Video by David Corrigan
Thursday was the deadline for Mayor Billy Kenoi’s final 2011-2012 fiscal budget proposal, and after transmitting the latest plan to the Hawaii County Council, he sat down with local media in his office to discuss some of the changes made since it was first introduced a few months ago.
The $367,294,364 budget is $35,910,634 or 8.9% less than the budget in effect when the Kenoi administration took office in 2008.
Some of the notable differences in the initial budget draft and this final version, according to the county:
The state legislature has passed legislation effective July 1, 2011 which caps the amount of Transient Accommodations Tax (TAT) that is transferred to the counties at the lesser of $93,000,000 or 44.8% of tax revenues for the next four years. Hawaii County’s 18.6% share of the capped amount is $17,298,000. The impact of this action is that the County’s revenue, already reduced significantly due to lower real property tax values, has now dropped another $1,370,401. In spite of this additional loss of revenue, the amended budget was balanced without increasing real property tax rates.
COLLECTIVE BARGAINING AGREEMENTS
All unions representing state and county employees have contracts ending June 30, 2011, and have been in negotiations with management. The first union to reach an agreement with management was Hawaii Government Employees Association (HGEA), which represents about 875 Hawaii County employees. Terms of the agreement allow for a 5% wage decrease and a shift in the employee share of health insurance cost from 40% to 50%.
The value of the cost savings to the County based on the new agreement is approximately $3 million, of which $2.8 million impacts the general fund budget. This budget uses the estimated savings generated by employee compensation cuts to increase County reserves in the Budget Stabilization Fund.
There are a number of uncertainties associated with the contractual wage and benefit savings from the recent negotiations. At the same time, we are faced with the uncertain revenues and increasing expenses for fuel, utilities and other non-controllable costs. Therefore, the estimated savings were posted as a reserve and were not used to balance the budget.
We know that we face new economic challenges ahead, and bolstering the County’s budget reserves will strengthen our financial position and help to maintain our favorable bond rating.
GENERAL FUND BALANCE
We are projecting an increase in the estimated fund balance of $3,736,000 from the estimated we provided in March. This was made possible by the ongoing efforts of the administration and all county employees to reduce costs and forego purchases and hiring whenever possible. The fund balance submitted with this budget is estimated at $13,936,000.
The administration also broke down some of the changes in revenue and expenditures for the proposed budget.
Changes to March 1, 2011 revenue estimates:
– TAT revenue decrease of $1,370,401
– State EMS Grant increase of $1,363,044 was not realized
– Area Plan on Aging state grant of $364,497
– Fund balance carryover increase by $3,736,000 which the administration says represents an increase in current year expenditure savings as a result of restrictions on hiring, travel, equipment and other spending.
Changes to March 1, 2011 expenditure estimates:
Research & Development
– $324,500 increase to fund priority initiatives in agriculture, tourism promotion, resource center, energy and business development.
– $300,000 increase for assumed responsibility of the Soil and Water Conservation Districts (formerly under Public Works).
– $170,500 decrease for Soil and Water Conservation Districts transfer to R&D.
– $310,600 increase for Automotive fuel budget
– $42,600 increase in building utilities for a portion of the Ben Franklin building to be occupied by Corporation Counsel while their offices undergo asbestos abatement.
– $1,142,690 decrease due primarily to reduction in anticipated state EMS grant increase.
Office of Aging
– $403,997 increase due to additional grant funding
Parks and Recreation
– $427,954 increase for electric and water costs, and to meet payroll requirements
The mayor also said he did not want to see a repeat of last year’s council budget debate, where a number of amendments were submitted for consideration before the second and final reading. The mayor says he has not heard details on any specific counter proposals from the county council, and said he would veto any budget that contains tax increases.