HomeMy WebLinkAboutCOM 1322.000 2006-2008
CASEY JARMAN ~tV OF V KENNETH G. GOODENOW
v••"'"•
County Clerk Deputy County Clerk
cP,••~u
; t COLLEEN SCHRANDT
Legislative Auditor
Mailing Address:
E OF'H~' Business Address:
(Former County Building) 333 Kilauea Avenue, Second Floor
25 Aupuni Street Ben Franklin Building
Hilo, Hawai `i 96720 Hilo, Hawai `i 96720
County of Hawai `i
Office of the County Clerk
Telephone: (808) 961-8255 Facsimile: (808) 961-8912 s r ~j
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July 8, 2008 -
TO: Council Members of the Finance Committee
FROM: L1 Colleen Schrandt
*'Legislative Auditor
RE: Financial Audit Report for Fiscal Year Ending June 30, 2007
For your review, deliberation, and acceptance, I am submitting the post-audit Financial Audit
Report of the County of Hawai `i for the Fiscal Year Ended June 30, 2007, and Management Letter
dated December 28, 2007, as prepared by KPMG LLP. The Report and Management Letter
satisfy the requirement of Section 10-13, Hawaii County Charter, relating to the responsibility of
the County Council to conduct an annual independent audit of the accounts and other evidences of
financial transactions of the County and of every county agency.
KPMG LLP has issued an unqualified opinion, indicating that the financial statements present
fairly in all material respects, the financial position of Hawaii County for Fiscal Year Ending
June 30, 2007, in conformance with U.S. generally accepted accounting principles.
This year's Management Letter contains findings and recommendations related to:
• Collection of Receivables
The auditors will be present at the Finance Committee meeting on July 22, 2008, to answer any
questions you may have. Appropriate department head(s) or their representative(s) will also be
asked to attend the meeting.
In the meantime, please feel free to contact Lane Shibata should you require further information.
Enclosures
cc w/o enclosures: Ralph Kanetoku, KPMG LLP
Department of Finance
Department of Environmental Management
Comm. No.
Ref. To., T -co
Serving the Interests of the People of Our Island Ref. -----~7..
Hawai `i County is an Equal Opportunity Provider and Employer Date- L `uU~
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1 Financial Audit Report
for the Fiscal Year Ended
June 30, 2007
i
CASEY JARMAN V OF KENNETH G. GOODE NOW
Deputy County Clerk
County Clerk ~~?V
• # COLLEEN SCHR-ANDT
Legislative Auditor
Mailing Address: ~T 6;*4 Business Address:
(Former County Building 333 Kilauea Avenue, Second Floor
' 25 Aupuni Street Ben Franklin Building
Hilo, Hawai `i 96720 County of Hawai`i Hilo, Hawaii 96720
Office of the County Clerk
Telephone: (808) 961-8255 Facsimile: (808) 961-8912
Foreword
' This financial audit report is the result of the audit of the basic financial statements of the
County of Hawaii, State of Hawaii (County), for the fiscal year ended June 30, 2007.
The audit was conducted by KPMG LLP, certified public accountants.
The audit was performed in accordance with auditing standards generally accepted in the
United States of America as set forth by the American Institute of Certified Public
' Accountants and the standards for financial audits set forth in the U.S. General
Accountability Office's Government Auditing Standards. In addition, the audit was
governed by the "Specifications" as set forth in Request For Proposal No. 2194 and the
' "Scope of Work" as set forth in Contract No. 0756, as issued by our office for the County
of Hawaii.
' This report is divided into two sections. Section I, "Management Letter" includes the
auditors' findings and recommendations based upon their consideration of the County's
internal control and recently issued government accounting pronouncements in
' connection with their audit of the County's financial statements for the fiscal year ended
June 30, 2007. This section also includes specific agencies' responses to the auditors'
findings and recommendations that indicates what action has been or will be taken.
' Section II, "Comprehensive Annual Financial Report" for the fiscal year ended
June 30, 2007, displays the basic financial statements and schedules of the County, the
' auditors' report as to the fairness of presentation of the basic financial statements and also
includes statistical information.
' We wish to express our sincere appreciation for the cooperation and assistance extended
by the management and staff of the various departments during the audit.
64U40.-, a04~-
' Colleen Schrandt
Legislative Auditor
County of Hawaii
Serving the Interests of the People of Our Island
Hawaii County is an Equal Opportunity Provider and Employer
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COUNTY OF HAWAII
' Financial Audit Report
For the Fiscal Year ended June 30, 2007
' Table of Contents
Page
' SECTION I - MANAGEMENT LETTER
Management Letter I
1 Current Year Findings and Recommendations 2
Status of Prior Year Findings and Recommendations 4
1 Recently Issued Governmental Accounting Pronouncements 5
' Comments by the Affected Agencies 7
SECTION II - COMPREHENSIVE ANNUAL FINANCIAL REPORT
Introductory Section I
Financial Section I I
1 Statistical Sections I I I
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' SECTION I
MANAGEMENT LETTER
COUNTY OF HAWAII
STATE OF HAWAII
Management Letter
' For the Fiscal Year ended June 30, 2007
Table of Contents
' Page
Management Letter 1
' CURRENT YEAR FINDINGS AND RECOMMENDATIONS
Collection of Receivables 2
STATUS OF PRIOR YEAR FINDINGS AND RECOMMENDATIONS
Monitoring of Backup Media 4
' RECENTLY ISSUED GOVERNMENTAL ACCOUNTING PRONOUNCEMENTS 5
' KPMG LLP
PO Box 4150
Honolulu, HI 96812-4150
December 28, 2007
' County Council of Hawaii
County of Hawaii
Hilo, Hawaii:
Ladies and Gentlemen:
We have audited the basic financial statements of the County of Hawaii, State of Hawaii (the County),
for the year ended June 30, 2007, and have issued our report thereon dated December 28, 2007. We have
also audited the County's compliance with requirements applicable to the County's federal financial
' assistance programs and have issued our report thereon dated January 23, 2008, except for the Schedule of
Expenditures of Federal Awards which is as of December 28, 2007. In planning and performing our audit
of the basic financial statements of the County, in accordance with auditing standards generally accepted in
' the United States of America, we considered the County's internal control over financial reporting (internal
control) as a basis for designing our auditing procedures for the purpose of expressing our opinion on the
basic financial statements but not for the purpose of expressing an opinion on the effectiveness of the
County's internal control. Accordingly, we do not express an opinion on the effectiveness of the County's
internal control.
During our audit we noted certain matters involving internal control and other operational matters that are
' presented for your consideration. These comments and recommendations, all of which have been discussed
with the appropriate members of management, are intended to improve internal control or result in other
operating efficiencies. We have also provided a brief summary of the recently issued governmental
accounting pronouncements for your consideration.
Our audit procedures are designed primarily to enable us to form an opinion on the basic financial
statements, and therefore may not bring to light all weaknesses in policies or procedures that may exist. We
aim, however, to use our knowledge of the County's organization gained during our work to make
comments and suggestions that we hope will be useful to you.
We would be pleased to discuss these comments and recommendations with you at any time.
This communication is intended solely for the information and use of the County Council and the County
' Administration and is not intended to be and should not be used by anyone other than these specified
parties.
Very truly yours,
0>MC, LLP
' KPMG LLP, a U.S. limited liability partnership, is the U.S.
member firm of KPMG International, a Swiss cooperative.
COUNTY OF HAWAII
STATE OF HAWAII
' Current Year Findings and Recommendations
For the Fiscal Year ended June 30, 2007
COLLECTION OF RECEIVABLES
The timely collection of solid waste (landfill) and wastewater (sewer) receivables continues to be a problem for
' the Department of Environmental Management. To address deficiencies in landfill receivables, the County has
continued in its efforts to improve collections of landfill fees and to reduce the amounts outstanding over
90 days. Despite these efforts, the amounts outstanding over 90 days as a percentage of total receivables
increased from 24% at June 30, 2006 to 36% at June 30, 2007. For sewer receivables, efforts made in previous
years, including the passing of a bill to facilitate the County's collection of past-due sewer charges and an
increase in the interest charge on past-due balances, have resulted in the County maintaining a steady balance in
' their overdue category as indicated by the amounts outstanding over 90 days as a percentage of total receivables
of 55% at June 30, 2007 compared with 54% at June 30, 2006.
Despite the progress and improvements being made, landfill and sewer receivables outstanding more than
90 days still account for a significant portion of the respective balance as follows:
2007 2006
Amount Percentage of Amount Percentage of
outstanding total outstanding total
Landfill
Current $ 758,296 29% $ 694,107 36%
31- 60 days 690,282 26 609,719 32
61 - 90 days 245,951 9 146,579 8
90+ days 970,535 36 458,802 24
$ 2,665,064 100% $ 1,909,207 100%
90+ days
Current 24%
90+ days 29% Current
36% 36%
61 - 90 days
' 8%
61 - 90 days 31 - 60 days 31- 60 days
° 26 /o
9 /0 32%
2 (Continued)
COUNTY OF HAWAII
STATE OF HAWAII
Current Year Findings and Recommendations
For the Fiscal Year ended June 30, 2007
2007 2006
Amount Percentage of Amount Percentage of
outstanding total outstanding total
Sewer
Current $ 556,009 34% $ 522,847 33%
31 - 60 days 106,410 7 141,078 9
61 - 90 days 68,816 4 69,400 4
90+ days 880,883 55 873,383 54
$ 1,612,118 100% $ 1,606,708 100%
34% 33%
)31 urrent 4L)31 urrent
90+ days
90+ days 54%
55% - 60 days
- 60 days 9%
7% 61 - 90 days
61 - 90 days 4%
4%
Recommendation
We recommend that the Department of Environmental Management continue to work with the Department of
Finance to improve collection efforts on delinquent accounts. A new Credit and Collections Clerk position has
been approved for 2008, which will focus on the collection of past due landfill and wastewater receivables. The
addition of this dedicated position should assist in providing improved collection efforts and address the backlog
in the 90 days overdue category for both landfill and wastewater receivables.
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COUNTY OF HAWAII
STATE OF HAWAII
Status of Prior Year Findings and Recommendations
For the Fiscal Year ended June 30, 2007
MONITORING OF BACKUP MEDIA
The County does not perform periodic tests of the data resident on the County's backup tapes. By not
periodically testing the backup tapes and disks, the County is unable to identify corrupt media, which could
impact its ability to restore critical data. This lack of testing puts the County at risk that its backup tapes could
unknowingly become damaged and the data on that media may become inaccessible.
In addition, the County does not maintain backup tape logs to track the location of its backup tapes. Without a
system in place to track the County's backup tapes, the process of retrieving information from these backup tapes
could be compromised.
Recommendation
We recommend that the Department of Data Systems document its periodic tests of the backup tapes by
performing a sample data recovery and recording the results on a quarterly basis. This will allow the County to
maintain the integrity of its backup tapes on a regular basis. In addition, we also recommend that a log be
maintained to track the location of the County's backup tapes to provide the users with a current inventory of its
backup tapes and their respective locations.
Status
The Department of Data Systems implemented a quarterly restoration procedure over the backup tapes.
Additionally, a log has been created to document the location of the backup tapes.
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COUNTY OF HAWAII
STATE OF HAWAII
i Recently Issued Governmental Accounting Pronouncements
For the Fiscal Year ended June 30, 2007
The following are recently issued governmental accounting pronouncements that should be evaluated for their
impact to the County upon adoption:
• GASB Statement No. 45: Accounting and Financial Reporting by Employers for
Postemployment Benefits Other Than Pensions.
In addition to pensions, many state and local governmental
employers provide OPEB as part of the total compensation offered to
attract and retain the services of qualified employees. OPEB includes
postemployment healthcare, as well as other forms of
postemployment benefits (for example, life insurance) when provided
separately from a pension plan. This statement establishes standards
for the measurement, recognition, and display of OPEB
expense/expenditures and related liabilities (assets), note disclosures
and, if applicable, required supplementary information in the
financial reports of state and local governmental employers.
• GASB Statement No. 48: Sales and Pledges of Receivables and Future Revenues and
Intra-Entity Transfers of Assets and Future Revenues.
This statement establishes accounting and financial reporting
standards for transactions in which a government receives, or is
entitled to, resources in exchange for future cash flows generated by
collecting specific receivables or specific future revenues. It also
contains provisions that apply to certain situations in which a
government does not receive resources but, nevertheless, pledges or
commits future cash flows generated by collecting specific future
' revenues. In addition, this statement establishes accounting and
financial reporting standards that apply to all intra-entity transfers of
assets and future revenues. This statement does not apply to a
government's pledge of its "full faith and credit" as security for its
own debt or the debt of a component unit. The requirements of this
statement apply to the financial statements of all state and local
governments and are effective for periods beginning after
December 15, 2006.
5 (Continued)
COUNTY OF HAWAII
STATE OF HAWAII
Recently Issued Governmental Accounting Pronouncements
For the Fiscal Year ended June 30, 2007
• GASB Statement No. 49: Accounting and Financial Reporting for Pollution Remediation
Obligations.
This statement addresses accounting and financial reporting
standards for pollution (including contamination) remediation
obligations, which are obligations to address the current or potential
detrimental effects of existing pollution by participating in pollution
remediation activities such as site assessments and cleanups. The
scope of the document excludes pollution prevention or control
obligations with respect to current operations, and future pollution
remediation activities that are required upon retirement of an asset,
such as landfill closure and postclosure care and nuclear power plant
decommissioning.
Once any one of five specified obligating events as provided in the
statement occurs, a government is required to estimate the
components of expected pollution remediation outlays and determine
whether outlays for those components should be accrued as a liability
or, if appropriate, capitalized when goods and services are acquired.
