It has been often said that the principal difference between our two political parties is that the Republicans want too little government and the Democrats want too much government. In Hawai‘i it is rather apparent which party has been dominant.
Local governments are instituted to provide services that are best administered proximate to the citizens being served. Some basic services that are nearly universally offered by local government, i. e. counties or cities, are police and fire protection. Such basic services are offered to benefit all citizens. But local governments particularly in areas controlled by advocates for expanded government look for instances where they can serve only a portion of the public.
On Kaua‘i there are a number of illustrations where the county government has acted to provide a governmental service to a segment of the population. They are generally familiar to members of the public. They include the Wailua Golf Course, the sanitary sewers, the water service, the bus service and the Eastside bike path.
Most of these operations are offered under what are frequently called enterprise operations. In theory they are self sufficient. They typically benefit only a small segment of our citizens and the populace is told when the program is initiated that the county will derive revenues from the users of the operation adequate to meet its costs so that taxpayers will not be burdened.
Because state law requires that rates be set at levels that are expected to cover costs the county sewage system program which covers a modest percentage of county sewage users runs fairly close to break even, although the county has been faced on several occasions with writing off some receivables from unhappy users.
The Wailua Golf Course has been in operation as an 18-hole facility since 1961. It has consistently required taxpayer subsidy because it has been unable to establish a rate structure revenue that will withstand the political pressure of objections from county golfers and be sufficient to meet costs of operation. At present the course costs taxpayers over a million dollars per year.
The picture for both the Kaua‘i bus service and the Eastside bike path is complicated by the fact that they to date have received mass infusions of financial support from the federal government. Although the county has persistently failed to provide to the public a responsible financial accounting for the portion of the planned path that has been completed and a budget for the remainder of the path it seems that about 80 percent of the funds for path construction have been obtained from Federal Highway Funds on the thesis that the path is an aid to Kaua‘i transportation needs. It does not appear that county funds are being allocated for this project in the next fiscal year. Similarly for the bus service 80 percent of the fleet acquisition cost has been received from the federal government. Currently there is no solid assurance that federal support will be maintained for these projects in the years ahead given the focus on reduction of the deficit and debt. Although the amounts given by the federal government must ultimately be funded by taxpayers, the funds are treated as a bonanza by our county officials because they are not a direct burden on the county and its taxpayers.
The county bus service is a prime example of the fiscal perils of a government-run operation. The program was initiated in 2003 amid optimistic testimony as to its benefits for our island. In its initial year it had revenues of about $100,000 and operational costs of $500,000 resulting in a net loss of around $400,000. In each succeeding year revenues grew but costs grew faster. In the current year revenues are over $700,000, but operating costs exceed $5,500,000. This operating costs amount does not appear to include any allowance for depreciation in value of the 55 vehicles in the operating fleet, so the real yearly loss is somewhat higher than $5 million. It is generally accepted that the bus service is of considerable benefit for a segment of our population, but the growth of the loss is troublesome and given continued expansion plans at some point the burden on taxpayers will exceed that benefit. The current loss works out on average to cost every man, woman and child residing here over $80 per year to subsidize.
The county water operations are budgeted separately, serve a majority of our island’s population, and except for a recent failure to account properly for asset depreciation, are generally stable.
Kaua‘i County’s excursions into operations that serve only a limited segment of our citizens have all at times been burdensome for our seemingly complacent taxpayers. However, with the proposed county operating budget reaching an all time high of nearly $186 million and the current difficult economic times we can expect our members of the public to have greater concern in the future about items that do not have a favorable cost benefit ratio. The lack of success of governmental engagement in commercial activity is well documented. It would appear that Kaua‘i would not likely be an exception. Our citizens should watch with concern the financial results over time of county ventures into the risky world normally inhabited by private concerns.
• Walter Lewis is a resident of Princeville and writes a biweekly colum for The Garden Island.
