Mayor Kenoi Presents 2012 – 2013 Budget to the Hawaii County Council

This morning Mayor Kenoi presented the 2012-2013 Budget to the Hawaiʻi County Council.

According to his Facebook message “….nearly $38 million smaller than the budget in effect when we took office. Mahalo to all my department leaders for their hard work and sacrifices that allowed our administration to present our fourth consecutive balanced budget!”

This $365 million FY 2012-2013 budget is $37,911,650 or 9.4 percent less than the budget in effect when this administration took office in 2008. It marks the fourth consecutive year of our efforts to reduce the size and 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 fourth 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 totaled $225.9 million and are expected to decrease to $198.5 million during FY 2012-2013. This continuing slide 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 less money available to provide these services.

Reducing the Size and Cost of Government

This budget represents the fourth consecutive year that we are reducing spending. Consulting contracts have been cut by more than $12 million since FY 2007-2008. Overtime spending is also being reduced by 38 percent during this same time period, for an additional reduction of $5.3 million.

This budget discontinues a subsidy for the West Hawai‘i golf program and phases out the lava-viewing program. It restricts out-of-state travel, cancels or delays vehicle purchases and the replacement of aging computers and software, and employee training has been deferred or eliminated.

Further, we have cut special counsel, trial aides and law clerks for the prosecutors’ office, reduced courier service, cut appraisals, environmental assessments and surveys, and reduced the workers compensation budget.

Two hundred twenty-two vacant positions have been unfunded during the first three years of this administration. Although it has been very challenging, for the upcoming year, we intend to again hold 222 positions unfilled and unfunded. Leaving these vacant positions unfunded will save the county $7.1 million. The total employee count for the County of Hawai‘i was reduced from 2,787 on November 30, 2008 to 2,586 as of February 29, 2012.

 

OPERATING BUDGET BY FUND

The following table describes the budgeted expenditures for FY 2011-12 and the proposed budget for FY 2012-13 for each fund.

(Amounts in thousands)

FUND

FY 11-12
Budget

FY 12-13
Proposed

Increase
(Decrease)
from FY 2011-12 

Percent Increase
(Decrease)

General Fund

$278,120

$274,594

($3,526)

(1.3%)

Highway Fund

29,267

32,773

3,506

12.0%

Sewer Fund

9,085

9,321

236

2.6%

Cemetery Fund

10

10

0

0.0%

Bikeway Fund

171

171

0

0.0%

Beautification Fund

154

158

4

2.6%

Vehicle Disposal Fund

2,599

2,588

(11)

(0.4%)

Solid Waste Fund

28,255

25,406

(2,849)

(10.1%)

Golf Course Fund

1,120

1,139

19

1.7%

Geothermal Royalty Fund

575

600

25

4.3%

Housing Fund

17,888

18,483

595

3.3%

Geothermal Asset Fund

50

50

0

0.0%

  

$367,294

$365,293

($2,001)

(0.5%)

REVENUES BY SOURCE

The following table presents a summary of projected FY 2012-13 revenues from various sources and the changes from the current budget:

(Amounts in thousands)

 Source

Amount

 Percent Of Total

Increase (Decrease)
From
FY 2011-12

 Percent
Increase
(Decrease)

Real Property Tax

$198,500

54.3%

($8,800)

(4.2%)

Public Service Company Tax

9,520

2.6%

420

4.6%

Fuel Tax

7,660

2.1%

969

14.5%

Public Utilities Franchise Tax

10,560

2.9%

1,235

13.2%

Licenses and Permits

15,859

4.4%

346

2.2%

Revenues and Use of Money & Property

675

0.2%

(510)

(43.0%)

Intergovernmental Revenues

62,554

17.1%

(951)

(1.5%)

Charges for Services

21,670

5.9%

44

0.2%

Other Revenues

8,315

2.3%

(34)

(0.4%)

Fund Balance Carryover

29,980

8.2%

5,280

21.4%

 

$365,293

100.0%

($2,001)

(0.5%)

REVENUE CHANGES

The major changes in projected revenues are as follows:

Real Property Tax. Real property tax revenues are expected to decrease by 4.2%, or $8.8 million, due to an estimated 4.0% decline in taxable values.

Fuel Tax. Fuel tax revenue is expected to increase by 14.5% to $7.7 million, as fuel consumption has increased over anticipated levels.

Public Utilities Franchise Tax. Increased public utility revenues are expected to result in an increase of $1.2 million, or 13.2% in franchise tax revenue.

Revenue from Use of Money and Property. Interest earnings are expected to continue to decrease for next fiscal year by $0.5 million, due to the low yield on investments, which is still reflective of the current economy.