The requirements of this statement are effective for financial
statements for periods beginning after December 15, 2007, with
' measurement of pollution remediation liabilities required at the
beginning of that period so that beginning net assets can be restated.
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OJNYYlOf M,~Y
' = Bobby Jean Leithead Todd
Harry Kim ;
* Director
Mayor
• Nelson Ho
°.+Ott Deputy Director
E Ci '
Kilan ~1 of'afunii
DEPARTMENT OF ENVIRONMENTAL MANAGEMENT
25 Aupuni Street • Hilo, Hawaii 96720-4252
(808) 961-8083 • Fax (808) 961-8086
hU://co.hawaii.hi.us/directory/dir envmng htm
MEMORANDUM
DATE : June 13, 2008
TO : Colleen Schrandt, Legislative Auditor
FROM : Bobby Jean Leithead Todd, Director ?'A r
SUBJECT: Fiscal Year 2007 Preliminary Draft Management Letter
We have reviewed the fiscal year 2007 draft Management Letter concerning the Collection
of Receivables and concur with the audit recommendations.
We are continuing to work with the Department of Finance and the Office of the
Corporation Counsel to improve collection efforts.
To further increase our collection efforts, a new Credit and Collection Clerk position has
been created and is currently in recruitment. This new position will focus on the collection
of past due solid waste and sewer accounts. Having one position dedicated to collections
will provide more timely and consistent collection efforts and allow us to put more focus on
the larger accounts.
Hawaii County is an equal opportunity provider and employer.
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SECTION II
COMPREHENSIVE ANNUAL FINANCIAL REPORT
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COMPREHENSIVE
ANNUAL FINANCIAL REPORT
Fiscal Year Ended June 30, 2007
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COUNTY OF HAWAII
Hilo, Hawaii
' Harry Kim
Mayor
Dixie Kaetsu
Managing Director
Prepared by
The Department of Finance
William Takaba
Director of Finance
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' COUNTY OF HAWAII
Comprehensive Annual Financial Report
For the Fiscal Year Ended June 30, 2007
Table of Contents
Page
INTRODUCTORY SECTION
Letter of Transmittal 1
GFOA Certificate of Achievement 7
Organization Chart 8
List of Elected Officials 9
List of Principal Officials 10
FINANCIAL SECTION
Independent Auditors' Report 11
Management's Discussion and Analysis 13
Basic Financial Statements:
Government-wide Financial Statements:
Statement of Net Assets 24
Statement of Activities 26
Fund Financial Statements:
Balance Sheet - Governmental Funds 28
Reconciliation of the Governmental Funds Balance Sheet to the
Statement of Net Assets 29
Statement of Revenues, Expenditures, and Changes in Fund Balances -
Governmental Funds 30
Reconciliation of the Change in Fund Balances of Governmental
Funds to the Statement of Activities 32
Statement of Revenues, Expenditures and Changes in Fund Balance -
Budget and Actual (Budgetary Basis) - General Fund 34
Statement of Net Assets - Proprietary Funds 38
Statement of Revenues, Expenditures, and Changes in Fund Net Assets -
Proprietary Funds 39
Statement of Cash Flows - Proprietary Funds 40
Statement of Fiduciary Net Assets - Fiduciary Funds 41
Statement of Changes in Fiduciary Net Assets - Fiduciary Funds 42
Notes to the Basic Financial Statements 43
FINANCIAL SECTION (Continued) ,
Page
Combining and Individual Nonmajor Fund Statements and Schedules:
Combining Balance Sheet - Nonmajor Governmental Funds 82
Combining Statement of Revenues, Expenditures, and Changes in Fund
Balances - Nonmajor Governmental Funds 86
Schedules of Revenues, Expenditures, and Changes in Fund Balances -
Budget and Actual (Budgetary Basis):
Highway Fund 89
Sewer Fund 90
Solid Waste Fund 91
Cemetery Fund 92
Parking Meter Fund 93
Vehicle Disposal Fund 94
Bikeway Fund 95
Workforce Investment Act Fund 96
Golf Course Fund 97
Geothermal Relocation Revolving Fund 98
Beautification Fund 99
Hawaii County Housing Agency 100
Park Dedication Fund 101
Combining Balance Sheet - Agency Funds 102
Combining Statement of Changes in Assets and Liabilities - Agency Funds 104
Combining Statement of Net Assets - Private Purpose Trusts 108 '
Combining Statement of Changes in Net Assets - Private Purpose Trusts 109
STATISTICAL SECTION
Table 1 -Net Assets by Component 111
Table 2 - Changes in Net Assets 112
Table 3 - Fund Balances, Governmental Funds 113
Table 4 - Changes in Fund Balance, Governmental Funds 114
Table 5 - Real Property Assessed Values by Classification and Tax Rates 115
Table 6 - Principal Taxpayers 119
Table 7 - Property Tax Levies and Collections 120
Table 8 - Ratios of Outstanding Debt by Type 121
Table 9 - Ratios of General Bonded Debt Outstanding 122
Table 10 - Legal Debt Margin Information 123
Table 11 - Demographic and Economic Statistics 124
Table 12 - Principal Employers, County of Hawaii 125
Table 13 - Full-Time Equivalent County Government Employees by Function 126
Table 14 - Operating Indicators by Function 127
Table 15 - Capital Asset Statistics by Functions 128
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INTRODUCTORY SECTION
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f ''y William Takaba
Harry Kim
Mayor Director
Nancy E. Crawford
Deputy Director
County of Hawaii
Finance Department
25 Aupuni Street, Room 118 • Hilo, Hawaii 96120
(808) 961-8234 • Fax(808)961-8248
December 28, 2007
The Honorable Mayor and Members of the Council
County of Hawaii
25 Aupuni Street
Hilo, Hawaii 96720
We transmit herewith the Comprehensive Annual Financial Report for the County of Hawaii,
State of Hawaii, for the fiscal year July 1, 2006 to June 30, 2007.
This report was prepared by the County's Department of Finance. The accuracy of the financial
' statements and the completeness and fairness of their presentation are the responsibility of the
County government. We believe the enclosed data are complete and accurate in all material
respects and are reported in a manner designed to present fairly the financial position and results
of operations of the various funds of the County. All disclosures necessary to convey the
maximum understanding of the County's financial activities have been included. Management's
discussion and analysis is also included to aid users of the financial statements.
This report presents the financial position of the County of Hawaii at June 30, 2007 and results
' of operations for the fiscal year then ended. The report is divided into three sections:
• The Introductory Section includes this transmittal letter, a Certificate of Achievement for
Excellence in Financial Reporting, the County of Hawai`i's organization chart and lists of
elected and principal officials.
• The Financial Section contains management's discussion and analysis, the basic financial
statements, related notes, the combining and individual fund budgetary financial statements,
and the independent auditors' report.
• The Statistical Section includes selected financial and demographic information, generally
presented on a multi-year basis.
' This report includes all funds of the County of Hawaii, including its component unit, the
Department of Water Supply, established by the County Charter as a semi-autonomous body of
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the County government. This component unit is included in the County's reporting entity ,
because of its financial relationship with the County.
The County provides the full range of municipal services. These include police and fire ,
protection; emergency medical care; public prosecutor; culture and recreation; sanitation; social
services; water; planning and zoning; construction and maintenance of highways, streets and t
infrastructure; real property assessment and tax collection; and general administrative services.
However, the County does not provide such other traditional services as public education,
hospitals and courts. These services are provided by the State government. '
The County of Hawaii consists of the island of Hawaii, 4,028 square miles in size. It is twice
as large as the combined area of all the other inhabited islands in the Hawaiian Archipelago.
Since there is no other local or municipal government within the County, there are no
overlapping taxes and no overlapping debt. The County of Hawaii has an elected mayor and a
nine-member council. '
Economic Condition and Outlook ,
The island of Hawaii, commonly known as the Big Island, is located 214 miles from Honolulu,
the state capital; 2,200 miles from the west coast of the continental United States; and 4,000
miles from Japan. The city of Hilo on the east side of the island serves as the county seat as well '
as the transportation and financial center for the Big Island. Hilo's infrastructure includes Hilo
Harbor, a deep-water port, and Hilo International Airport, which is capable of handling fully- '
loaded wide-bodied aircraft. Kailua-Kona and South Kohala, major tourist destination areas on
the west side of the Big Island, are served by flights from the United States mainland, Japan and
Canada through the Kona International Airport. Scheduled freight services are available ,
between the islands by air and sea transport. Communities on the island are linked by a network
of State and County maintained streets and highways.
The Big Island is the most diversified of the neighbor island economies. As a result it is buffered '
when any one industry lags. Currently, the Big Island is enjoying its best economic times in
recent years. The west side growth is fueled by surging visitors numbers and record construction '
activity, while the east side economic activity is led by the University of Hawaii at Hilo and
other government construction projects.
Continued increasing population has contributed to a growing labor force that numbered 86,250
in June 2007. The expanding economy has matched the growth in available work force and
unemployment continues to follow a downward trend, with an average 2.8 percent for 2006.
Total and per capita personal income have been steadily increasing.
Tourism - Tourism is the major industry on the island. In addition to the mild climate and '
natural beauty it shares with other areas in the state, the County features the Hawaii Volcanoes
National Park. A popular attraction, the park is the most visited site in the state, handling over 2
million visitors annually. Total visitors to Hawaii increased slightly compared to the prior year, '
with 1,597,056 arrivals in 2006. A developing source for bringing tourists to the island of
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' Hawaii is the cruise ship industry. Cruise ship visitors for the first half of 2007 nearly doubled
over the same period in 2006.
Scientific Research and Development - Due largely to its unique geographic characteristics
which has attracted scientists in fields of astronomy, meteorology, volcanology, and
agriculture/aquaculture, Hawaii County has benefited economically by the significant
investments made in scientific research. The total astronomy related capital investment on
Mauna Kea exceeds $600 million and combined annual budgets are about $60 million, while
direct employment is over 500. The Hawaiian Volcano Observatory in Hawaii Volcanoes
National Park and the Natural Energy Laboratory of Hawaii Authority at Keahole, Kona are
also major contributors to international research and the local economy.
' Agriculture - Forestry, nut and fruit orchards, and floral and vegetable farms have successfully
replaced lands where sugar once grew. Demand for Kona coffee is improving and macadamia
nut prices remain strong. Papaya remains the largest orchard crop. Agriculture makes a
substantial contribution to the County's economy and produces a variety of goods for export as
well as for local consumption.
Major Initiatives
For the Year
During the year, the County focused on public works, planning, and other issues affecting the
quality of life in the County.
Public Works - Preliminary and construction work continued on several West Hawaii road
' projects including Kuakini Highway and various connector roads. Construction of intersection
curb cuts and facilities upgrades to meet Americans with Disabilities Act (ADA) requirements is
an on-going project. Construction was completed on the Scotty White Bridge and several other
smaller projects. In addition, the County is investigating using Community Facility Districts to
help speed up construction of roadways by developers in West Hawaii.
Planning - The Planning Department continued the Community Development Plan (CDP)
process for the districts of North and South Kona, and Puna. The CDP process began for North
and South Kohala in an effort that has become the most comprehensive planning process in the
State of Hawaii.
' Open Space - The Public Access, Open Space and Natural Resources Preservation fund was
established last year. The fund can be used for acquiring land for public outdoor recreation and
education, preservation of historic or culturally important land areas, protection of natural
resources, preservation of forests, beaches, coastal areas, natural beauty and agricultural lands or
for the protection of watershed lands to preserve water quality and water supply. In the current
year, the voters approved an ordinance to transfer two percent of real property tax collections to
' this fund each year.
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For the Future ,
Public Safety - Expansion and upgrade of Fire and Police facilities around the island are being
planned and site selection is in process.
Public Works - The County is working on developing a West Hawaii Civic Center. This
facility will improve access to government for the Kona residents. Additionally, the County is
working on several major road projects to enhance traffic in West Hawaii.
Environmental Management - As the Hilo landfill approaches full capacity, the County will be
looking at solid waste technology alternatives to divert waste from the Hilo landfill to enable the
County to close that facility. It is anticipated that an alternative will be decided upon in the next ,
year. The County is also working closely with the State Department of Health to extend the life
of the Hilo landfill.
Human Resources - With numerous Countywide vacancies, and a tight labor market, new '
"jobs" marketing strategies were developed to reach different segments of the population. These
new strategies will continue to be utilized as we continue to work against a very tight labor
market.
Other Financial Information
Internal Control
The management of the County is responsible for establishing and maintaining an internal '
control structure designed to ensure that the assets of the County are protected from loss, theft or
misuse and to ensure that adequate accounting data are compiled to allow for preparation of
financial statements in conformity with generally accepted accounting principles. The internal
control structure is designed to provide reasonable, but not absolute, assurance that these '
objectives are met. The concept of reasonable assurance recognizes that (1) the cost of a control
should not exceed the benefits likely to be derived; and (2) the valuation of costs and benefits
requires estimates and judgments by management.
Budgetary Control
The County maintains budgetary controls to ensure that legal provisions of the annual budget are
complied with and that expenditures do not exceed budgeted amounts.
Activities of the general fund and special revenue funds are included in the annual appropriated
operating budget. Project-length financial plans are adopted for the capital projects fund.
Budgetary control is established at the department level.
Formal budgetary integration is employed as a management control device for the general fund,
special revenue funds, and the capital projects fund. Budgetary control for the debt service fund
is achieved through general obligation bond indenture provisions. '
The basis of accounting used for the budgets of the general and special revenue funds differs
from generally accepted accounting principles. Intergovernmental revenues are recognized when '
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' awarded by the granting agency, encumbrances and unexpended allotments are treated as
expenditures for purposes of determining legal compliance with the annual budget, all leases are
treated as operating leases, and accounts payable are not accrued.
