In accordance with the Hawai’i County Charter, Mayor Billy Kenoi today submitted a proposed Fiscal Year 2013-2014 budget to the Hawai’i County Council.
Honorable Members of the Hawai‘i County Council
County of Hawai‘i
25 Aupuni Street
Hilo, HI 96720
Aloha Council Members:
As required by the Hawai‘i County Charter, submitted with this message is the proposed operating budget for the County of Hawai‘i for the fiscal year (FY) ending June 30, 2014. This balanced budget includes estimated revenues and appropriations of $370,778,473 and includes the operations of eleven of the County’s special funds as well as the general fund. This FY 2013-2014 budget is $32,426,525 or 8.0 percent less than the budget in effect when this administration took office in 2008. It marks the fifth consecutive year of our efforts to control the cost of government in a strategic and responsible manner that maintains critical infrastructure and public services. This proposed balanced budget does not require any increase in property taxes.
Collecting Less Taxes
For the fifth straight year, the County of Hawai‘i will collect less in property taxes than it did when this administration began in 2008. Tax collections in FY 2008-09 were $225.9 million and are expected to total $200.6 million during FY 2013-2014. This continuing lag in tax collections has been coupled with years of cost increases in areas such as employee health care and retirement costs and unpredictable fluctuations in utilities and fuel. In short, it will cost us more to deliver the same services next year, and there will be approximately the same amount of money available to provide these services.
Limiting the Size and Cost of Government
This budget represents the fifth year of our continuing effort to control and reduce spending wherever possible. Overtime spending has been reduced by 36 percent during this period, for a reduction of $5.1 million since FY 2007-2008.
This budget discontinues funding for recycling centers based at County solid waste transfer stations, and reduces county funding for soil and water conservation districts. It restricts out-ofstate travel, cancels or delays vehicle purchases and the replacement of aging computers and software, and employee training has been deferred or eliminated.
Two hundred thirty-six vacant positions have been unfunded during the first four years of this administration. Unfunding positions has made it more difficult to provide County services, but we intend to again hold as many positions unfilled and unfunded as possible to provide for the largest possible savings. The total employee count for the County of Hawai‘i was reduced from 2,787 on November 30, 2008 to 2,582 as of February 28, 2013.
This budget includes increased expenditures for salaries and wages of about $4.2 million because furloughs are not anticipated to continue next fiscal year. There were also increases in non-discretionary expenses such as debt service, retirement system contributions and the new transfer to the Public Access, Open Space and Natural Resources Preservation Maintenance Fund. These increased costs had to be offset with further spending cuts in order to stay within available revenue to generate a balanced budget.
OPERATING BUDGET BY FUND
The following table describes the budgeted expenditures for FY 2012-13 and the proposed budget for FY 2013-14 for each fund.
REVENUES BY SOURCE
The following table presents a summary of projected FY 2013-14 revenues from various sources and the changes from the current budget:
The major changes in projected revenues are as follows:
Real Property Tax. Real property tax revenues are expected to increase by 1.2%, or $2.4 million, due to an estimated 1.0% rise in taxable values and a slight increase in interest payments.
Public Utilities Franchise Tax. Increased public utility revenues are expected to result in an increase of $1.0 million, or 9.5% in franchise tax revenue.
Licenses and Permits. Increases in building permit revenue ($400,000), liquor license fees ($350,000) and vehicle weight tax revenue ($200,000) have contributed to an increase of $1.1 million, or 7.0% in this revenue source.
Fund Balance Carryover. The higher projection of carryover savings is attributed to the cumulative effect of successful cost cutting measures for the past several years and additional spending restrictions in the current year.
EXPENDITURES BY FUNCTION
The following table presents a summary of projected FY 2013-14 expenditures from various sources and the changes from the current budget:
Major changes in projected expenditures are as follows:
- The Geothermal Relocation and Community Benefits Fund. Appropriations are increased by $1.3 million for anticipated property purchases under the geothermal relocation program.
- Salary and wage increases in many departments are the result of the ending of the furlough program. The increase is offset by other expenditure cuts in various areas.
- Fire. The Fire Department has increases of approximately $200,000, primarily for fire protection costs.
- Liquor Control. Funds are budgeted to pay $350,000 of the cost to renovate the Hilo office and remove asbestos. Additional funds will be appropriated in subsequent years to complete payment of the full cost.
- Prosecuting Attorney. Additional grant funding revenue of about $400,000 is anticipated and appropriated for various programs.
- Highway Fund. An increase of approximately $200,000 results from the combination of ending the furlough program and adding a new traffic safety project.
- Transfer to Debt Service. In the current fiscal year the County experienced a temporary reduction in debt service expense. With the beginning of principal payments on bonds issued in 2010, the transfer to debt service is increasing.
Pension & Retirement
- Retirement Benefits.Contributions to the employee retirement system will increase by approximately 4.5% as the result of rate increases established by the state Legislature.
- Vacation Pay. This provision which assists with covering the cost of vacation payouts for employees separating from the County is reduced by $500,000.
- Miscellaneous Insurance Claims & Judgments. The appropriation to cover various smaller claims and judgments against the County is reduced by $200,000.
- Wastewater Replacement Reserve Account. Funding appropriated to set aside for large equipment rehabilitation and replacement must be reduced by approximately $900,000 as the Sewer Fund fund balance and replacement reserve fund balance have been exhausted
Once again, I want to express our deep appreciation for the support and dedication of our hardworking County employees. Their efforts have allowed us to control the size and cost of government while delivering essential services and safeguarding public safety in each of our communities.
We will continue to work closely with our state Legislators to maintain the County of Hawai‘i’s share of the Transient Accommodations Tax, which is critically important to maintain our balanced budget. We also continue to work with our Congressional delegation to secure federal resources as we work to expand our transportation infrastructure and build important capital improvement projects.
This proposed budget is the result of many months of cooperation and collaboration between all of our department heads and county employees. We recognize that this budget represents another year of difficult choices for our community, and we look forward to working closely with the County Council as we seek to address both new and continuing demands for public services while also maintaining a balanced and responsible budget.
William P. Kenoi