The City and County of Honolulu has made payments this year into a fund to pay future government employees’ benefits, a mayoral challenger said Friday.
Dominic Yagong said he asked Maui and Kauai mayors and Honolulu’s managing director Friday, during a panel at the Hawaii State Association of Counties conference at the Hapuna Beach Prince Hotel, whether their counties had paid into the accounts. All said they had, Yagong said.
That contradicts, at least in part, comments Mayor Billy Kenoi has made supporting his budgeting decision allowing Hawaii County to defer those same payments into the GASB 45 account, Yagong said.
Yagong said he remembers Kenoi said Honolulu and Maui have made no payments at all into the fund.
Kenoi said he never claimed Honolulu has never made any payments, but that the county had deferred those payments for several years. And he never made that claim about Maui at all, he said.
“We have a chart that shows the unfunded liability” for each county in the state, Kenoi said. Maui “put their money on the side.”
The state has not made any payments into the fund, ever, he said.
“When we were paying, Honolulu wasn’t,” Kenoi added. “If they’re paying, good for them.”
Kenoi has deferred payments for two consecutive years, for a total of about $34 million, noting the county already has more than $60 million set aside for future health care and other benefits for retirees.
Yagong said he was surprised to hear the other county officials answer his question about the GASB payments, particularly the vehemence with which Maui Mayor Alan Arakawa responded.
“He said, ‘we cannot pretend it doesn’t exist,’” Yagong said, referring to the looming liability for the funding.
Honolulu paid $40 million this fiscal year and plans to pay the same amount next year, he said.
Kenoi noted Honolulu was about $220 million behind in payments, according to information provided to Hawaii County.
The payments are known as GASB 45 for the form number on the reporting form of the Governmental Accounting Standards Board, the independent, not-for-profit organization formed in 1984 that establishes financial accounting and reporting standards for state and local governments.
Municipal governments with $100 million or more in annual revenue, such as Hawaii County, were required starting in 2006 to report these estimated payments as a liability on their balance sheets. Any contributions against the liability must be put into a separate, irrevocable trust account, which can pay interest.
An actuary told West Hawaii Today in April government agencies are not required to create such a trust, however, but if they don’t, they begin to grow a liability.
The disagreement between Yagong and Kenoi on the upcoming year’s budget led Yagong to introduce a bill that would take a portion of any year’s fund balance in excess of $5 million and apply it to unpaid GASB liabilities. The bill passed its final reading Tuesday, but Kenoi has threatened to veto the measure. Yagong said he does not have six votes to overturn the veto should Kenoi take that action.