The County also maintains an encumbrance accounting system as one technique of
' accomplishing budgetary control. Encumbrances outstanding at fiscal year end are reported as
reservations of fund balances and do not constitute expenditures or liabilities because they will
be honored during the following year. As demonstrated by the statements and schedules
included in the financial section of this report, the County continues to meet its responsibility for
sound financial management.
' Pension Plan
All full-time employees of the County participate in the Employees' Retirement System of the
State of Hawaii, a cost-sharing, multiple-employer defined benefit public employee retirement
system.
' Cash Management
Cash temporarily idle during the year was invested in demand deposits, certificates of deposit
and repurchase agreements. The average yield on investment was 4.15%.
The County's policy is to minimize credit and market risks while maintaining a competitive yield
on its portfolio. Accordingly, with the exception of $174,256 held by a rental management
agent, deposits were either insured by federal depository insurance, collateralized, or secured by
irrevocable letters of credit. All collateral on deposit was held for safe keeping with a County-
designated agent in the County's name.
' Risk Management
' The County maintains insurance coverage for privately owned police vehicles as well as for
other purposes. The County is substantially self-insured for its vehicles as well as for all other
perils including workers' compensation and general liability.
' Other Information
Independent Audit
The Hawaii County Charter requires an annual audit by independent certified public
' accountants. KPMG LLP was selected by the County Council to perform the audit.
Employee Union Contracts
' County employees are members of eight different bargaining units. All of the bargaining units
have contracts that run through June 30, 2007.
5-
Certificate ofAchievement '
The Government Finance Officers Association of the United States and Canada (GFOA)
awarded a Certificate of Achievement for Excellence in Financial Reporting to the County of
Hawaii for its Comprehensive Annual Financial Report for the fiscal year ended June 30, 2006.
This was the nineteenth consecutive year that the government has achieved this prestigious '
award. In order to be awarded a Certificate of Achievement, a government must publish an
easily readable and efficiently organized comprehensive annual financial report. This report
must satisfy both generally accepted accounting principles and applicable legal requirements. '
A Certificate of Achievement is valid for a period of one year only. We believe our current
Comprehensive Annual Financial Report continues to meet the Certificate of Achievement '
Program's requirements, and we are submitting it to the GFOA to determine its eligibility for
another certificate.
Acknowledgments
The preparation of this report on a timely basis was made possible by the efficient and dedicated '
services of the entire staff of the Department of Finance and fiscal personnel in other
departments. I am grateful for their help in preparing this report. I also thank the Mayor and the
members of the County Council for their interest and support in assuring the continuing sound
financial condition of the County of Hawaii.
V V~~
WILLIAM TAKABA
Director of Finance
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Certificate of
1 Achievement
1 for Excellence
in Financial
1
Reporting
' Presented to
County of Hawaii
Hawaii
For its Comprehensive Annual
' Financial Report
for the Fiscal Year Ended
' June 30, 2006
A Certificate of Achievement for Excellence in Financial
' Reporting is presented by the Government Finance Officers
Association of the United States and Canada to
government units and public employee retirement
systems whose comprehensive annual financial
' reports (CAFRs) achieve the highest
standards in government accounting
and financial reporting.
5jr
aw K
President
Executive Director
-7-
County of Hawaii ,
Organization Chart ,
County Electorate
County Council Mayor Prosecuting Attorney
County Clerk '
Office of Management:
Managing Director
Departments and agencies Agencies under Departments under '
under direct supervision administrative supervision commissions and
of the Mayor and/or of the Mayor: administrative supervision
Managing Director: of the Mayor: ,
Corporation Counsel Civil Defense Civil Service
Finance Office of Aging Police '
Planning Mass Transportation Liquor Control
Environmental Management Housing & Community Fire '
Research & Development Development Water Supply
Public Works (semi-autonomous)
Parks & Recreation
Data Systems
8- '
County of Hawaii
' Elected Officials
Administrative Officers (Term: 2004-2008)
Harry Kim Mayor
Jay T. Kimura Prosecuting Attorney
County Council (Term: 2006-2008)
Pete Hoffmann Chair
t K. Angel Pilago Vice Chair
Brenda Ford Member
t Stacy K. Higa Member
Donald Ikeda Member
Bob Jacobson Member
Emily I. Naeole Member
Dominic Yagong Member
J Yoshimoto Member
r
Principal Officials
June 30, 2007
County Clerk Casey Jarman
Legislative Auditor Colleen Schrandt
Managing Director Dixie Kaetsu
Deputy Managing Director Barbara J. Kossow '
Corporation Counsel Lincoln Ashida
Director of Finance William Takaba
Planning Director Christopher Yuen
Director of Personnel Michael R. Ben
Director of Research and Development Jane Testa
Chief of Police Lawrence K. Mahuna
Fire Chief Darryl Oliveira ,
Director of Public Works Bruce McClure
Director of Environmental Management Bobby Jean Leithead Todd ,
Director of Parks and Recreation Patricia Engelhard
Manager, Department of Water Supply Milton Pavao ,
Civil Defense Administrator Troy M. Kindred
Director of Liquor Control Janice A. Pakele
Transit Operations Administrator Thomas Brown ,
Executive on Aging Alan Parker
Administrator, Office of Housing and '
Community Development Edwin S. Taira
i
1
1
1
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FINANCIAL SECTION
1
1
1
1
t
KPMG LLP Telephone 808 531 7286
PO Box 4150 Fax 808 541 9321
Honolulu, HI 96812-4150 Internet www.us.kpmg.com
' Independent Auditors' Report
To the Chair and Members of the
' County Council
County of Hawaii
State of Hawaii:
' We have audited the accompanying financial statements of the governmental activities, the business-type
activities, the discretely presented component unit, each major fund, and the aggregate remaining fund
information of the County of Hawaii, State of Hawaii (the County) as of and for the year ended June 30,
2007, which collectively comprise the County's basic financial statements as listed in the table of contents.
These financial statements are the responsibility of the County's management. Our responsibility is to
' express opinions on these financial statements based on our audit.
We conducted our audit in accordance with auditing standards generally accepted in the United States of
America and the standards applicable to financial audits contained in Government Auditing Standards,
issued by the Comptroller General of the United States. Those standards require that we plan and perform
the audit to obtain reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes consideration of internal control over financial reporting as a basis for
designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing
an opinion on the effectiveness of the County's internal control over financial reporting. Accordingly, we
express no such opinion. An audit also includes examining, on a test basis, evidence supporting the
' amounts and disclosures in the financial statements, assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall financial statement
presentation. We believe that our audit provides a reasonable basis for our opinions.
In our opinion, the financial statements referred to above present fairly, in all material respects, the
respective financial position of the governmental activities, the business-type activities, the discretely
presented component unit, each major fund, and the aggregate remaining fund information of the County
' as of June 30, 2007, and the respective changes in financial position and, where applicable, cash flows
thereof, and the respective budgetary comparisons for the general fund for the year then ended in
conformity with U.S. generally accepted accounting principles.
In accordance with Government Auditing Standards, we have also issued our report dated December 28,
2007, on our consideration of the County's internal control over financial reporting and on our tests of its
' compliance with certain provisions of laws, regulations, contracts, and grant agreements and other matters.
The purpose of that report is to describe the scope of our testing of internal control over financial reporting
and compliance and the results of that testing, and not to provide an opinion on the internal control over
financial reporting or on compliance. That report is an integral part of an audit performed in accordance
' with Government Auditing Standards and should be considered in assessing the results of our audit.
i
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KPMG LLP, a U.S. limited liability partnership, is the U.S.
member firm of KPMG International, a Swiss cooperative.
The management's discussion and analysis on pages 13 through 22 is not a required part of the basic '
financial statements, but is supplementary information required by U.S. generally accepted accounting
principles. We have applied certain limited procedures, which consisted principally of inquiries of
management regarding the methods of measurement and presentation of the required supplementary
information. However, we did not audit the information and express no opinion on it.
Our audit was conducted for the purpose of forming opinions on the financial statements that collectively ,
comprise the County's basic financial statements. The introductory section, the combining and individual
nonmajor fund financial statements and schedules, and the statistical section are presented for purposes of
additional analysis and are not a required part of the basic financial statements. The combining and
individual nonmajor fund financial statements and schedules have been subjected to the auditing
procedures applied in the audit of basic financial statements and, in our opinion, are fairly stated in all
material respects in relation to the basic financial statements taken as a whole. The introductory section and '
the statistical section have not been subjected to the auditing procedures applied in the audit of the basic
financial statements and, accordingly, we express no opinion on them.
O>MG, LOP
1
Honolulu, Hawaii
December 28, 2007
r
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MANAGEMENT'S DISCUSSION AND ANALYSIS
This section of the County of Hawai`i's (the County) Comprehensive Annual Financial Report
presents a narrative overview and analysis of the financial activities of the County for the fiscal
year ended June 30, 2007. We encourage readers to consider the information presented here in
conjunction with additional information that we have furnished in our letter of transmittal.
' FINANCIAL HIGHLIGHTS
' • The assets of the County exceeded its liabilities at the end of the fiscal year by $472.1 million
(net assets). This amount includes $22.0 million in unrestricted net assets, an increase of
$12.3 million from the prior year.
' • The government's total net assets increased by $30.3 million during the fiscal year.
• As of the close of the current fiscal year, the County's governmental funds reported combined
ending fund balances of $287.2 million, an increase of $80.2 million from the prior year.
Approximately 52 percent of this total amount, $149.5 million, is available for spending at
the government's discretion (unreserved fund balance).
• At the end of the current fiscal year, unreserved fund balance for the general fund was $29.0
million, or 15 percent of total general fund expenditures.
• The County's total current and other assets increased by $91.1 million (39 percent) during the
current fiscal year. The key factors in this increase were the net increase in cash and
investments ($96.6 million) offset by the decrease in receivables ($6.2 million).
' OVERVIEW OF THE FINANCIAL STATEMENTS
This discussion and analysis is intended to serve as an introduction to the County's basic financial
statements. The County's basic financial statements comprise three components: (1)
Government-wide financial statements, (2) Fund financial statements, and (3) Notes to the basic
financial statements. This report also contains other supplementary information in addition to
' the basic financial statements themselves.
Government-wide Financial Statements
The government-wide financial statements are designed to provide readers with a broad overview
of the County's finances, in a manner similar to a private-sector business.
' The statement of net assets presents information on all of the County's assets and liabilities,
with the difference between the two reported as net assets. Over time, increases or decreases in
net assets may serve as a useful indicator of whether or not the financial position of the County is
improving or deteriorating.
The statement of activities presents information showing how the County's net assets changed
during the most recent fiscal year. All changes in net assets are reported as soon as the
underlying event giving rise to the change occurs, regardless of the timing of related cash flows.
Thus, revenues and expenses are reported in this statement for some items that will only result in
cash flows in future fiscal periods, such as revenues pertaining to uncollected taxes and expenses
pertaining to earned but unused vacation and sick leave.
Both of the government-wide financial statements distinguish functions of the County that are
principally supported by taxes and intergovernmental revenues (governmental activities) from
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other functions that are intended to recover all or a significant portion of their costs through user '
fees and charges (business-type activities). The governmental activities of the County include
public safety, highways and streets, health, education and welfare, culture and recreation,
sanitation and general government. The business-type activities of the County include rental
housing for senior citizens and families.
The government-wide financial statements include not only the County itself (known as the
primary government), but also the Department of Water Supply, a legally separate entity that the
County is financially accountable for. Financial information for this component unit is reported
separately from the financial information presented for the primary government itself. ,
Fund Financial Statements
The fund financial statements are designed to report information about groupings of related ,
accounts which are used to maintain control over resources that have been segregated for specific
activities or objectives. The County, like other state and local governments, uses fund accounting
to ensure and demonstrate compliance with fmance-related legal requirements. All of the funds '
of the County can be divided into the following three categories: governmental funds,
proprietary funds, and fiduciary funds.
Governmental funds. Governmental funds are used to account for essentially the same t
functions reported as governmental activities in the government-wide financial statements -
i.e., most of the County's basic services are reported in governmental funds. These
statements, however, focus on (1) how cash and other financial assets can readily be '
converted to available resources and (2) the balances left at year-end that are available for
spending. Such information may be useful in determining what financial resources are
available in the near future to finance the County's programs. ,
Because the focus of governmental funds is narrower than that of the government-wide
financial statements, it is useful to compare the information presented for governmental
funds with similar information presented for governmental activities in the government wide
financial statements. By doing so, readers may better understand the long-term impact of the
government's near-term financing decisions. Both the governmental fund balance sheet and '
the governmental fund statement of revenues, expenditures, and changes in fund balances
provide a reconciliation to facilitate this comparison between governmental funds and
governmental activities.
The County maintains several individual governmental funds organized according to their
type (general, special revenue, debt service, and capital projects). Information is presented
separately in the governmental fund balance sheet and in the governmental fund statement of ,
revenues, expenditures, and changes in fund balances for the general fund and capital
projects fund, which are considered to be major funds. Data from the remaining
governmental funds are combined into a single, aggregated presentation. Individual fund '
data for each of the non-major governmental funds is provided in the form of combining
statements elsewhere in this report.
The County adopts an annual appropriated budget for its general fund and special revenue
funds. A budgetary comparison statement has been provided for these funds to demonstrate
compliance with this budget. The budgetary comparison statement for the general fund is
located in the basic financial statements, whereas the budgetary comparison statements for ,
the nonmajor special revenue funds are presented elsewhere in this report.
-14- '
Proprietary funds. Proprietary funds are generally used to account for services for which
the County charges outside customers. Proprietary funds provide the same type of
information as shown in the government-wide financial statements, only in more detail. The
County maintains only one type of proprietary funds, enterprise funds. Enterprise funds
are used to report the same functions presented as business-type activities in the government-
wide financial statements. The County uses enterprise funds to account for the operations of
the Kulaimano Elderly Housing Project and the Ouli Ekahi Affordable Housing Project.