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 2012-13 expenditures from various sources and the changes from the current budget:

(Amounts in thousands)

 

 

 Expenditures

 Amount

 

 Percent
Of
Total

Increase (Decrease)
From
FY 2011-12
Amount

Percent
Increase
(Decrease)

General Government

$41,459

11.3%

($1,750)

(4.1%)

Public Safety

112,658

30.8%

776

0.7%

Highways & Streets

22,151

6.1%

1,500

7.3%

Health, Education, & Welfare

25,456

7.0%

(396)

(1.5%)

Culture and Recreation

17,228

4.7%

(1,066)

(5.8%)

Sanitation & Waste Removal

33,799

9.3%

(2,654)

(7.3%)

Debt Service

35,250

9.6%

(5,965)

(14.5%)

Pension & Retirement

32,275

8.8%

1,412

4.6%

Health Fund

29,803

8.2%

978

3.4%

Miscellaneous

15,214

4.2%

5,164

51.4%

  

$365,293

100.0%

($2,001)

(0.5%)

EXPENDITURE CHANGES

Major changes in projected expenditures are as follows:

General Government

  • General savings in the proposed budget were achieved through many sacrifices across all administrative departments, from further reduction of travel, training and contracted services to reductions in supplies and continued postponement of equipment purchases. Fuel and utility costs continue to fluctuate, and the oil market will be monitored and budget items adjusted if necessary prior to the May submittal. Corporation Counsel’s special counsel account was significantly reduced, as was funding for Property Management land acquisition related services. Research and Development was able to eliminate some costs from the current year budget for APEC-related activities. The reductions in General Government expenditures touched all departments in this classification.

Highways and Streets

  • Highways. The Department of Public Works is earmarking an additional $500,000 for work on roads-in-limbo, increasing the budget from $1.5 million to $2.0 million. Additionally, Highway Maintenance division is budgeting approximately $1.0 million for new and replacement equipment for road maintenance and resurfacing.

Health, Education and Welfare

  • Social Services. Despite declining revenues and reductions in spending, the county’s budget for non-profit agencies will remain at $1.5 million in fiscal year 2012-13. We have protected this funding despite three years of budget cuts because of our commitment to the non-profit organizations that support the most vulnerable in our community.

Culture and Recreation

  • Parks and Recreation. The Lava Viewing program at Kalapana is being phased out, resulting in a savings of $300,000. Discontinuation of the West Hawai‘i Golf Subsidy program will provide a budget reduction of $500,000.

Sanitation and Waste Removal

  • Solid Waste Fund. Some repairs to facilities projects will be transferred to the Capital Projects fund, reducing operating expenses by over $800,000. Equipment lease expenses were reduced by approximately $600,000 as some financing leases were completed. Solid Waste and Recycling contracts for services were also reduced by a combined amount of over $800,000.

Debt Service

  • Transfer to Debt Service. The County will make its final payment on bonds issued in 1993, which will result in a reduction in the required transfer to the debt service fund for the budgeted fiscal year. Future transfers to the debt service fund will be higher as the County begins principal payments on bonds issued in 2010.

Health Fund

  • Health Benefits. This item represents the purchase of health coverage for active and retired employees. It is a binding obligation on the part of each of the counties and the state, and will continue uninterrupted next year and into the future to ensure that all public workers and retirees receive all of the health benefits to which they are entitled. This proposed budget includes $29.8 million to provide coverage to active employees and retirees, which will continue the current level of health coverage for all.

Miscellaneous

  • Provision for Payroll Lag. This item from the current year budget was a one-time provision to reflect the adjustment of pay days to fall on the day after a pay period ends, rather than on the last day of the pay period. The elimination of this item results in an increase to miscellaneous expenditures of approximately $6.0 million.
  • Provision for Compensation Adjustment. For the FY 2011-12 budget there was an expectation that County employees represented by HGEA would be taking a one-day per month furlough, however there was no final agreement, so a provisional account was established to reflect the expected savings. For the FY 2012-13 budget the savings are reflected in each department’s salaries and wages accounts. The elimination of this item results in an increase to miscellaneous expenditures of approximately $3.0 million.
  • Transfer to Self-Insurance. Due to current fiscal challenges and the fact that the balance in the fund is now at $1.2 million, no transfer is included in the proposed budget from the general fund to the county’s self-insurance fund, resulting in a $1.0 million reduction in this item. However, the administration is concerned about the possibility of new potential claims against the county and will re-evaluate the status when preparing the amended budget submittal for May to determine if a transfer is needed to cover potential or existing claims against the county.
  • Transfer to Solid Waste Fund. This budget reduces the general fund subsidy of the solid waste fund by $2.3 million. Total transfers from the general fund to the Solid Waste Fund to subsidize the solid waste management in the County of Hawai‘i will be $15.9 million in the year ahead.

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