OPINION: You Don’t Starve a Weak Economy
You don’t put an emaciated person on a cleansing diet.
While it may work for couture fashion models, it can mean lights out for the less-than-spry.
Some governments in the western world are choosing to starve already weak economies, hoping that by narrowing the girth of their budgets, they will keep the affections of the fickle bond investors so many of them rely on.
Unfortunately, as the Europeans have demonstrated over the last year, cutting government spending while the economy is on life support can spell disaster. 11 countries in the European Union have now dipped into recession, and the spending cuts that were imposed are causing major political backlashes.
A similar beef over budgets is playing out on a smaller, but still important scale right here on the Big Island. Prepare to gasp. The 2012 budget for Hawaii County that Mayor Billy Kenoi put forward is being challenged.
Leading the charge is Councilman Dominic Yagong, the mayor’s chief rival this election year. Yagong has been busy blowing the whistle on a plan to postpone payments on future retiree health care. Skipping payments will save the county $20 million in each of the next two years.
The account that holds those payments, known as “GASB 45,” currently has $61 million. Yagong argues that skipping payments would burden the county in the future. Other critics claim it will put an otherwise healthy bond rating at risk.
To be sure, our county government got a little portly during the good years, adding positions and raising salaries with little worry over property tax revenues. But the budget has since been trimmed, and worker furloughs implemented.
The Big Island economy is still struggling its way to recovery, and forcing the county to slash an additional $20 million per year in spending wouldn’t exactly put it on the fast track to health.
Deferring payments like GASB 45 is hardly a shocking move for local governments short on cash. The county’s bond rating is not currently at risk, and with the Hawaii economy expected to continue positive growth for the next few years, temporary budget relief is both welcome and responsible.
Kenoi‘s budget manages to balance the books without raising property taxes this year, and that deserves serious praise. Attacking him for deferring payments is unfair, if not politically convenient.
Have his critics been spending time in Europe?