Fiduciary funds. Fiduciary funds are used to account for resources held for the benefit of
parties outside the County. The Geothermal Asset Fund, Shippers' Wharf Trust Fund and
the agency funds are reported under the fiduciary funds. Since the resources of these funds
are not available to support the County's own programs, they are not reflected in the
government-wide financial statements. The accounting used for fiduciary funds is much like
that used for proprietary funds.
Notes to the Basic Financial Statements
' The notes to the basic financial statements provide additional information that is essential to a full
understanding of the data provided in the government-wide and fund financial statements.
Other Supulementary Information
In addition to the basic financial statements and accompanying notes, this report also presents
' supplementary information, including the combining statements referred to earlier in connection
with nonmajor governmental fiends and budget comparison statements for the nonmajor special
revenue funds. This supplementary information is presented immediately following the notes to
the basic financial statements.
GOVERNMENT-WIDE FINANCIAL ANALYSIS
Condensed Schedule of Net Assets
June 30, 2007 and 2006
' Primary Government
Governmental Activities Business-type Activities Total
2007 2006 2007 2006 2007 2006
Assets:
' Current and other assets $ 324,854,922 $ 233,765,854 $ 1,272,461 $ 1,382,097 $ 326,127,383 $ 235,147,951
Capital assets, net 545,921,770 516,600,592 1,306,263 1,336,920 547,228,033 517,937,512
Total assets $ 870,776,692 $ 750,366,446 $ 2,578,724 $ 2,719,017 $ 873,355,416 $ 753,085,463
Liabilities:
Long-term liabilities
outstanding 371,342,710 292,196,562 995,854 1,019,386 372,338,564 293,215,948
Other liabilities 28,437,233 17,685,089 451,873 385,869 28,889,106 18,070,958
Total liabilities $ 399,779,943 $ 309,881,651 $ 1,447,727 $ 1,405,255 $ 401,227,670 $ 311,286,906
Net assets:
Invested in capital assets, net
of related debt 394,789,635 386,861,296 310,409 317,534 395,100,044 387,178,830
Restricted 54,857,023 44,737,588 183,832 182,797 55,040,855 44,920,385
Unrestricted 21,350,091 818851911 636,756 813,431 21,986,847 9,699,342
Total net assets $ 470,996,749 $ 440,484,795 $1,130,997 $ 1,313 762 $ 472,127,746 $ 441,798,557
~_®s mn~~o ae.®~~imam. s
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Analysis of Net Assets
As noted earlier, net assets may serve over time as a useful indicator of a government's financial ,
position. In the case of the County, assets exceeded liabilities by $472.1 million at the close of
the most recent fiscal year.
By far the largest portion of the County's net assets (84 percent) reflects its investment in capital
assets (e.g., land, buildings, infrastructure, and equipment), less any related debt used to acquire
those assets that is still outstanding. The County uses these capital assets to provide services to
citizens; consequently, these assets are not available for future spending. Although the County's
investment in its capital assets is reported net of related debt, it should be noted that the resources
needed to repay this debt must be provided from other sources, since the capital assets themselves
cannot be used to liquidate these liabilities.
An additional portion of the County's net assets (12 percent) represents resources that are subject
to external restrictions on how they may be used. '
At the end of the current fiscal year, the County is able to report positive balances in all three
categories of net assets, both for the government as a whole, as well as for its separate
governmental and business-type activities.
The government's net assets increased by $30.3 million during the current fiscal year. '
Approximately $31.4 million of the increase is due to increases in real property tax valuations and
collections. The offsetting decrease represents the degree to which increases in ongoing expenses
have outstripped similar increases in ongoing revenues.
The government's current and other assets increased by $91.0 million during the current fiscal
year. Approximately $96.6 million of the increase is due to an increase in cash and investments,
which is offset by a $6.2 million decrease in receivables. The increase in cash and investments is
primarily due to the issuance of bonds ($85 million).
The government's capital assets increased by $29.3 million due to the large amount of capital
improvement projects done by the County during the current fiscal year. See further discussion
of the increase in capital assets on page 21.
The government's long-term liabilities outstanding increased by $79.1 million due to the new ,
general obligation bonds issued during the current year, offset by principal payments and
decreases in other long-term liabilities. See further discussion of the increase in long-term debt ,
outstanding on page 22.
The government's other liabilities increased by $10.8 million primarily due to increases in
unearned revenue relating to intergovernmental grants ($5.6 million), accounts payable and ,
accrued liabilities ($4.0 million) and interest due on long-term debt ($1.8 million) offset by
smaller decreases in other accounts.
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Condensed Schedule of Changes in Net Assets
For the Fiscal Years Ended June 30, 2007 and 2006
' Primary Government
Governmental Activities Business-type Activities Total
2007 2006 2007 200¢ 2007 2006
' Revenues:
Program revenues:
Charges for services $ 40,532,366 $ 38,977,264 $ 345,802 $ 338,141 $ 40,878,168 $ 39,315,405
Operating grants and contributions 38,068,138 38,252,889 134,211 141,019 38,202,349 38,393,908
Capital grants and contributions 7,805,986 14,801,828 - - 7,805,986 14,801,828
General revenues:
Property taxes 183,611,050 152,182,806 - 183,611,050 152,182,806
Other taxes 24,387,670 21,997,764 - 24,387,670 21,997,764
Grants and contributions, unrestricted 18,999,596 18,510,262 - 18,999,596 18,510,262
Investment earnings 9,727,911 4,976,178 35,551 22,874 9,763,462 4,999,052
Miscellaneous 3,063,413 2,110,854 - 3,063,413 2,110,854
Total revenues 326,196,130 291,809,845 515,564 502,034 326,711,694 292,311,879
Expenses:
General government 46,349,904 38,264,132 - - 46,349,904 38,264,132
Public safety 118,010,316 106,067,466 - 118,010,316 106,067,466
Highways and streets 28,185,968 24,783,476 28,185,968 24,783,476
Health, education and welfare 23,203,874 20,181,685 698,329 547,201 23,902,203 20,728,886
Culture and recreation 26,948,501 19,464,962 - 26,948,501 19,464,962
Sanitation 42,682,281 27,265,515 42,682,281 27,265,515
Interest on long-term debt 10,303,332 10,168,710 10,303,332 10,168,710
Total expenses 295,684,176 246,195,946 698,329 547,201 296,382,505 246,743,147
Increase (decrease) in net assets 30,511,954 45,613,899 (182,765) (45,167) 30,329,189 45,568,732
Net assets at beginning of year 440,484,795 394,870,896 1,313,762 1,358,929 441,798,557 396,229,825
Net assets at end of year $ 470,996,749 $ 440,484,795 $ 1,130,997 $ 1,313,762 $ 472,127,746 $ 441,798,557
Analysis of Changes in Net Assets
Governmental activities. Governmental activities increased the County's net assets by $30.5
million or substantially all of the total growth in net assets of the County.
' Total revenues increased by $34.4 million (12 percent). The County's property taxes increased
by $31.4 million (21 percent) during the year. Most of this increase is attributable to the increase
in assessed values. Investment earnings increased by $4.8 million (95 percent).
Total expenses increased by $49.5 million (20 percent). This increase was primarily due to
increases in all of the expense categories. Part of the increase is the result of negotiated pay
raises and related benefits. Much of the increase in all areas is due to the increased cost of
employee benefits, particularly employee retirement and health insurance costs. Increases are
also due to an increase in capital project expenditures for this fiscal year. For the most part, other
fluctuations in expenses closely paralleled inflation and growth in demand for services.
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Expenses and Program Revenues • Governmental Activities
Year Ended June 30, 2007
140,000,000
120,000,000
¦ Expenses
_ o Program revenues
100,000,000
80,000,000
}
60,000,000
40,000,000
20,000,000
General Public safety Highways and Health, Culture and Sanitation Interest on '
government streets education and recreation long-term debt
welfare
Revenues by Source -Governmental Activities
Year Ended June 30, 2007
Investment earnings Miscellaneous
3% 1%
Grants and contributions not
restricted to specific Charges for services
programs
6% 12%
Other taxes '
7% Operating grants and
contributions
12%
Capital grants and ,
contributions
2%
Property taxes
57%
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' The charts above illustrate the County's governmental expenses and revenues by function, and its
revenues by source. As shown, public safety is the largest function in expense (40 percent),
followed by general government (16 percent) and sanitation (14 percent). General revenues such
as property and other taxes are not shown by program, but are effectively used to support
program activities countywide. For governmental activities overall, without regard to programs,
property taxes are the largest single source of funds (57 percent), followed by charges for services
(12 percent) and operating grants and contributions (12 percent).
Business-type activities. Business-type activities decreased the County's net assets by $182,765.
Expenses for health, education and welfare account for all of the $698,329 of expenses. Charges
for services were $345,802, operating grants and contributions were $134,211 and investment
earnings were $35,551. Expenses increased $151,128 (28 percent) due to increases in repairs and
' maintenance ($99,843) and lease expenses ($39,028).
FINANCIAL ANALYSIS OF THE COUNTY'S FUNDS
As noted earlier, the County uses fund accounting to ensure and demonstrate compliance with
finance-related legal requirements.
Governmental funds. The focus of the County's governmental funds is to provide information
on near-term inflows, outflows, and balances of spendable resources. Such information is useful
in assessing the County's financing requirements. In particular, unreserved fund balance may
serve as a useful measure of a government's net resources available for spending at the end of the
fiscal year.
As of the end of the current fiscal year, the County's governmental funds reported combined
ending fund balances of $287.2 million, an increase of $80.2 million in comparison with prior
year. Approximately 52 percent of this total amount ($149.5 million) constitutes unreserved fund
balance, which is available for spending at the government's discretion. The remainder of the
fund balance is reserved to indicate that it is not available for new spending because it has already
been committed 1) to liquidate contracts and purchase orders for last fiscal year ($71.9 million),
2) to pay debt service ($18.8 million), or 3) for a variety of other restricted purposes ($47.0
million).
The general fund is the chief operating fund of the County. At the end of the current fiscal year,
unreserved fund balance of the general fund was $29.0 million, while total fund balance reached
$44.6 million. As a measure of the general fund's liquidity, it may be useful to compare both
unreserved fund balance and total fund balance to total fund expenditures. Unreserved fund
balance represents 15 percent of total general fund expenditures, while total fund balance
represents 23 percent of that same amount.
The fund balance of the County's general fund increased by $9.6 million during the current fiscal
year. Key factors in this increase are as follows;
• An increase of $28.2 million (18 percent) in property tax revenue due to increasing property
values.
• An increase of $5.0 million (100 percent) in investment earnings due to an increase in interest
rates and the amount available to invest.
• An increase of $6.5 million (21 percent) in general government expenditures due primarily to
increases in expenditures for the legislative branch ($1.1 million), research and development
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($1.2 million), building maintenance ($1.5 million) and engineering ($1.2 million). Increases ,
were noted in flood mapping as well as in salaries and wages due to negotiated pay increases
and an increase in the number of positions. '
• An increase of $8.8 million (11 percent) in public safety expenditures due primarily to
increases in expenditures for police ($2.9 million), fire ($4.8 million) and prosecuting
attorney ($0.7 million). Increases were noted in many of the grant-funded programs as well
as in salaries and wages due to negotiated pay increases.
• An increase of $2.3 million (16 percent) in culture and recreation expenditures due primarily
to increases in expenditures for the new West Hawaii golf program ($0.7 million) and park
maintenance ($1.0 million). In addition to the new West Hawaii golf program, increases
were noted in salaries and wages due to negotiated pay increases.
The fund balance of the County's capital projects fund increased by $64.8 million during the
current fiscal year. The increase is primarily due to the fund's main revenue sources of
intergovernmental revenue ($2.7 million), transfers in ($15.4 million), state revolving fund loan
proceeds ($6.3 million) and bond proceeds ($85.0 million) combining to exceed capital
expenditures ($48.0 million) for the current fiscal year.
The debt service funds, included in other governmental funds, have combined total fund balances
of $18.8 million, all of which is reserved for the payment of debt service. The net increase in the
combined fund balances during the current year in the debt service funds was $2.0 million (12
percent).
Proprietary funds. The County's proprietary funds provide the same type of information found
in the government-wide financial statements, but in more detail.
Unrestricted net assets of the Kulaimano Elderly Housing Project (Kulaimano) at the end of the
year amounted to $763,983, and the unrestricted net deficit of the Ouli Ekahi Affordable Housing
Project (Ouli Ekahi) amounted to $127,227. The net assets for Kulaimano decreased by $102,235 '
and the net assets for Ouli Ekahi decreased by $80,530. Other factors concerning the finances of
these two funds have already been addressed in the discussion of the County's business-type
activities.
GENERAL FUND BUDGETARY HIGHLIGHTS
Differences between the original budget and the final amended budget were primarily the result
of an $11.1 million increase in appropriations and an $9.3 million increase in transfers out and
can be briefly summarized as follows:
• $11.1 million in increases due to the appropriation of higher than expected fund balance to be
used in the year's operations.
• $8.8 million in increases due to the appropriations for capital and operating grants and
contributions.
• $7.2 million increase in transfer out to the capital projects fund to help cover costs relating to
damages from our October 2006 earthquake and $1.6 million increase in transfer to public
access, open space, and natural resources preservation fund due to an ordinance passed by the
voters in November 2006 to transfer two percent of real property taxes collected to this fund.
Differences between the final budget and the actual (budgetary basis) resulted in $1.8 million less ,
revenues than expected and $20.4 million less expenditures than appropriated. This is primarily
due to the following factors:
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• $2.2 million negative variance in taxes and assessments revenue resulting from collections
being less than expected.
