Thursday, February 18, 2010


ONE WAY OR ANOTHER: Watching yesterday’s council meeting we feared the council as a whole might have to march en masse to the hospital after their session to have the same kind of shoulder surgery we recently endured due to the way they twisted themselves into pretzels patting themselves on their own backs over the increase in ratings for the $120 million dollars in bonds they plan to issue on March 3.

And indeed, credit where credit is due. It will mean that the county will have to pay a lower interest rate to service those bonds saving the taxpayer money over the years. In addition we’re borrowing enough to cover outstanding bonds that we’re now paying off at a higher interest rate.

As the Honolulu Advertiser wrote yesterday:

Standard & Poor's Ratings Services has raised it's rating on Kaua`i County outstanding general obligation bonds to AA, it's third-highest rating for municipal bonds.

The ratings agency also assigned an AA rating to the county's $120 million general obligation bond sale that's expected in early March. Standard & Poor's said the ratings upgrade related to Kaua'i's strong financial performance and its reserve position.

Fitch Ratings assigned an AA- rating on Kaua`i bonds that will be sold, and upgraded its outstanding general obligation debt to AA- from A+.

The council touted how they had done it by fully funding their obligations to the county retirement funds unlike the other counties and fixed the 19 different “problems” a required audit found a couple of years back.

But one thing barely mentioned- and for good reason- is that the primary reason for the better rating is that Kaua`i has been operating with huge surpluses for many years.

Now don’t get us wrong- we’re not one of those “lower my taxes” wing-nut tea-baggers, especially when it comes to the progressive types like property and income taxes. We often joke that the reason we don’t run for office is they we favor more government- especially fiscal and environmental regulations - and higher taxes to fully fund safety net and social spending.

One of the problems has been that there is a question of exactly how much money is in this slush fund awaiting appropriation- a question that has never been answered despite the queries from council watchers from Glenn Mickens to Ray Chuan over the last 20 years.

Trying to find out from that shell game they call the annual financial audit has been an exercise in frustration according to those with the skills to try.

Another is that is isn’t spent on social programs... it just kind of sits there like a slush fund ready for appropriation whenever someone convinces the council to spend it.

But the main problem in all this is that at the very moment the council was claiming to be flush out of one side of our collective mouths the administration was talking out of the other side while testifying before a legislative committee in Honolulu where they are considering stealing the counties’ shares of the transient accommodations tax (TAT) which could cost Kaua`i around $15 million this year.

As the Advertiser reported this morning, at the hearing

(Kaua`i Administrative Assistant) Gary Heu, administrative assistant to Kaua`i Mayor Bernard Carvalho Jr., said they would have to raise property taxes to a level necessary to offset the TAT losses.

So are we flush enough to achieve a better bond rating because of our vast surpluses or are we so broke that losing 10% of our resources will cause an increase in our property tax rates to fund the same level of services as last year?

All we know is you can’t have it both ways.

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