Funding for everything from the historic Royal Hawaiian Band to nonprofit programs could face the chopping block in the search for ways to tackle a $140 million city budget deficit.

Administrators of the city's affordable spay-and-neuter program were the first to get a warning when they went before the city Budget Committee last week on a separate but related issue — raising fees.

"There's a need for parties to come to me, tell me 'OK, there's this problem out there that still needs to be addressed,' " City Council Budget Committee chairman Nestor Garcia said of the spay-neuter program during the meeting. "If not, I'm not sure if we need to continue to fund this."

Garcia later told The Advertiser that the Royal Hawaiian Band, which bills itself as "the only full-time municipal band in the United States today," also may be in danger. "Whether it's cutting positions or the whole band entirely, we need to have that discussion," he said.

Programs that escaped cuts last year may be "facing scrutiny" again, he said. The committee typically deliberates on the budget through late May or early June, after the mayor hands over the administration's budget proposals on March 1.

"We need to have the discussions about vital city services we can continue to support, what should the city consider continuing to support over the next two years, because it's going to be tough," Garcia said. "The greater community needs to weigh in. Don't let us make all the vital decisions by ourselves. That's what public hearings are for."

Garcia previously has suggested — unsuccessfully — ways to tackle the looming deficit, including doubling the minimum property tax that nonprofits pay annually. All nonprofits, including large ones such as Kamehameha Schools, now pay the minimum rate of $100.

Garcia also was rejected when he proposed reducing funding for the Mayor's Office on Culture and the Arts, and the Office of Economic Development, both of which provide grants. In recent months, the Office on Culture and the Arts provided $20,000 to the Honolulu Theater for Youth and $10,000 to the Aloha Festivals.

And Garcia said that when he tried to cut money for Honolulu City Lights, he was told funding was necessary to celebrate the popular program's 25th anniversary.

"Don't be surprised when these things come up when my budget conferences begin for the next fiscal year's budget," he said.

JUNE CRUNCH

The Hannemann administration has warned repeatedly for months that the city's $1 billion-plus operating budget is facing a revenue shortfall of at least $140 million in the new fiscal year that begins June 1, 2010.

Mark Oto, the city's deputy budget director, said city agencies were already told during the summer that their current budget allotment will be 4.5 percent less than what was originally appropriated.

That reduced amount, which applied to all departments with the exception of public safety agencies such as police and firefighting, was used as a starting point for discussions for the coming year's budgets.

"Our base for next year (in all but public safety agencies such as police and firefighting) is this year's allotment," Oto said. City agencies were also instructed to quash all new hires and travel unless granted exemptions, he said.

For next year's budget, agencies are being given targeted dollar amounts to try to plan for.

The agencies are also being asked to look at entire programs, Oto said.

"We're asking them to look at and identify what are non-core programs and if we had to go that route and eliminate whole programs, what whole programs may be considered for elimination," he said.

A key reason for the budget shortfall is declining property values that have resulted in less in property tax collections. Final assessments won't be released for a few weeks but preliminary estimates show an islandwide drop in value of about 10 percent — a loss of about $85 million in revenues, Oto said.

Meanwhile, the city needs to provide an additional $19 million in pay for police officers and firefighters under collective bargaining agreements, he said. Nondiscretionary costs such as employer contributions to employee health and retirement benefits also have been on the rise, Oto said.

COSTS OF SPAYING

The Budget Committee voted last week to advance a bill that would increase fees for the decades-old spay-and-neuter program. Veterinarians in the program charge only a fraction of the regular cost of spaying or neutering cats and dogs. Taxpayers cover a portion of the cost for those with limited income, and pay a $10 subsidy for the spaying of a female dog.

Veterinarians who participate in the program bear the rest of the cost. That cost is going up, and the number of veterinarians participating is declining. So the Hawaii Veterinary Medical Association and the Hawaiian Humane Society, which administers the program at no cost, are asking that the city raise the discounted fee so more veterinarians will agree to stay with the program.

There are now only 16 veterinarians or clinics participating where there once were 38, said Felix Young, the Hawaiian Humane Society's finance director.

The fee to spay a female dog would go from $75 to $150; to neuter a male dog from $50 to $125; spaying of a female cat from $50 to $100; and neutering of a male cat from $40 to $80.

The increases, if approved by the full council, could be an empty victory. Garcia's colleagues on the Budget Committee joined him in questioning the success of the program, and the need for it.

"I'm not completely convinced the taxpayers are completely benefiting from their subsidization of this program," Councilman Ikaika Anderson said.

Councilman Rod Tam said he's not sure the rest of the island's population should be footing the bill for pet owners. "If you can't care for the animal, why have the animal?"

Councilman Charles Djou said he doesn't think all O'ahu pet owners should get a discount on spaying and neutering when the program is only supposed to help those in need.

Young said both the number of dogs going into the shelter and those being killed on city streets have declined significantly.

The city allocates $330,000 annually for the program, and last year the program for the second straight year ran out of money before the 12 months were up.

Faced with paying the full rate of $300 to $400, most pet owners who come in after the money runs out opt to delay spaying or neutering their pets until the following year, said Eric Ako, vice president of the Hawai'i Veterinary Medical Association and operator of The Pet Doctor clinic in Kähala. Ako pointed out that only a small portion of the $330,000 is not paid back to the city from the certificate fees.

Dennis Kamimura, the city licensing administrator tasked with overseeing the spay and neuter program, said that in fiscal year 2009, only about $13,800 was used to help subsidize low- income pet owners and those spaying female dogs.

The program runs out of money, however, because there is no revolving fund for it. A one-time payment is made annually to the Hawaiian Humane Society to administer it. But revenues that come in from pet owners are paid into the city general fund and therefore do not go back into the program.