' • $5.8 million positive variance in interest and penalties revenue resulting from higher earnings
on cash and investments than expected.
• $4.3 million negative variance in intergovernmental revenue, including $2A million in
federal grants and $2.3 million in state grants.
$4.9 million positive variance in general government expenditures caused by an overall effort
by each department to hold the line on expenditures.
• $5.8 million positive variance in public safety expenditures primarily created by vacant
positions in the police department, as well as an increased effort to control costs during the
budget year.
• $4.9 million positive variance in health fund expenditures, due primarily to lower than
expected costs and the fund not billing a portion of the post-retirement benefits costs as
anticipated.
CAPITAL ASSET AND DEBT ADMINISTRATION
t Capital assets. The County's investment in capital assets for its governmental and business-type
activities as of June 30, 2007 amounts to $547.2 million (net of accumulated depreciation). This
investment in capital assets includes land, buildings and improvements, equipment, and
infrastructure assets, which consists of primarily roads and bridges. The total increase in the
County's investment in capital assets for the current fiscal year was six percent.
Major capital asset events during the current fiscal year included the following:
• Construction continued on Kuakini Highway Improvements; construction in progress as of
the end of the current fiscal year had reached $11.0 million.
• Construction continued on the Prosecuting Attorney's Office in Aupuni Center; construction
in progress as of the end of the current fiscal year had reached $4.1 million.
• Construction began on the Mamalahoa Highway Improvements; construction in progress as
of the end of the current fiscal year had reached $4.6 million.
• Construction began on several park projects; construction in progress as of the end of the
current fiscal year had reached $4.1 million.
• Construction was completed on the Scotty White Bridge; construction in progress of $1.7
million was transferred to infrastructure.
Capital Assets
(net of depreciation)
As of June 30, 2007 and 2006
Primary Government
Governmental Activities Business-type Activities Total
2007 2006 2007 2006 2007 2006
Land $ 22,999,168 $ 22,737,854 $ 753,877 $ 753,877 $ 23,753,045 $ 23,491,731
Infrastructure assets 157,241,475 155,377,804 - - 157,241,475 155,377,804
Ground and site improvements - - 86,352 90,107 86,352 90,107
Buildings and improvements 219,677,063 219,887,751 452,804 477,419 220,129,867 220,365,170
Equipment 36,237,623 31,854,863 13,230 15,517 36,250,853 31,870,380
Construction work in progress 109,766,441 86,742,320 109,766,441 86,742,320
Total $ 545,921,770 $ 516,600,592 $ 1,306,263 $ 1,336,920 $ 547,228,033 $ 517,937,512
-21-
Additional information on the County's capital assets can be found in note 6 to the basic financial
statements. ,
Long-term debt. Long-term debt is comprised of bonds of $269,281,339 and State Revolving
Fund loans of $30,246,751. At the end of the current fiscal year, the County had total bonded
debt outstanding of $269.3 million. This entire amount was comprised of general obligation
bonds which are backed by the full faith and credit of the County.
The County's total bonded debt increased by $72.6 million (37 percent) during the current fiscal
year. The key factors in this increase were new debt ($85.0 million) and normal principal
reduction.
The County maintains an "A+" rating from Standard & Poor's, an "Al" rating from Moody's and
an "A+" rating from Fitch for general obligation debt.
State statutes limit the amount of general obligation debt the County may issue to 15 percent of
the total assessed value of all county real property as established for tax purposes on the last tax
assessment rolls. The current debt limitation for the County is $3,406,144,000, which is in excess ,
of the County's outstanding general obligation debt. Currently the County's outstanding debt
represents eight percent of our debt limitation.
At the end of the current fiscal year, the County also had loans outstanding from the State Water
Pollution Control Revolving Fund amounting to $30.2 million and notes payable to the U.S.
Department of Agriculture, Farmers Home Administration amounting to $1.0 million.
Additional information on the County's long-term debt can be found in note 10 to the basic
financial statements.
ECONOMIC FACTORS AND NEXT YEAR'S BUDGETS AND RATES
• The unemployment rate for the County is 2.8 percent, which is down from the prior year rate
of 3.2 percent.
• The number of visitors to the County for the most recent calendar year was 1,597,056, up
seven percent from the previous year's count of 1,487,747. ,
Both of these factors were considered in preparing the County's budget for the 2008 fiscal year.
At the end of the current fiscal year, unreserved fund balance in the general fund was $29.0
million. The County has appropriated $19.0 million of this amount for spending in the 2008
fiscal year budget.
REQUESTS FOR INFORMATION
This financial report is designed to provide a general overview of the County's finances for all
those with an interest in the government's finances. Questions concerning any of the information
provided in this report or requests for additional information should be addressed to the Director ,
of Finance, County of Hawaii, 25 Aupuni Street, Room 118, Hilo, Hawaii 96720.
-22- ,
1
BASIC FINANCIAL STATEMENTS
1
1
i
i
-23-
COUNTY OF HAWAII
Statement of Net Assets
June 30, 2007
Primary Government
Governmental Business-type Component
Activities Activities Total Unit
Assets
Current assets:
Cash and cash equivalents (notes 3 and 14) $136,604,924 $ 282,333 $136,887,257 $ 3,806,266
Restricted cash and cash equivalents (note 3) 80,569 32,634 113,203 -
Investments (notes 3 and 14) 128,713,405 700,000 129,413,405 47,091,515
Receivables, net (note 4) 26,142,765 60,240 26,203,005 5,577,145
Receivable from improvement district
(notes 4 and 10) 85,802 - 85,802 -
Internal balances (note 5) 2,700 (2,700) - - ,
Inventories 2,243,984 - 2,243,984 1,201,276
Prepaid expenses - 1,369 1,369 248,691
Other 2,261,638 - 2,261,638 -
Total current assets 296,135,787 1,073,876 297,209,663 57,924,893
Investments (note 3) 25,000,000 - 25,000,000 -
Restricted cash and cash equivalents (note 3) - 198,585 198,585 -
Restricted investments (note 14) - - - 16,207,996
Loans receivable, excluding current portion - - - 384,544
Receivable from improvement district, excluding
current portion (notes 4 and 10) 3,719,135 - 3,719,135 -
Deferred charges - - - 6,917,791
Capital assets (notes 6, 8 and 14):
Utility plant in service, net - - - 154,841,401
Infrastructure assets, net 157,241,475 - 157,241,475 - ,
Ground and site improvements, net - 86,352 86,352 -
Buildings and improvements, net 219,677,063 452,804 220,129,867 -
Equipment, net 36,237,623 13,230 36,250,853 -
Construction work in progress 109,766,441 - 109,766,441 42,489,082
Land 22,999,168 753,877 23,753,045 815,962
Total capital assets, net 545,921,770 1,306,263 547,228,033 198,146,445
Total noncurrent assets 574,640,905 1,504,848 576,145,753 221,656,776
Total assets 870,776,692 2,578,724 873,355,416 279,581,669
(Continued)
i
-24- ,
COUNTY OF HAWAII
Statement of Net Assets
June 30, 2007
(Concluded)
Primary Government
Governmental Business-type Component
Activities Activities Total Unit
Liabilities
Current liabilities:
Accounts payable and accrued liabilities $ 8,210,114 $ 449,015 $ 8,659,129 $ 3,568,169
Unearned revenue (note 7) 11,137,422 2,858 11,140,280 -
Interest due on long-term debt 5,270,995 5,270,995 395,883
Bonds and loans payable, current portion net
(notes 10 and 14) 14,990,831 24,994 15,015,825 2,200,000
Compensated absences, current portion (note 10) 6,606,708 - 6,606,708 1,516,141
Claims and judgments, current portion
(notes 10, 12 and 14) 3,282,252 - 3,282,252 45,187
Capital leases, current portion (notes 8 and 10) 1,418,078 - 1,418,078 -
Landfill costs payable, current portion
(notes 9 and 10) 183,103 - 183,103 -
Customers' deposits for service connections - - - 748,395
Other 3,818,702 - 3,818,702 -
Total current liabilities 54,918,205 476,867 55,395,072 8,473,775
Noncurrent liabilities:
Bonds and loans payable, net
(notes 10 and 14) 286,968,694 970,860 287,939,554 40,108,135
Compensated absences (note 10) 19,141,450 - 19,141,450 1,029,545
Claims and judgments (notes 10, 12 and 14) 15,026,040 15,026,040 156,813
Capital leases (notes 8 and 10) 2,667,657 - 2,667,657 -
Landfill costs payable (notes 9 and 10) 21,057,897 - 21,057,897 -
Customers' deposits payable from
restricted assets - - - 16,207,996
Total noncurrent liabilities 344,861,738 970,860 345,832,598 57,502,489
Total liabilities 399,779,943 1,447,727 401,227,670 65,976,264
Net Assets
Invested in capital assets, net of
related debt 394,789,635 310,409 395,100,044 179,984,628
Restricted for:
Capital projects 36,095,871 - 36,095,871 -
Debt service (note 10) 18,761,152 183,832 18,944,984 -
Unrestricted 21,350,091 636,756 21,986,847 33,620,777
Total net assets $470,996,749 $ 1,130,997 $472,127,746 $ 213,605,405
See accompanying notes to the basic financial statements.
-25-
i
COUNTY OF HAWAII
Statement of Activities
For the Fiscal Year Ended June 30, 2007
Program Revenues
Operating Capital
Charges for Grants and Grants and
Functions/Programs Expenses Services Contributions Contributions
Primary government:
Governmental activities:
General government $ 46,349,904 $ 4,460,016 $ 3,167,784 $ 4,050,900
Public safety 118,010,316 5,798,126 17,083,062 213,626
Highways and streets 28,185,968 9,354,639 409,198 3,020,115
Health, education and welfare 23,203,874 799,075 15,500,768 -
Culture and recreation 26,948,501 1,634,008 620,032 521,345
Sanitation 42,682,281 18,486,502 1,287,294 - '
Interest on long-term debt 10,303,332 - - -
Total governmental activities 295,684,176 40,532,366 38,068,138 7,805,986
Business-type activities:
Health, education and welfare 698,329 345,802 134,211 -
Total primary government $ 296,382,505 $ 40,878,168 $ 38,202,349 $ 7,805,986
Component unit:
Water (note 14) $ 40,468,835 $ 38,524,965 $ - $ 5,730,506
General revenues:
Taxes:
Property taxes, levied for general purposes
Public service company taxes
Franchise taxes
Fuel taxes
Grants and contributions not restricted to specific programs
Investment earnings
Miscellaneous
Total general revenues
Change in net assets
See accompanying notes to the basic financial statements.
-26-
Net (Expense) Revenue and Changes in Net Assets
Primary Government
Governmental Business-type Component
Activities Activities Total Unit
$ (34,671,204) $ - $ (34,671,204) $
(94,915,502) (94,915,502)
(155402,016) - (15,402,016) -
(6,904,031) - (6,904,031) -
(24,173,116) - (24,173,116) -
(22,908,485) - (22,908,485)
(10,303,332) (10,303,332) -
(209,2779686) - (209,277,686) -
(218,316) (218,316) -
(209,277,686) (218,316) (209,496,002) -
- - - 3,786,636
183,611,050 - 183,611,050 -
7,396,084 - 7,396,084 -
8,520,133 - 8,520,133 -
8,471,453 - 8,471,453
18,999,596 18,999,596
9,727,911 35,551 9,763,462 2,251,239
3,063,413 - 3,063,413 101,518
239,789,640 35,551 239,825,191 2,352,757
30,511,954 (182,765) 30,329,189 6,139,393
440,484,795 1,313,762 441,798,557 207,466,012
$ 470,996,749 $ 1,130,997 $472,127,746 $213,605,405
-27-
i
COUNTY OF HAWAII
Governmental Funds
Balance Sheet
June 30, 2007 1
Other Total
Capital Governmental Governmental
General Projects Funds Funds
Assets
Cash and cash equivalents (note 3) $ 29,133,610 $ 70,682,984 $ 36,788,330 $136,604,924
Investments (note 3) 15,689,391 118,794,414 19,229,600 153,713,405
Receivables, net (note 4) 7,631,259 878,665 3,022,627 11,532,551
Due from other governmental
funds (note 5) 421,359 265,242 383,115 1,069,716
Due from other nongovernmental
funds (note 5) - - 2,700 2,700
Receivables from other
governments (note 4) 6,373,988 7,516,935 719,291 14,610,214
Restricted cash with escrow (note 3) 80,569 - - 80,569
Inventories 2,243,984 - - 2,243,984
Other 612,879 - 1,648,759 2,261,638
Total assets $ 62,187,039 $ 198,138,240 $ 61,794,422 $322,119,701
Liabilities and Fund Balances
Liabilities:
Accounts payable $ 2,604,045 $ 3,155,443 $ 2,450,626 $ 8,210,114
Due to other governmental
funds (note 5) 262,419 285,779 521,518 1,069,716
Deferred revenue (note 7) 11,332,238 7,407,157 3,051,914 21,791,309
Other 3,377,986 - 440,716 3,818,702
Total liabilities 17,576,688 10,849,379 6.464,774 34,889,841
Fund balances:
Reserved for:
Encumbrances 12,518,470 47,693,607 11,693,752 71,905,829
Inventories 2,243,984 - - 2,243,984
Taxicab investigations 63,388 - - 63,388
Liquor control 833,841 - - 833,841
Unexpended allotments - 43,912,039 - 43,912,039
Debt service (note 10) - - 18,761,152 18,761,152
Unreserved, reported in:
General fund 28,950,668 - - 28,950,668 L
Special revenue funds - - 24,874,744 24,874,744
Capital projects funds - 95,684,215 - 95,684,215
Total fund balances 44,610.351 187,289,861 55 329,648 287229,860
Total liabilities and fund balances $ 62,187,039 $ 198,138,240 $61,794,422 $322,119,701
See accompanying notes to the basic financial statements.
