WMTA Shares these commentaries, without taking a position unless otherwise noted, to bring information to our readers
To view the archives of the Tax Foundation of Hawaii's commentary click here. Weekly Commentary For the Week of July 16, 2017 The Field of Dreams Led to the Slammer By Tom Yamachika, President On June 7, 2017, the Honolulu City Council voted to authorize bond funding to keep the Honolulu rail project on track. What they might not realize is that bond funding dramatically raises the stakes for transparency around the rail project. Beginning in late 2007, the U.S. Securities Exchange Commission began scrutinizing state and local governments to protect investors in what then-Chairman Christopher Cox called the increasingly complex municipal bond market. In April 2008, the SEC charged five San Diego officials, including the former city manager and auditor, with fraud. City officials were accused of certifying financial statements in 2002 and 2003 that were false because they failed to disclose that the city was purposely underfunding its pension system. Eventually, the officials agreed to pay penalties ranging from $5,000 to $25,000 — the first such fines levied against officials in a muni-fraud case. In 2010, the SEC established a new unit to investigate misconduct in municipal finance, with an emphasis on pension funding. They charged New Jersey in 2010 and Illinois in 2013 with fraud connected with bond offerings for misrepresenting that their respective pension systems were well funded, when they were in fact under water by billions. In April 2016, the SEC turned the heat up another notch on Ramapo, a suburb in New York. The plot in this case sounded like “Field of Dreams” – officials in Ramapo wanted to build a $58 million baseball stadium after voters in the town overwhelmingly refused to guarantee bonds to pay for its construction. The officials went to the bond market anyway and raised the money to build the stadium, now called the Provident Bank Park, in part because they “cooked the books of the town’s primary operating fund,” according to the SEC. Instead of just going for fines and penalties, however, the agency involved Preet Bharara, who then was the U.S. Attorney for the Southern District of New York, to indict the town defendants on criminal securities fraud, wire fraud, and conspiracy charges. In May 2017, a federal jury convicted then-Ramapo Supervisor Christopher St. Lawrence on 20 of the 22 felony charges. The fraud counts on which he was convicted carry 20-year maximum terms. He will be sentenced on September 28th. Back here in the Aloha State, there is a growing chorus of people who are expressing misgivings about the financial parameters of the rail project. One reader writes, “No one trusts the rail cost projections. No one trusts the rail ridership projections. No one trusts the rail energy use projections. No one trusts the rail land condemnation projections. No one trusts anything about rail.” Those who are now overseeing the project need to be concerned that going out to the bond market with cooked books is a recipe for repercussions of the federal criminal variety. It doesn’t matter that the officials involved have gotten no personal benefit from the project. Mr. St. Lawrence had nothing to gain personally from building the Provident Bank Park. He just wanted the park built, no matter what. He now may be getting a one-way ticket to federal prison. Officials here may have the best of intentions, but they better be telling the public the truth. Or else. PRESS RELEASE
July 20, 2017 Lahaina, HI - WMTA ANNOUNCES SPECIAL SPEAKERS COMING TO PARTICIPATE IN EMERGENCY PREPAREDNESS: MAUI ELECTRIC TO SHARE STORM RESPONSE AND POWER RESTORATION West Maui Community Disaster Planning Meeting Scheduled for Thursday, July 20, 2017 at Lahaina Civic Center Amphitheater at 5:30 p.m. These meetings are free and open to the public. With hurricane season officially underway, the Hawaiian Hazards Awareness and Resilience Program (HHARP) invites the public to hear from Maui Electric representatives Chris Reynolds and Kūhea Asiu who will discuss important storm response and power restoration efforts. “It’s our responsibility to provide safe and reliable power to our community, but natural disasters do happen and outages can occur, so being prepared is critical,” said Chris Reynolds, manager of system operations at Maui Electric. “That’s why we’ll be discussing how residents and businesses can make plans now to safeguard themselves and their families during this potentially active storm season. We’ll also be sharing how our trained crews respond to emergencies and the steps we take to restore power should a natural disaster strike.” Maui Electric provides electrical service to nearly 70,000 customers on Maui, Moloka‘i and Lāna‘i. Reynolds oversees the company’s system operations