The City Council’s proposed $2 billion city operating budget, which includes $14 million for nonprofit groups, is "fiscally irresponsible" and is balanced through a combination of debt and money grabs that could risk the city’s high bond rating, Mayor Kirk Caldwell charged Wednesday.

Council members countered that Caldwell’s approach to balancing the budget is based on "phantom money," and that they are trying to help island communities without increasing financial burdens on residents, as suggested by the administration.

The brouhaha comes as the Council prepares to take a final vote Wednesday on the budget that cuts no services and does not raise property taxes, bus fares or fees.

Caldwell, at a news conference in his office, questioned the wisdom of funding for grants-in-aid — which he called "special interest grants" — for nonprofit groups. The funding, about $8.3 million more than required by charter, means the city would have to balance the budget through borrowing to buy equipment such as trucks, lawn mowers and weed cutters, diverting $10 million from retiree health benefits and taking $6.2 million from the rainy day fund.

The mayor said he expects some Council members to propose scaling back the grants-in-aid when they meet Wednesday, and that he was publicly trying to forge a compromise by appealing to them and their constituents to consider a more responsible approach.

"Right now, it looks like we have an uphill battle," Caldwell said. "So I thought it was important that we speak out publicly — that we continue to reach out to Council members. Hopefully we can bring a greater common-sense approach and see if we can’t find some balance here."

The administration previously warned that the Council would have to raise bus fares or property taxes, or cut services, to deal with an estimated $67.5 million deficit caused largely by the Council’s rejection of the Caldwell’s proposed increase in the fuel tax. Doing so would have raised an additional $15 million.

Council Budget Chairwoman Ann Kobayashi said the mayor’s plan did not add up.

"He sent us what he called a balanced budget basing it on phantom money — $15 million from a fuel tax that didn’t exist," she said. "So we were already $15 million in the hole."

Kobayashi said the budget responsibly addresses roads, sewers and other infrastructure needs and takes care of communities. Grants-in-aid benefit nonprofit groups such as Meals on Wheels, the Weed and Seed anti-drug program and the Leeward Coast Community Benefits Program.

She said grants were needed more this year because federal funding for such programs was reduced by about $13 million, down to $9 million.

"It’s about time we help the people who live here, who need the services of many nonprofits," Kobayashi said.

Council Chairman Ernie Martin noted the total for grants still amounts to less than 1 percent of the overall operating budget and that the money would go where it was needed.

"We cannot afford to have any more individuals on the streets and camping on our parks and sidewalks," he said. "Anything this Council can do to prevent that, we’re going to do it."

Caldwell also questioned how the grants were awarded. Under a charter amendment approved last year, grant applications are supposed to be vetted by an appointed seven-member committee. The grants instead were included in the budget, leaving it up to the mayor to decide whether to release the money.

Kobayashi and Martin said the budget has had extensive hearings since March and that the public has had ample time to comment on the grants. Many of the recipients are previous applicants and the process used this year is similar to past practices, they said.

If the budget is approved as it is, Caldwell said he would take steps to ensure the money is spent responsibly.

"Depending on what happens I will be notifying everyone who’s on this list to not count on this money, they should not put it in their budget and that a process will have to be vetted before money will be released," he said. "I think it’s the most responsible thing to do as a mayor."

Martin said time remains before Wednesday’s meeting and said of Caldwell’s news conference, "It’s disappointing that he’s chosen to make his case in the media, as opposed to trying to work through the Council."

Caldwell said he had met individually with each of the Council members to make his case, adding that he and Martin "agreed to disagree."