Tight County Budget Controls Result in $10.7 Million Savings

From the Mayors Office:

Mayor Billy Kenoi announced today that tight restrictions on hiring, overtime, purchases and other expenses have allowed the County of Hawai`i to realize a fund balance of $24.682 million at the end of the 2011 fiscal year on June 30.

That is $10.74 million more than the county expected to have on hand at the close of the fiscal year, and represents a determined effort by every department to cut costs, conserve resources, and increase the efficiency of county government, Mayor Kenoi said.

“This is the culmination of years of hard work to reduce the size and cost of county government, and I am extremely proud of our employees for pulling together to cut spending and prepare for the future,” Mayor Kenoi said. “We know we face some difficult times ahead, and these reserves will be critical to providing the police, fire and other essential services our communities need.”

The higher-than-expected fund balance at the end of the fiscal year comes during the third consecutive year of budget cuts. The county budget for this year is $35.9 million or 8.9 percent less than the budget in effect when this administration took office in 2008.

The administration reduced spending even below budgeted levels by establishing the Personnel Review Committee to scrutinize hiring requests; and the Expenditure Review Committee to scrutinize departments’ requests to buy equipment or enter into contracts for professional services. Those committees successfully restricted spending by departments, and played an important role in accumulating the June 30 carryover balance, Mayor Kenoi said.

The county has also unfunded 222 positions over the past three budget cycles, and reduced the total number of county employees. As of October 1, there were 166 fewer employees on the county payroll than there were at the beginning of this administration.

“All of the hard work that went into cutting spending and building up the county’s reserves will pay off,” said Nancy Crawford, director of the county Department of Finance. After years of declining revenue, the additional carryover balance will be an essential tool for balancing the county budget in fiscal year 2013, Crawford said.

Crawford also noted that in difficult economic times, credit rating agencies look very closely at all reserves to assess the credit worthiness of state and local governments.

Factors that helped boost the carryover balance include the following:

  • The county received some revenue in addition to what had been budgeted, including about $800,000 in unanticipated transient accommodation tax (TAT) collections. That income is a one-time windfall because the state Legislature this year capped the counties’ share of TAT revenue.
  • The county also received about $1 million in unbudgeted income through the county Department of Public Works. DPW collected that revenue by closing out a number of earthquake recovery and other federally funded projects, and billing the federal government for engineering work done by county employees on those projects.
  • Most of the carryover balance was realized by restricting hiring. The county delayed filling a variety of positions for as long as possible, meaning budgeted funding for wages and benefits for those jobs remained unspent. Budgeted but unspent funding for salaries and wages totaled about $6 million, and budgeted but unspent money on fringe benefits totaled $4 million. Those savings in personnel costs are attributed in large part to the work of the Personnel Review Committee.

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