- 28-
COUNTY OF HAWAII
Reconciliation of the Governmental Funds Balance Sheet to the Statement of Net Assets
June 30, 2007
Total fund balances - governmental funds $ 287,229,860
Amounts reported for governmental activities in the statement of
net assets are different because:
Capital assets used in governmental activities are not financial
resources and therefore are not reported in the funds. These assets
consist of:
Land 22,999,168
Infrastructure assets, net 157,241,475
Buildings and improvements, net 219,677,063
Equipment, net 36,237,623
Construction work in progress 109,766,441
Total capital assets 545,921,770
Some of the County's revenues will be collected after year-end but are
not available soon enough to pay for the current period's expenditures
and therefore are deferred (unearned) in the funds. (note 7) 10,653,887
Some liabilities are not due and payable in the current period and
therefore are not reported in the funds. Those liabilities consist of:
Bonds and loans payable, net of receivable
from improvement district (298,154,588)
Accrued interest on bonds (5,270,995)
Capital leases (4,085,735)
Compensated absences (25,748,158)
Claims and judgments (18,308,292)
Landfill closure/postclosure costs (21,241,000)
Total long-term liabilities (372,808,768)
Net assets of governmental activities $ 470,996,749
See accompanying notes to the basic financial statements.
-29-
COUNTY OF HAWAII
Governmental Funds
Statement of Revenues, Expenditures, and Changes in Fund Balances
For the Fiscal Year Ended June 30, 2007
Other Total I
Capital Governmental Governmental
General Projects Funds Funds
Revenues
Property tax $ 181,445,952 $ - $ - $ 181,445,952
Public service company tax 7,396,084 - - 7,396,084
Fuel tax - - 8,471,453 8,471,453
Public utility franchise tax - - 8,520,133 8,520,133
Licenses and permits 7,218,217 - 9,050,770 16,268,987
Intergovernmental 45,997,340 2,705,683 14,896,173 63,599,196
Charges for services 4,474,017 - 17,211,003 21,685,020
Investment earnings 10,111,061 - 179,413 10,2901474
Miscellaneous 1,951,555 1,736,618 1,384,722 5,072,895
Total revenues 258,594,226 4,442,301 59,713,667 322,750,194
Expenditures
Current:
General government 37,651,563 - - 37,651,563
Public safety 88,325,293 - 4,916,044 93,241,337
Highways and streets 3,012,228 - 11,020,819 14,033,047
Sanitation 1,029,073 - 30,787,535 31,816,608
Health, education and welfare 6,232,515 - 15,237,486 21,470,001
Culture and recreation 16,271,995 - 845,649 17,117,644
Pension and retirement
contributions (note 13) 18,593,349 - 3,202,556 21,795,905
Employees' health insurance 15,543,842 - 1,397,266 16,941,108
Miscellaneous 4,096,314 - 1,011,680 5,107,994
Debt service:
Principal 360,668 - 15,715,681 16,076,349
Interest 38,286 - 9,856,196 9,894,482
Capital outlay 4,247,771 48,037,148 - 52,284,919
Total expenditures 195,402,897 48,037,148 93,990,912 337,430,957 ,
Excess (deficiency) of revenues
over expenditures 63,191,329 (43,594,847) (34,277,245) (14,680,763)
(Continued)
-30-
COUNTY OF HAWAII
Governmental Funds
Statement of Revenues, Expenditures, and Changes in Fund Balances
For the Fiscal Year Ended June 30, 2007
(Concluded)
Other Total
Capital Governmental Governmental
General Projects Funds Funds
Other Financing Sources (Uses), including transfers
Sale of assets $ 5,000 $ = $ - $ 5,000
Increase in capital leases (note 10) 2,402,731 2,402,731
State Revolving Fund loans (note 10) - 6,254,922 - 6,254,922
Sale of bonds (note 10) - 85,000,000 - 85,000,000
Premium on bonds (note 10) 1,309,803 1,789,402 3,099,205
Refunding bonds (note 10) 31,607,388 - - 31,607,388
Refunding bonds issuance costs (note 10) (218,518) _ _ (218,518)
Payment to refunded bond escrow agent (note 10) (32,698,673) (32,698,673)
Transfers in (note 5) - 15,386,503 43,752,217 59,138,720
Transfers out (note 5) (52,997,033) - (6,141,687) (59,138,720)
Total other financing sources (uses) (52,992,033) 108,430,827 40,013,261 95,452,055
Net change in fund balances 10,199,296 64,835,980 5,736,016 80,771,292
Fund balance at beginning of year 34,965,207 122,453,881 49,593,632 207,012,720
Decrease in reserve for inventories (554,152) - - (554,152)
Fund balance at end of year $ 44,610,351 $1871289,861 $ 55,329,648 $287,229,860
See accompanying notes to the basic financial statements.
-31-
COUNTY OF HAWAII
Reconciliation of the Change in Fund Balances of Governmental Funds
to the Statement of Activities
For the Fiscal Year Ended June 30, 2007
Net change in fund balances - total governmental funds $ 80,771,292
Amounts reported for governmental activities in the statement of activities are
different because:
Capital outlays are reported as expenditures in governmental funds.
However, in the statement of activities, the cost of capital assets is
allocated over their estimated useful lives as depreciation expense. In
the current period, these amounts are:
Capital outlay and dedicated property 49,723,184
Depreciation expense and loss on disposals (20,402,006)
Excess of capital outlay over depreciation expense 29,321,178
Borrowings provide current financial resources to governmental funds;
however, issuing debt increases long-term liabilities in the statement
of net assets. In the current period, proceeds were received from:
General obligation bonds, net of refunding (85,185,214)
Premium on bond issuance (1,789,402)
Deferred amount on refunding of bonds 1,534,757
SRF loan obligations (6,254,922)
Capital lease obligations (2,402,731)
Total debt proceeds (94,097,512)
Repayment of long-term debt is reported as an expenditure in governmental
funds, but the repayment reduces long-term liabilities in the statement of
net assets. In the current year, these amounts consist of:
Bond principal retirement, net of refunding 12,473,327
SRF loan repayment 2,421,513
Capital lease payments 1,181,510
Total long-term debt repayment 16,076,350
Because some revenues will not be collected for several months after the
County's fiscal year end, they are not considered "available" revenues and
are "deferred" in the governmental funds. Unearned revenues decreased by
this amount this year. 1,980,870
(Continued)
-32-
COUNTY OF HAWAII
Reconciliation of the Change in Fund Balances of Governmental Funds
to the Statement of Activities
For the Fiscal Year Ended June 30, 2007
(Concluded)
Some items reported in the statement of activities do not involve current
financial resources and therefore are not reported as expenditures in
governmental funds. These activities are:
Decrease in inventory $ (554,152)
Increase in compensated absences (1,681,778)
Decrease in claims and judgments 3,032,101
Increase in landfill closure/postclosure care costs (2,578,000)
Amortization of premium from bond issuance 226,272
Amortization of deferred amount on refunding of bonds (206,138)
Net increase in accrued interest (1,778,529)
Net additional expenditures (3,540,224)
Change in net assets of governmental activities $ 301511,954
See accompanying notes to the basic financial statements.
-33-
COUNTY OF HAWAII
General Fund
Statement of Revenues, Expenditures and Changes in Fund Balance -
Budget and Actual (Budgetary Basis)
For the Fiscal Year Ended June 30, 2007
Actual Variance
Original Final (Budgetary Positive
Budget Budget Basis) (Negative)
Revenues:
Taxes and assessments:
Real property taxes $ 183,695,000 $ 183,695,000 $ 181,445,952 $ (2,249,048)
Public service company taxes 7,300,000 7,300,000 7,396,084 96,084
Total taxes and assessments 190,995,000 190,995,000 188,842,036 (2,152,964)
Licenses and permits:
Nonbusiness licenses and permits 3,983,805 3,983,805 4,288,651 304,846
Business licenses 1,489,199 1,489,199 1,341,681 (147,518)
Street use 1,599,000 1,599,000 1,587,885 (115115)'
Total licenses and permits 7,072,004 7,072,004 7,218,217 146,213
Intergovernmental:
Federal:
Programs for the aged 2,180,304 2,457,064 1,957,614 (499,450)
Community development block grants - 2,438,491 2,438,491 -
HOME program grant - 995,756 995,756
Law enforcement 1,951,836 2,432,583 1,833,302 (599)281)
Other 2,822,895 3,892,611 2,974,268 (918,343) 1
Total federal 6,955,035 12,216,505 10,199,431 (2,017,074)
State:
State General Fund - Act 185,
SLH 1990 19,198,000 19,198,000 18,690,646 (507,354)
Emergency medical services 11,820,968 11,820,968 10,721,402 (1,099,566)
Other 4,217,946 7,783,741 7,168,761 (614,980)
Child support enforcement 1,082,357 1,082,357 1,003,067 (79,290)
Total State 36,319,271 39,885,066 37,583,876 (2,301,190)
Total intergovernmental revenue 43,274,306 52,101,571 47,783,307 (4,318,264)
Charges for current services:
General government 3,497,132 3,614,324 3,449,864 (164,460)
Culture and recreation 883,050 883,050 878,990 (4,060)
Highways and streets 218,114 218,114 255,351 37,237
Public safety 152,878 152,878 (110,188) (263,066)
Total charges for current services 4,751,174 4,868,366 4,474,017 (394,349)
Fines and forfeitures 1,484,900 1,484,900 809,516 (675,384)1
Rents 119,140 119,140 76,264 (42,876)
(Continued)
-34-
COUNTY OF HAWAII
General Fund
Statement of Revenues, Expenditures and Changes in Fund Balance -
Budget and Actual (Budgetary Basis)
For the Fiscal Year Ended June 30, 2007
Actual Variance
Original Final (Budgetary Positive
Budget Budget Basis) (Negative)
Revenues (continued):
Interest and penalties $ 4,000,000 $ 4,000,000 $ 9,782,198 $ 5,782,198
Miscellaneous 3,435,505 3,848,282 3,738,523 (109,759)
Total revenues 255,132,029 264,489,263 262,724,078 (1,765,185)
Expenditures:
Current:
General government:
Finance 8,075,389 8,186,676 6,751,591 1,435,085
General government building 4,845,491 5,120,775 4,477,515 643,260
Legislative 6,038,927 4,588,723 3,911,956 676,767
Automotive equipment 3,949,032 3,649,032 3,288,405 360,627
Law 3,406,664 3,406,664 3,176,532 230,132
Research and development 2,848,412 3,339,102 3,152,104 186,998
Planning and zoning 3,287,240 3,467,740 3,136,037 331,703
Mayor's office 1,644,171 3,265,171 3,032,251 232,920
Engineering 2,938,280 2,896,493 2,637,791 258,702
Data systems 1,151,984 2,660,984 2,547,131 113,853
Personnel services 1,782,345 1,788,137 1,600,119 188,018
Public works administration 1,566,125 1,597,125 1,441,417 155,708
Elections 973,865 989,865 891,453 98,412
Total general government 42,507,925 44,956,487 40,044,302 4,912,185
Public safety:
Police department 47,035,790 47,832,946 45,270,831 2,562,115
Fire department 29,866,570 30,281,307 30,182,018 99,289
Prosecuting attorney 8,052,651 8,303,747 7,013,386 1,290,361
Protective inspection 2,284,283 2,324,951 2,057,099 267,852
Liquor control 1,444,856 1,769,681 1,568,805 200,876
Flood control 335,031 635,031 590,237 44,794
Civil defense agency 2,597,789 4,113,871 2,790,554 1,323,317
Animal control 1,099,357 1,186,357 1,186,357 -
Total public safety 92,716,327 96,447,891 90,659,287 5,788,604
Highways and streets:
Mass transit 4,613,306 4,613,306 4,389,737 223,569
(Continued)
-35-
COUNTY OF HAWAII
General Fund
Statement of Revenues, Expenditures and Changes in Fund Balance -
Budget and Actual (Budgetary Basis)
For the Fiscal Year Ended June 30, 2007
Actual Variance
Original Final (Budgetary Positive
Budget Budget Basis) (Negative)
Expenditures (continued):
Current (continued): '
Sanitation:
Environmental management $ 1,239,535 $ 1,356,727 $ 1,054,147 $ 302,580
Health, education and welfare:
Elderly activities 3,248,040 3,411,040 3,011,258 399,782
Office of Aging 2,540,856 2,549,616 2,169,446 380,170
Education 65,000 65,000 60,499 4,501
Social programs 900,000 900,000 898,000 2,000
Cemeteries 313,618 333,718 299,964 33,754
Physical examination 102,942 102,942 102,942 -
Total health, education and welfare 7,170,456 7,362,316 6,542,109 820,207
Culture and recreation:
Community music 412,520 412,520 240,009 172,511
Organized recreation:
Maintenance 6,719,212 7,012,012 6,524,990 487,022
Recreation 2,373,077 2,544,027 2,378,518 165,509
Aquatics 3,904,805 3,777,305 3,382,848 394,457
Hoolulu Park complex 898,416 899,416 874,278 25,138
Administration 1,997,694 2,271,994 2,010,944 261,050
Children's zoo 581,340 611,940 591,940 20,000
Summer/Intersession 478,365 478,365 304,238 174,127
Culture and arts 149,148 179,818 160,821 18,997
Elderly activities administration 673,833 734,813 637,063 97,750
Total culture and recreation 18,188,410 18,922,210 17,105,649 1,816,561
Pension and retirement contributions 18,969,686 18,969,686 18,382,958 586,72
Health fund 20,654,000 20,479,000 15,543,842 4,935,158
Miscellaneous 4,076,000 4,131,709 3,123,042 1,008,667
Total current 210,135,645 217,239,332 196,845,073 20,394,259
1
(Continued)
-36-
COUNTY OF HAWAII
General Fund
Statement of Revenues, Expenditures and Changes in Fund Balance -
Budget and Actual (Budgetary Basis)
For the Fiscal Year Ended June 30, 2007
(Concluded)
Actual Variance
Original Final (Budgetary Positive
Budget Budget Basis) (Negative)
Expenditures (continued):
Capital Outlay:
Community Development Block
grants (HUD) $ - $ 2,648,538 $ 2,648,538 $ -
HOME Program 1,045,618 1,045,618 -
Other - 346,500 346,500 -
Total capital outlay - 4,040,656 4,040,656 -
Total expenditures 210,135,645 221,279,988 200,885,729 20,394,259
Excess of revenues over expenditures 44,996,384 43,209,275 61,838,349 18,629,074
Other financing uses:
Transfers out:
Capital Projects Fund (2,000,000) (9,244,816) (9,244,816) -
Housing Fund (1,228,399) (1,295,399) (1,295,399) -
Solid Waste Fund (14,483,706) (14,656,244) (14,656,244) -
Golf Course Fund (256,480) (342,531) (342,531) -
Highway Fund (700,000) (812,000) (812,000) -
Self Insurance Fund (1,000,000) (1,000,000) (1,000,000) -
Disaster/Emergency Fund (1,000,000) (1,000,000) (1,000,000) -
Public Access, Open Space, and Natural
Resources Preservation Fund (1,000,000) (2,600,000) (2,519,479) 80,521
Budget Stabilization Fund (1,000,000) (1,000,000) (1,000,000) -
Debt Service Fund (29,622,809) (29,622,809) (29,313,792) 309,017
Total transfers out (52,291,394) (61,573,799) (61,184,261) 389,538
Total other financing uses (52,291,394) (61,573,799) (61,184,261) 389,538
Excess (deficiency) of revenues and other
sources over expenditures and other uses (7,295,010) (18,364,524) 6545088 19,018,612
Fund balance at beginning of year 34,965,207 34,965,207 34,965,207 -
Fund balance at end of year $ 27,670,197 $ 16,600,683 $ 35,619,295 $ 19,018,612
t See accompanying notes to the basic financial statements.
