Rob Parsons

Budget Bust

California and Hawaii define issues, cope with changes

by Rob Parsons

June 25, 2009

My friend, who works for the city of Oakland, California, stood in the area that was once his front lawn. The late afternoon sun warmed the cocoa husk mulch covering his total-makeover landscaping project, producing an aroma like brownies baking in the oven.

What, I asked, does the city do about something like this, gesturing to where a street tree’s root had heaved up the sidewalk three or four inches.

“At this point,” he replied, “we let them trip over it and then sue us.”

His answer (later recanted, when he acknowledged that a sidewalk repair program exists, but “takes quite a while”) was indicative of the feeling of economic desperation in California, which hit 11.5 percent unemployment last week, the nation’s highest, according to a Monterey Herald headline story. Oakland’s Public Works department alone saw an 18 percent cut in jobs. Hawaii, meanwhile, is turning to work furloughs rather than layoffs. 

The Golden State’s $24.3 billion budget shortfall makes Hawaii’s $700 million deficit look like chump change, though in addressing potential cuts, both states are showing about as much finesse as one choosing to open a china shop in Pampalona.

As a recent New York Times editorial put it, “The governor [Linda Lingle] announced the most drastic furlough program in the country. She’s closing state offices three days a month, for two years. Aloha Friday, where people go to work in aloha shirts and muumuus, is going to be Furlough Friday, where they stay home in pajamas and look for jobs on the Internet.”

With his proposal to lay off 5,000 state workers, California Governor Arnold Schwarzenegger seems destined to keep his “Terminator” reputation. Among those are 2,000 park rangers, biologists, lifeguards, interpreters, architects and maintenance workers, all jeopardized by a recommendation to cut $70 million from the state parks budget. That would necessitate closure of 220 of 279 parks, including Emerald Bay at Lake Tahoe and Humboldt Redwoods State Park, home to the world’s tallest tree. 

California parks attract an estimated 80 million visitors annually, and a State Parks Foundation official believes that the state receives $2.35 in return revenue for every dollar spent on parks. A Ventura County Star article stated that California legislators were reviewing a $15 vehicle park entry fee tax proposal that reportedly would help avoid layoffs or offset the parks budget shortfall.

Hawaii’s Recreational Renaissance bill, similarly proposed to prop up state park funding, failed to garner approval at this year’s legislative session. Lingle’s plan, however, would have relied upon $240 million in bonds to help fix Hawaii’s aging parks and harbors, paid for in part by user fees to non-residents at eight popular parks, and increased harbor slip fees.

State officials still believe there is merit in charging tourists to enter state parks, citing the increased visitor numbers at Diamond Head, even after bumping up charges to those entering the state monument. But objections were voiced statewide that fees levied at specific parks (Makena and ‘Iao were selected for Maui) should be used to improve those facilities, not spirited away to fix other parks.

With more than $111 million carved from the Department of Land and Natural Resources budget in fiscal 2009, it’s uncertain how State Parks and other divisions will cope.

New rules for commercial activities within Maui County parks geared to “strike a better balance” of park users could backfire by causing yet another blow to the sagging tourist industry. Some believe that limiting the number of vendors allowed to teach surfing, scuba, windsurfing, kayaking and kite boarding, and the number of park locations where such activities are allowed, is one more nail in small, local businesses’ coffin. 

Recently, the Maui County Council backed down an ordinance that would have prohibited the largest big box store outlets from obtaining permits to build or expand. The Council’s waffling came after heavy lobbying from certain businesses, including WalMart, which flew in corporate representatives from the Mainland to help plead their arguments. 

Nationwide, many communities have rejected the shift toward allowing corporations to supplant local businesses, under the guise of job creation and low prices. But for now, it seems that such a bold move is beyond the will of the current County Council and, for that matter, the Chamber of Commerce.

County officials, including Mayor Charmaine Tavares, are still being criticized for shutting down unlicensed vacation rental operations, reversing a previous stance that recognized their presence, without penalties, while suitable guidelines and parameters were being crafted by ordinance. Now, more than two years after the closure has put hundreds of operators out of business, new draft permits and rules would require a transient vacation operation in a neighborhood to pay the same property tax rate as hotels, or nearly four times the residential rate.

Such onerous, punitive, anti-business measures are hard to comprehend, especially against businesses that are island-based and not linked with large corporations. Just a few days ago, I was walking down the streets of Carmel, California, where residences and vacation rentals co-exist peacefully, side-by-side. The result is a community that is accessible to visitors, yet retains its singular personality.

Still, like Hawaii, California is faced with dire problems and monumental challenges. The state now ranks 50th—dead last—in per capita spending for education. And you thought Hawaii’s public school system was behind the times. The California legislature did, however, recently reject Gov. Schwarzenegger’s plan to lop another $700 million from the education budget.

To a degree, each state’s budget woes are the result of decreased return from property taxes. As home values decline, tax revenues follow. The San Francisco Chronicle recently reported that thousands of Bay Area residents will receive notices this summer that their property taxes are being cut because of plummeting real estate assessments. Such valuations generally are based on recent sales. But, given a dearth of transactions, could Maui County follow suit in lowering property tax rates?

The biggest question at hand is how to compensate for the changes wrought by a sagging economy and diminished revenues. Among the suggestions made in California are taxing each barrel of oil extracted, increasing alcohol and tobacco taxes and restoring a higher income tax bracket for those earning over $250,000, a strategy that alone could generate an estimated $4 billion annually. 

All those proposals, however, have been voted down by California Republicans, or vetoed by Gov. Schwarzenegger. California voters also turned back four ballot initiatives that would have increased taxes in one form or another to help address the budget shortfall.

Hawaii’s representatives passed a measure this year—House Bill 1271—that levies a dollar surcharge on each barrel of imported petroleum, setting aside an estimated $30 to $40 million each year to fund clean energy projects. Additionally, about one-third of the funding will be used for a new program to support local food production, another of our major imports (currently, 85-90 percent of food consumed in Hawaii is flown or shipped in). The bill is currently on Gov. Lingle’s desk, awaiting her signature.

Many have touted the opportunity to reduce our dependence on imports, especially with rising oil prices and shipping costs, and to return to a simpler model of local-based economies. Local food and energy production have been heralded by Maui’s elected leaders, but so far little has come of the talk—aside from Mayor Tavares tootling about in an electric car.

On Monday, U.S. Rep. Neil Abercrombie offered advice to Hawaii residents and officials on how to utilize federal funds for “green jobs.” Rather than high tech solutions that might only benefit a few venture capitalists, Abercrombie believes moves toward energy efficiency and independence can be made using simpler, existing technologies and resources. 

As much as $620 million may be available to Hawaii through federal stimulus funding, much of it in block grants for energy upgrades and conservation. Abercrombie stated these clean-energy investments will help create as many as 7,000 jobs throughout the islands.

If those projections are on target (with apologies for the between-the-lines reference to another big box chain), there may yet be an awakening to the new paradigm of local sustainability. Hawaii deserves that.