Honolulu’s Financial Challenges

Feb 5, 2021

As a new city administration settles in to Honolulu Hale, finances are one challenging area.

 

The City and County of Honolulu recently released its latest Comprehensive Annual Financial Report, or CAFR. The document covers fiscal year 2020, which ended on June 30th last year. To get a better feel for the city's financial condition, we went over the CAFR with Andrew Kawano, the former Foodland executive who is now the city's new director of budget and finance.

The numbers show a mix of strengths and weaknesses. Its net position is a positive $350 million, much improved over the previous fiscal year’s negative $76 million. “Net position” in an accounting term that goes beyond revenues and expenses to also factor in assets and liabilities. For 2020, the city benefitted from the transfer of various Kakaako properties from the state to the city as well as from a nearly 11% increase in property tax collections.

What is not improving is the city’s long-term debt picture, which has grown from $3.8 billion in 2010 to $6.2 billion in the 2020 report. The debt is comprised of general obligation bonds, revenue bonds, and the city’s pension obligations. Kawano says the debt is not going to go down anytime soon, in part because of capital projects such as rail.

By law, the city could carry as much as $36 billion in debt. But at its current level, the situation was enough to earn an “F’ grade from the Mainland watchdog group Truth in Accounting, which analyzed city debt on a per capita basis for 75 cities. Honolulu’s debt amounts to nearly $30,000 per taxpayer, only Chicago and New York owe more by that measure