-37-
COUNTY OF HAWAII
Proprietary Funds
Statement of Net Assets
June 30, 2007
Business-type Activities-
Enterprise Funds
Kulaimano Ouli Ekahi '
Elderly Affordable
Housing Housing
Project Project Total
Assets
Current assets:
Cash and cash equivalents (note 3) $ 112,276 $ 169,907 $ 282,183
Restricted cash and cash equivalents (note 3) 10,625 22,009 32,634
Investments (note 3) 700,000 - 700,000
Imprest fund (note 3) 50 100 150
Receivables (note 4) 8,280 51,960 60,240
Prepaid expenses 1,369 - 1,369 '
Total current assets 832,600 243,976 1,076,576
Noncurrent assets:
Restricted cash and cash equivalents (note 3) 183,832 14,753 198,585
Capital assets (note 6):
Land and site improvements 511,000 503,877 1,014,877
Buildings and equipment 1,230,504 - 1,230,504
Less accumulated depreciation (939,118) - (939,118)
Total capital assets 802,386 503,877 1,306,263
Total noncurrent assets 986,218 518,630 1,504,848
Total assets 1,818,818 762,606 2,581,424
Liabilities
Current liabilities:
Accounts payable 53,947 356,124 410,071
Internal balances (note 5) 2,700 - 2,700
Due to developer - 7,729 7,729
Security deposits payable from restricted assets 10,625 20,590 31,215
Deferred revenue (note 7) 1,345 1,513 2,858
Notes payable, current portion (note 10) 24,994 - 24,994
Total current liabilities 93,611 385,956 479,567
Noncurrent liabilities:
Notes payable (note 10) 970,860 - 970,860
Total liabilities 1,064,471 385,956 1,450,427
Net Assets
Invested in capital assets, net of related debt (193,468) 503,877 310,409
Restricted for debt service 183,832 - 183,832
Unrestricted 763,983 (127,227) 636,756
Total net assets $ 754,347 $ 376,650 $ 1,130,997
See accompanying notes to the basic financial statements. ,
-38-
f
COUNTY OF HAWAII
Proprietary Funds
Statement of Revenues, Expenses, and Changes in Fund Net Assets
For the Fiscal Year Ended June 30, 2007
Business-type Activities-
Enterprise Funds
Kulaimano Ouli Ekahi
Elderly Affordable
Housing Housing
Project Project Total
I Operating revenues:
Rental receipts from tenants $ 106,772 $ 233,455 $ 340,227
Rental subsidy from federal government - HUD 134,211 - 134,211
Laundry receipts 2,435 2,435
Miscellaneous - 3,140 3,140
Total operating revenues 243,418 236,595 480,013
Operating expenses:
Utilities 36,770 28,857 65,627
General and administration 96,832 108,013 204,845
Maintenance and repairs 143,092 65,088 208,180
Lease expense - 115,254 115,254
Depreciation (note 6) 33,666 33,666
Total operating expenses 310,360 317,212 627,572
Operating loss (66,942) (80,617) (147,559)
Nonoperating revenues (expenses):
Investment income 35,464 -87 35,551
Interest expense (70,380) (70,380)
Loss on disposal of assets (377) - (377)
Total nonoperating revenue (expenses) (35,293) 87 (35,206)
Change in net assets (102,235) (80,530) (182,765)
' Net assets, beginning of year 856,582 457,180 1,313,762
Net assets, end of year $ 754,347 $ 376,650 $ 1,130,997
See accompanying notes to the basic financial statements,
-39-
COUNTY OF HAWAII
Proprietary Funds
Statement of Cash Flows
For the Fiscal Year Ended June 30, 2007
Business-type Activities -
Enterprise Funds
Kulaimano Ouli Ekahi
Elderly Affordable i
Housing Housing i
Project Project Total
Cash Flows from Operating Activities
Receipts from tenants $ 106,996 $ 230,239 $ 337,235
Receipts from federal government - HUD 134,211 - 134,211
Payments to suppliers for goods and services (227,702) (303,363) 531,065
Net cash provided by (used in) operating activities 13,505 (73,124} 59,619
Cash Flows from Capital and Related Financing Activities
Principal paid on notes payable (23,532) - (23,532)
Interest paid on notes payable (70,380) - (70,380)
Purchase of capital assets (3,386) - (3,386
Net cash used in capital and related financing activities (97,298) - (97,298)
Cash Flows from Investing Activities
Purchase of investments (1,400,000) - (1,400,000)
Proceeds from maturities of investments 1,400,000 - 1,400,000
Interest on investments 35,464 80 35,544
Net cash provided by investing activities 35,464 80 35,544
Net decrease in cash and cash equivalents (48,329) (73,044) (121,373)
Cash and cash equivalents at beginning of year 355,112 279,813 634,925
Cash and cash equivalents at end of year $ 306,783 $ 206,769 $ 513,552
Reconciliation of Operating Loss to Net Cash
Provided by (Used in) Operating Activities
Operating loss $ (66,942) $ (80,617) $ (147,559)
Adjustments to reconcile operating loss to net cash
provided by (used in) operating activities:
Depreciation expense 33,666 - 33,666
Change in assets and liabilities:
Receivables (1,813) (8,429) (10,242)
Prepaid expenses (138) - (138)
Accounts and other payables 49,382 15,746 65,128
Unearned income (650) 176 474
Net cash provided by (used in) operating activities $ 13,505 $ 73,124 $ 59,619
Supplemental disclosure of cash flow information - Interest paid $ 70,380 $ - $ 70,380 '
See accompanying notes to the basic financial statements.
-40- ,
COUNTY OF HAWAII
r Fiduciary Funds
Statement of Fiduciary Net Assets
June 30, 2007
Private-
Purpose Agency
Trusts Funds
Assets
Cash and cash equivalents (note 3) $ 1,861,787 $ 4,315,864
Investments (note 3) 2,883,581 1,447,009
Receivables:
Due from other agency funds - 2,245
Other receivables 6,980 63,839
Total receivables 6,980 66,084
Restricted cash and cash equivalents (note 3) - 637,000
Total assets 4,752,348 $ 6,465,957
Liabilities
Due to other agency funds - 2,245
Accrued liabilities - 2,994,401
Advances payable - 191,900
Assets held for benefit of improvement districts 3,277,411
' Total liabilities - $ 6,465,957
Net Assets
Held in trust for other parties 4,752,348
Total net assets $ 4,752,348
' See accompanying notes to the basic financial statements.
-41-
COUNTY OF HAWAII
Fiduciary Funds
Statement of Changes in Fiduciary Net Assets
For the Fiscal Year Ended June 30, 2007
Private-
Purpose
Trusts ,
Additions
Contributions:
Puna Geothermal Venture $ 50,000 '
Investment earnings:
Net increase in fair value of investments 137,148
Dividends 46,442
Interest 175,595
Total additions 409,185 '
Deductions
Appraisal fees 11,726
Total deductions 11,726 j
Change in net assets 397,459
Net assets, beginning of year 4,354,889
Net assets, end of year $ 4,752,348
See accompanying notes to the basic financial statements.
-42-
COUNTY OF HAWAII
Notes to the Basic Financial Statements
' June 30, 2007
The accounting policies of the County of Hawaii (the County) conform to U.S. generally accepted
accounting principles (GAAP) as applicable to local governmental units. The following notes to
the basic financial statements are an integral part of the County's Comprehensive Annual Financial
Report.
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The Financial Reporting Entity
The County has implemented Governmental Accounting Standards Board Statement No. 14,
The Financial Reporting Entity (GASB Statement No. 14). All organizations, activities or
functions that meet the criteria in GASB Statement No. 14 for inclusion in the reporting entity
are included from the County's basic financial statements.
Primary Government The County operates under the Mayor-Council form of government
under a charter that became effective on January 2, 1969, and was amended in 1979, 1982,
1990 and 2000. The County's operations are organized by the following functions. general
government; public safety; highways and streets; sanitation; health, education and welfare;
' culture and recreation; pension and retirement contributions; health fund; miscellaneous;
capital outlay; and debt service. The State of Hawaii (the State) assumes full responsibility
for several major functions usually performed by local governments, including education,
welfare, health and judicial functions. There are no separate city, county or township
governments nor any school districts, special districts, authorities or public corporations with
overlapping authority.
GASB Statement No. 14 defines component units as legally separate organizations for which
the elected officials of the primary government are financially accountable. "Financial
' accountability" is the level of accountability that exists if a primary government appoints a
voting majority of an organization's governing board and is either able to impose its will on
that organization or there is a potential for the organization to provide specific financial
benefits to, or impose specific financial burdens on, the primary government. A primary
government has the ability to impose its will on an organization if it can significantly
influence the programs, projects, activities or level of services performed or provided by the
organization. An organization has a financial benefit or burden relationship with the primary
government if any one of three conditions exist: (1) The primary government is legally
entitled to or can otherwise access the organization's resources; (2) The primary government
is legally obligated or has otherwise assumed the obligation to finance the deficits of, or
provide financial support to, the organization; or (3) The primary government is obligated in
some manner for the debt of the organization.
' As required by GAAP as set forth in GASB Statement No. 14, these basic financial
statements present the County of Hawaii (the primary government) and its component unit,
' -43-
COUNTY OF HAWAII
Notes to the Basic Financial Statements
June 30, 2007 '
the Department of Water Supply. This component unit is included in the County's reporting
entity because of its financial relationship with the County.
Discretely Presented Component Unit The component unit column in the basic financial
statements includes the financial data of the Department of Water Supply (the Department), a
legally independent agency of the County that is accounted for as an enterprise fund. It is
reported in a separate column to emphasize that it is legally separate from the County. The
members of the Water Commission, the governing body of the Department, are appointed by
the Mayor of the County and confirmed by the County Council. The Department is granted
corporate powers by state statute and the County Charter. Although the County does not have
the authority to approve or modify the Department's operational and capital budgets, the
County has issued bonds on the Department's behalf that are general obligations of the
County. Because the County is obligated to repay these bonds in the event of default by the
Department, the County is financially accountable for the debts of the Department. See Note
14 for component unit disclosures for the Department. Complete financial statements of the
Department can be obtained from the Department of Water Supply, 345 Kekuanaoa Street,
Suite 20, Hilo, Hawaii 96720.
Basic Financial Statements ,
The basic financial statements include both government wide (based on the County as a
whole) and fund financial statements. Both the government-wide and fund financial
statements (within the basic financial statements) categorize primary activities as either
governmental or business-type. In the government wide statement of net assets, both the
governmental and business-type activities columns (a) are presented on a consolidated basis '
by column, (b) and are reflected, on a full accrual, economic resource basis, which
incorporates long-term assets and receivables as well as long-term debt and obligations.
The government wide statement of activities reflects both the gross and net costs per
functional category (general government, public safety, highways and streets, etc.) which are
otherwise being supported by general government revenues (property taxes, certain
intergovernmental revenues, etc.). The statement of activities reduces gross expenses
(including depreciation) by related program revenues, operating and capital grants. The
program revenues must be directly associated with the function (general government, public
safety, highways and streets, etc.) or a business-type activity. The operating grants include
operating-specific and discretionary (either operating or capital) grants while the capital
grants column reflects capital-specific grants. The net cost (by function or business-type ,
activity) is normally covered by general revenues.
The government wide focus is more on the sustainability of the County as an entity and the ,
change in aggregate financial position resulting from the activities of the fiscal period.
