogs warn, must curb spending, focus on its debt and address critical multi-billion dollar infrastructure problems already overwhelming taxpayers.

Honolulu City Council budget chair Ann Kobayashi is concerned about the mounting bills, and about how Oahu’s aging population will pay them. As the Honolulu City Council tries to avoid additional increases to already high fuel taxes, Kobayashi said the council is considering several “revenue enhancements.” The council wants to cover $2 billion in costs for  operations, another $15 billion for infrastructure repairs and $5.2 billion for a planned elevated rail project.

The U.S. Environmental Protection Agency in 2009 ordered the county to spend $2 billion to upgrade its Sand Island and Honouliuli Wastewater Treatment plants. The wastewater system needs another $3 billion in upgrades and repairs.

 Honolulu City Council Member Ann Kobayashi.

The roads, annually rated among the worst in the nation by the Reason Public Policy Institute and TRIP, require $100 million annually in repairs over the next 10 years.

Panos Prevedorous is a professor of engineering at the University of Hawaii who consults with governments around the world about infrastructure. The problem on Oahu is more complicated than simply repaving roads, Prevedouros said.

“We have problems with signage because we cannot see them at night. Our electrical systems, sidewalks, markings, cameras and sensors all need significant upgrades. And that adds up quickly.”.

In addition, Oahu has a number of functionally obsolete bridges, Prevedouros said, some that fall under the city’s jurisdiction.

“The bridges are very narrow and not safe for drivers or pedestrians.”

Oahu has, on average, one water main break a day. To make the necessary repairs, ratepayers will need to invest some $2 billion.

A park restroom facility at the popular Maunalua Bay in Hawaii Kai has been closed since February 2011, waiting for a $350,000 upgrade to its sewer system. It’s just one example of problems, found in the dozens of parks and recreational facilities across the island, that will cost more than $1 billion to repair.

 Panos Prevedouros, Ph.D.

Besides basic infrastructure, the city plans to build a 20-mile, $5.2 billion elevated rail project, from west Oahu into town. The project, which has already cost taxpayers $1 billion, is on hold — a federal lawsuit that could end the rail project will be heard Aug. 15 in the U.S. Court of Appeals.

Honolulu already spends 19 percent of its operational budget on debt service, Kobayashi said. If the rail project is built, Kobayashi said, that number would exceed 20 percent and even rise as high as 24 percent. “We were at 13 percent in good years,” Kobayashi said.

Adding to the money woes, the city must set aside $200 million for police pay increases and another $30 million for medical costs. The fire department’s new contract negotiations are under way and will likely mirror the law enforcement deal.

Bills mount for Oahu taxpayers

Hawaii has a high cost of living, with many residents working two or three jobs just to live here. Kobayashi wants to cut city spending but said some fees could increase.

“I worry about how we will pay for all this,” Kobayashi said. “Many of our residents are elderly on fixed incomes and we already are hearing from them about how difficult it is to pay the water and sewer rate increases.”

 Homeless on Oahu now number about 5,000

The city’s homeless population  – around 5,000 on Oahu – rose 4.7 percent this year. In addition, the number of homeless people living on the streets, rather than in shelters, climbed 11 percent, according to the latest Homeless Point-in-Time Count.

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