REP FC 093 04/17/2007 2006-2008 - Laserfiche WebLink

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REPORT OF THE COMMITTEE ON FINANCE DATE: April 17, 2007 Re: Comm. No. 194/Bill No. 61 PLACE: Council Chambers TIME: 10:12 a.m. Council Chair and Members Hawaii County Council Hilo, Hawaii 96720 Your Committee on Finance, to which was referred Bill No. 61, reports as follows: Bill No. 61, transmitted by Mayor Harry Kim via Communication No. 194, dated Mazch 1, 2007 submits for consideration the proposed Capital Budget for Fiscal Yeaz 2007-08, and the Six-Year Capital Improvements Program for the Fiscal Yeazs 2007-08 to 2012-13, consisting of 85 projects totaling $140,575,000, of which $80,000 are Federal Grants Receivable and $22,334,000 are County-financed through State Revolving Fund loans, bonds, or other sources (see Table 1). Debt Service: The Government Finance Officers Association's recommendation, generally followed by bond rating agencies, is that a prudent debt service limit be 15% of general expenditures. The goal that the County of Hawai`i's Administration sets as their policy is a more conservative one and that the debt service should not exceed 13% of general expenditures. The lower the interest rate and the greater the revenues, the more that can be borrowed while staying within the prudent debt service limits. The proposed operating budget for this FY 2007-08 includes debt service of approximately $1,307,000 for $25 million in bonds to be floated during the next fiscal year, as well as $115,000 debt service for new SRF loans. At this budget amount, the resulting total debt service is estimated at 10.01 % of the general expenditures. Approximately $113.9 million of the proposed capital budget may require bond funding. Of this amount, two lazge projects comprise nearly a third of the total potential bond projects: the Waikoloa Workforce Housing Parks and Community Center ($25M) and Fire Administrative Support Complex ($14.7M). To fund an additional $70 million in bonds, over and above the $25 million budgeted, to carry out the projects requiring bond funding results in a debt service estimated at 11.12% of the general expenditures. Project Selection Criteria: In selecting the projects, funding requests from the agencies were initially screened to ensure that the agency had the capacity to implement the project during the fiscal year (i.e. whether to defer or phase the project), that current requests were reconciled with previous appropriations (i.e. unused amounts from previous appropriations were sufficient to carry the project through the coming fiscal year), that the projects were not more appropriately funded through the operational budget (e.g. minor repairs), and that the projects were as equitably distributed geographically as possible while meeting the selection criteria below. FC REPORT NO. 93