area that monitors and controls the company’s electrical system 24-7, as well as reroutes power and relays outage information and restoration crews during outages. Asiu coordinates the company’s community and government relation efforts for Maui County. The WMTA is working with the Maui Emergency Management Agency, The Pacific Disaster Center, and the State Emergency Management Agency on developing a customized disaster plan designed to meet West Maui’s specific needs. The isolation from the Island’s major hospital and airport, due to frequent road closures, fires and flooding, have highlighted the need for special preparedness planning. The Hawaiian Hazards and Resilience Program (HHARP) is a series of monthly workshops, presented by subject-matter experts, to provide education for hazard understanding and offer tools and information resources to guide community mitigation, preparedness, response and recovery planning. The current meeting schedule follows:
For more information about HHARP and this event, contact Joseph Pluta at (808) 661-7990 or email pluta@maui.net. For more information on the Maui Electric emergency response presentations, contact Kūhea Asiu at (808) 872-3244 or email kuhea.asiu@mauielectric.com. WMTA Shares these commentaries, without taking a position unless otherwise noted, to bring information to our readers
To view the archives of the Tax Foundation of Hawaii's commentary click here. Weekly Commentary For the Week of July 9, 2017 Mucking Around in the Past? By Tom Yamachika, President On Thursday, June 22nd, the board of Honolulu Authority for Rapid Transportation (HART) stunned critics by cancelling a special audit that would have examined past cost overruns. Ember Shinn, former City Managing Director and HART board member, was quoted as saying, "It's not my intent to muck around in the past and try to figure out what we did wrong in the past. It's more trying to get forward.” The HART board decided that the money set aside for was better spent on other things, especially because there were other outside reviews being conducted. This comment seems to show a lack of understanding of what an audit is, and of the problems that it is supposed to address. According to the American Institute of Certified Public Accountants, the purpose of an audit is to provide users of financial statements with an opinion by the auditor on whether the financial statements are presented fairly in all material respects. The audit (and the auditor’s opinion) enhances the degree of confidence that intended users can place in the financial statements. Companies, governmental units, and others communicate their financial condition to owners, constituents, or other stakeholders. One common way to communicate this information is through financial statements such as profit and loss statements, balance sheets, and related statements. Stakeholders receiving those statements may be trying to follow the Russian proverb made famous by Ronald Reagan: “Trust, but verify.” So, the entity presenting the financial statements engages a disinterested professional, often a CPA firm, to test the information on the statements to see if it is trustworthy. This testing process is the “audit,” and the resulting opinion is the “audit report.” Variations on this theme also occur, but the overall objective is to enhance stakeholder confidence. One of the biggest problems with the Honolulu rail project today is the lack of confidence that constituents and legislators have in the financial condition of the project. One recent email I received put it this way: “No one trusts anything about rail. No trust. No deal.” House Finance Chair Luke said something similar March 10, that it’s “not because people no longer support rail, but people have lost confidence in the cost, and they have lost confidence in the management, and they have lost confidence in what this project is going to cost in the future.” An audit is designed to give people more confidence. Is it “mucking around in the past”? Sure it is. But is it something we need? The dollars that would need to be spent on an audit, no matter who does it, could go toward one of the many other cost items – plenty of costs to go around – but why is it not important to restore public confidence? HART needs to remember that it has a boss, namely We the People of Honolulu. If your boss lost confidence in your work, wouldn’t it be important to do something about that? And then, why is mucking around in the past a bad thing? As the philosopher George Santayana said, “Those who cannot remember the past are doomed to repeat it.” If we are trying to move forward and aren’t, we need to figure out why. Maybe then we can do something different, and get a different outcome from the doom and gloom that we are all constantly hearing now. |
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