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The Honorable Chairman Stacy Higa <br />and Members of the County Council <br />Page 3 <br />March 1. 2006 <br />AFFORDABLE HOUSING <br />In addition to property tax rate reductions, a bill to enable properties rented at <br />"affordable" rates to receive an appropriate tax break will be submitted before the <br />end of this year. It will also enable owners of properties that would otherwise qualify to <br />be in the Homeowners class rent a room out without being disqualified from the class. <br />RESERVES <br />Included in this budget is funding for a new reserve account that is very important for the <br />future: <br />• "Rainy Day" Fund, $4,000,000. A bill to create a "Rainy Day" Fund will be <br />submitted shortly. Its purpose is to enable the County to continue providing services <br />to the public without having to increase taxes during economic downturns. <br />In addition, $4,000,000 is being budgeted for accrued retiree health care benefits. Recent <br />regulations regarding financial reporting for government entities (GASB 45) require that <br />the full liability for post employment health care benefits be reflected in financial <br />statements. The County of Hawaii currently funds retiree health benefits on a "pay-as- <br />you-go" basis. This has resulted in a large unfunded liability for future benefits. After <br />the liability has been actuarily determined, it will be necessary to initiate catch-up <br />payments over a period of years to fully fund the future liability and maintain a positive <br />bond rating. <br />Funding for other reserve accounts has also been included in this budget: <br />• Public Access, Open Space, <br />$3,000,000. <br />• Self -Insurance Fund, $1,000,000. <br />• Disaster Relief Fund, $500,000. <br />OTHER BUDGET HIGHLIGHTS <br />and Natural Resources Preservation Fund, <br />In addition to setting aside reserves for the future, this budget adds supplemental funding <br />for these major areas of need: <br />Improving Parks and Recreation Services <br />• Provide $700,000 to offer municipal golf rates in West Hawaii. Negotiations are <br />taking place with two golf courses in West Hawaii. <br />• Establish 5 positions and purchase necessary equipment to maintain the Old Kona <br />Airport as a County park. We anticipate that the State will be transferring the <br />responsibility for this park to the County. <br />