COM 0140.014 2002-2004 - Laserfiche WebLink

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($755,000), increases in landfill costs ($1.3M), and vehicle disposal costs ($1. I M). It adds a Deputy Director position to the new Department of Environmental Management. It increases debt service, which must be further adjusted upward subsequent to the Council's recent amended bond authorization. [t offers up $1.2M in salary increases (admittedly a "guesstimate" for the time being). The mayor's message projects continuance of all County services at present levels. However, a 5% decrease in the Highway Fund is proposed, reflecting reduced operations and equipment expenditures. Finally, it proposes additional funding ($836,000) for private cellblock security, thereby freeing up 14 positions in the Police Department to man two special "Ice Teams" and supplement patrol services in Waimea, Puna and Ka`u. This is a major public health and safety initiative meant to tackle a problem of "crisis" proportions. An estimated 10.49% increase in real property tax collections (+$10.2M) accounts for over 75% of the $13,278,000 increase in the operating budget. This remarkable revenue spike largely is due to recent high-end construction and sales activity in West Hawaii. To better understand and appreciate this development, the Finance Committee will entertain a presentation by former councilman John Ray and Dr. Bruce S. Plasch, president of Decision Analysts Hawaii, Inc., on April l~`. With figures newly supplied by [he Real Property Tax Division, they will discuss the current and projected revenue windfall pursuant to West Hawaii property sales and developments. Other revenue increases are projected due to increased receipts of fuel taxes, vehicle registration fees, grants, service charges and "other" revenue. However, interest income is projected to drop by 46.5% due to "a record low investment market." Moreover, the fund balance carryover ($5.7M) reflects a 7.4% decrease. We note that the Elected Oj~cia!'s Gurde to Fund Balance published by [he Government Finance Officers Association suggests that bond raters commonly cite 5% as a minimum standard for an unreserved fund balance. Others argue for a fund balance not less than one month's operating expenditures (i.e., 8.3%). By either standard, our current fund balance is low and affords little "rainy day" protection in the event of a natural disaster or unexpected revenue shortfall. Finally, in light of the newly adjusted overall indebtedness pursuant to the additional $19 million added to the original bond float, we would encourage the Council to request the Finance Director to furnish an underwriter's report on our County's bond rating at the earliest convenience. uestions With this background in mind, it seems advisable for the Council to ask the administration broadly, and each department specifically, where it would recommend specific budget cuts and/or fee increases in the event that budget revisions are necessary. Rather than dwell on line-item minutia, we think that an overall grasp of where departments can demonstrate resilience and efficiency may prove the best route to fiscal austerity. To assist you, please see the attached summary of budget increases per fund account as shown in the budget. We acknowledge that the distinct mission and revenue sources of each department will prompt any number of questions from council members. Nonetheless, with the proviso that presentations by departments are brief and ensuing Q&A is disciplined, we recommend the following focal questions: A. Ouestions to the mavor and finance director 1. What is administration's position on employee pay raises? 2. In view of the uncertainties affecting our economy, does the mayor have a spending strategy afrer the budget is approved with respect to holding of funds and expenditure control? 2