-44-
COUNTY OF HAWAII
f Notes to the Basic Financial Statements
' June 30, 2007
The fund financial statements' emphasis is on the major funds in either the governmental or
business-type categories. Nonmajor funds (by category) are summarized into a single
' column.
The governmental funds in the fund financial statements are presented on a current financial
resource and modified accrual basis of accounting. This is the manner in which these funds
are normally budgeted. This presentation is deemed most appropriate to (a) demonstrate legal
and covenant compliance, (b) demonstrate the source and use of liquid resources, and (c)
demonstrate how the County's actual experience conforms to the budget fiscal plan. Since
the governmental fund statements are presented on a different measurement focus and basis of
accounting than the government wide statements' governmental column, a reconciliation is
' presented on the page following each statement, which briefly explains the adjustments
necessary to transform the fund based financial statements into the governmental column of
the government-wide presentation.
' The County's fiduciary funds are presented in the fund financial statements by type (private
purpose and agency). Since by definition these assets are being held for the benefit of a third
party (private parties, state government, etc.) and cannot by used to address activities or
' obligations of the government, these funds are not incorporated into the government wide
statements.
Government-wide and fund financial statements - The government-wide financial
statements (i.e., the statement of net assets and the statement of changes in net assets) report
information on all of the nonfiduciary activities of the primary goverment and its component
unit. The effect of interfund activity has been removed from these statements. Governmental
activities, which normally are supported by taxes and intergovernmental revenues, are
reported separately from business-type activities, which rely to a significant extent on fees
and charges for support. Likewise, the primary government is reported separately from
certain legally separate component units for which the primary government is financially
accountable.
The statement of activities demonstrates the degree to which the direct expenses of a given
function or segment are offset by program revenues. Direct expenses are those that are
' clearly identifiable with a specific function or segment. Program revenues include (a) charges
to customers or applicants who purchase, use, or directly benefit from goods, services, or
privileges provided by a given function or segment and (b) grants and contributions that are
restricted to meeting the operational or capital requirements of a particular function or
segment. Taxes and other items not included among program revenues are reported instead as
general revenues.
' Separate financial statements are provided for governmental funds, proprietary funds, and
fiduciary funds, even though the latter are excluded from the government wide financial
-a5-
1
COUNTY OF HAWAII
Notes to the Basic Financial Statements '
June 30, 2007
statements. Major individual governmental funds and major individual enterprise funds are
reported as separate columns in the fund financial statements.
Activities in funds - The financial transactions of the County are recorded in individual '
funds. Each fund is accounted for by providing a separate set of self-balancing accounts that
comprises its assets, liabilities, reserves, fund equity, revenues and expenditures/expenses.
The various funds are reported by generic classification within the financial statements.
GASB Statement No. 34, Basic Financial Statements - and Management's Discussion and ,
Analysis -for State and Local Governments, sets forth minimum criteria (percentage of the
assets, liabilities, revenues or expenditures/expenses of either fund category or the
governmental and enterprise combined) for the determination of major funds. The nonmajor '
funds are combined in a column in the fund financial statements and detailed in the
combining section.
The County reports the following major governmental funds: ,
General Fund - The general fund is the general operating fund of the County. It is used '
to account for all activities of the general government, except those required to be
accounted for in other funds.
Capital Projects Fund - Used to account for the costs of constructing County capital '
improvements financed with general obligation bond proceeds, federal and state grants,
and general and special revenue fund revenues. The capital projects fund is used to '
account for financial resources to be used for the acquisition or construction of major
general government capital facilities and infrastructure (other than those financed by
proprietary funds and trust funds) when separate project centers are needed to control
costs.
The County reports the following major proprietary funds:
Kulaimano Elderly Housing Project - Used to account for the operation of a rental
housing project for low-income senior citizens located north of Hilo.
Ouli Ekahi Affordable Housing Project - Used to account for the operation of a 33-unit '
single-family affordable rental housing project located in Waimea.
The County reports the following fiduciary funds:
Private-Purpose Trust Funds - Used to account for funds received from geothermal ,
developers to mitigate the effects of geothermal energy development. Also used to
account for investment income on funds received from import businesses at the port of
Hilo and the related expenditures to promote health and safety on the Island of Hawaii. '
-46- '
COUNTY OF HAWAII
' Notes to the Basic Financial Statements
June 30, 2007
1
Agency Funds - Used to account for assets held by the County for other governmental
' units and individuals. The agency funds are custodial in nature and do not involve
measurement of results of operations. The County has the following agency funds:
' • State Weight Tax Fund
• Improvement District No. 17 Fund
• Improvement District No. 18 Fund
Improvement District Revolving Fund
• Performance and Refundable Deposits Fund
• Payroll Clearance Fund
• Flexible Spending Account
• Lapsed Warrants Fund
• Non-Profit License Plates Fund
+ Organ and Tissue Education Fund
' Basis of Accounting
Basis of accounting refers to the period in which revenues and expenditures (or expenses) are
' recognized in the accounts and reported in the basic financial statements. Basis of accounting
relates to the timing of the measurements made, regardless of the measurement focus applied.
' The government-wide financial statements and the proprietary, fiduciary and component unit
fund financial statements are presented on an accrual basis of accounting. The governmental
funds in the fund financial statements are presented on a modified accrual basis.
Accrual Basis - Revenues are recognized when earned and expenses are recognized when the
related obligation is incurred.
' Modified Accrual Basis - Revenues are recorded when susceptible to accrual (that is, both
measurable and available). "Measurable" means the amounts are determinable. "Available"
means the amounts are collectible within the current period or soon enough thereafter (within
60 days) to be used to pay liabilities of the current period.
Licenses and permits, charges for current services, fines and forfeitures, penalties and
miscellaneous revenues are recorded as revenues when received in cash because they are
generally not measurable until actually received. State Revolving Fund loan proceeds are
considered available when collected.
' In applying the susceptible to accrual concept to intergovernmental revenues, the legal and
contractual requirements of the numerous individual programs are used as guidance. There
' -47-
COUNTY OF HAWAII
Notes to the Basic Financial Statements ,
June 30, 2007
'
specific
are essentially two types of these revenues. In one, monies must be expended on the speci
purpose or project before any amounts will be paid to the County; therefore, revenues are '
recognized based upon the expenditures recorded. Most construction grants and many
operating grants fall into this category. In the other, monies are virtually unrestricted as to
purpose of expenditure and are usually revocable only for failure to comply with prescribed
compliance requirements. These resources are reflected as revenues at the time of receipt or ,
earlier if the susceptible to accrual criteria are met.
The County reports unearned revenue in its fund financial statements (see Note 7). Unearned '
revenues arise when potential revenue does not meet both the "measurable" and "available"
criteria for recognition in the current period. In subsequent periods, when both revenue
recognition criteria are met, the liability for unearned revenue is removed from the combined
balance sheet and revenue is recognized.
Expenditures are recognized under the modified accrual basis of accounting in the accounting ,
period in which the fund liability is incurred. Exceptions to this general rule include:
(a) accumulated compensated absences and claims and judgments which are recognized as
expenditures when paid; (b) liabilities related to municipal solid waste landfill closure and ,
postclosure care costs; and (c) principal and interest on general long-term debt which are
recognized as expenditures when due.
In accordance with GASB Statement No. 20, Accounting and Financial Reporting for ,
Proprietary Funds and Other Governmental Entities That Use Proprietary Fund Accounting,
the County applies all applicable GASB pronouncements as well as the following ,
pronouncements issued on or before November 30, 1989, unless those pronouncements
conflict with or contradict GASB pronouncements; Financial Accounting Standards Board
statements and interpretations, Accounting Principles Board opinions, and Accounting
Research Bulletins of the Committee on Accounting Procedures.
Encumbrances '
The general, special revenue, and capital projects funds follow encumbrance accounting
under which purchase orders, contracts and other commitments are recorded as a reserve of
fund balance and provide authority for the carryover of appropriations to the subsequent year
in order to complete these transactions. Encumbrances outstanding at year-end are reported
as reservations of fund balances and do not constitute expenditures or liabilities because the
commitments will be honored during the subsequent year.
Unexpended Allotments
Allotment accounting is employed in the general and capital projects funds to reserve
appropriations to complete capital projects that were funded during a given fiscal period.
-48- '
COUNTY OF HAWAII
' Notes to the Basic Financial Statements
' June 30, 2007
' Unexpended allotments represent reserves of capital projects appropriations that are available
to complete such projects in future fiscal periods.
' Cash and Investments
' Cash and cash equivalents include cash on hand, amounts in demand deposits and short-term
investments with a maturity date of three months or less from the date acquired by the
County.
' Investments consist of time certificates of deposit at financial institutions and bank repurchase
agreements with original maturities exceeding three months. Included are participating
interest-earning investment contracts (repurchase agreements) that have remaining maturities
at the time of purchase of one year or less, as well as nonparticipating interest earning
investment contracts (time certificates of deposit and repurchase agreements): Both
categories of investments are stated at amortized cost (see Note 3). Investments also consist
' of equity securities in the fiduciary fund financial statements. These investments are stated at
fair value.
' Real Property Taxes
The County's real property taxes are on levied July 1 each year on assessed valuation as of
January 1. The taxes become a lien on the property assessed as of the levy date. Taxes are
due and payable in two equal annual installments on August 20 and February 20.
Accordingly, real property taxes receivable as of June 30 are delinquent. Each delinquent
' installment bears interest at I% per month and penalties of up to 10% of the amount due.
Assessments are based on 100% of estimated fair market values.
' Inventories
Inventories consist of materials and supplies and are reported as expenditures at the time of
purchase (purchase method). Police and fire department inventories are stated using the first
in, first out (FIFO) method. Other inventories are stated at average cost.
' Liquor Control
Section 281 of the Hawaii Revised Statutes requires that liquor license revenues collected be
used only for costs and expenses directly relating to operational and administrative costs
actually incurred by the liquor commission collecting such fees. The unexpended fees at
June 30, 2007 of $833,841 are reflected as a reserve of general fund balance.
-49-
COUNTY OF HAWAII
Notes to the Basic Financial Statements
June 30, 2007 ,
Capital Assets
Capital assets, which include property, plant, equipment, and infrastructure assets (e.g., roads, ,
bridges, curbs and gutters, streets and sidewalks, drainage systems, lighting systems, and
similar items), are reported in the applicable governmental or business-type activities columns
in the government wide financial statements. Capital assets are defined by the government as '
assets with an initial, individual cost of more than $1,000 and an estimated useful life in
excess of one year. Such assets are recorded at historical cost or estimated historical cost if
purchased or constructed. Donated capital assets are recorded at estimated fair market value ,
at the date of donation.
The costs of normal maintenance and repairs that do not add to the value of the asset or '
materially extend the life of the asset are not capitalized.
Major outlays for capital assets and improvements are capitalized as projects are constructed. ,
Interest incurred during the construction phase of capital assets of business-type activities is
included as part of the capitalized value of the assets constructed.
Capital assets of the primary government are depreciated using the straight-line method over ,
the following estimated useful lives of the assets:
Assets Years
Infrastructure 20 to 100 years
Buildings and improvements 50 to 100 years ,
Equipment 5 to 40 years
Depreciation is recorded in one enterprise fund, the Kulairnano Elderly Housing Project. It is '
computed using the straight-line method over the following estimated useful lives of the
assets:
Buildings 50 years
Furnishings and equipment 5 to 10 years
Ground and site improvements 20 to 50 years
Long-term Obligations
The County reports long-term debt of governmental funds at face value on the government '
wide statement of net assets. Certain other governmental fund obligations not expected to be
financed with current available resources are also reported on the government wide statement ,
of net assets. Long-term debt and other obligations financed by the proprietary funds are
reported as liabilities in those funds.
-50-
COUNTY OF HAWAII
Notes to the Basic Financial Statements
' June 30, 2007
Compensated Absences
Employees earn vacation credit at the rate of one and three-quarter working days for each
month of service. Up to ninety days of vacation leave credits can be accumulated per
employee. In addition, employees who work overtime can elect to take compensatory time off
instead of overtime pay. The time off is earned at the rate of one-and-a-half hours for each
hour of overtime worked. There is no statutory limit to the amount of compensatory time off
an employee can accumulate. Both compensatory time off and vacation credits are converted
' to pay upon termination of employment.
A liability for these amounts is reported in the Governmental Funds only if they have
' matured, for example, as a result of employee resignations and retirements. All vacation and
compensatory time off pay is accrued in the government-wide statement of net assets along
with the estimated liability for social security and Medicare taxes and employers' retirement
contributions on those amounts. In prior years, the following funds have been used to
' liquidate this liability for compensated absences: General Fund, Highway Fund, Sewer Fund,
Solid Waste Fund, Vehicle Disposal Fund, Golf Course Fund and the Housing Agency.
Sick leave accumulates without limit. Sick leave can betaken only in the event of illness and
is not convertible to pay upon termination of employment; therefore there is no related
liability. However, a County employee who retires or leaves government service in good
' standing with 60 days or more of unused sick leave is entitled to additional service credit in
the Employees' Retirement System of the State of Hawai'i. Accumulated sick leave at
June 30, 2007 totaled $57,063,000 for the primary government.
Leases
' Leases transferring substantially all of the risks and benefits of ownership are recorded as
capital leases; other leases are operating leases (see Note 8). Capital leases are recorded as
capital asset additions at their estimated fair market value at the inception of the lease and the
' related present value of the future minimum lease obligations is recorded as longterm debt.
Operating lease expenditures and expenses are recognized when the lease obligation is paid.
' Retirement Flan Contributions
The County's contribution to the Employees' Retirement System of the State of Hawaii
includes the normal cost plus the level annual payment required to amortize the unfunded
actuarial accrued liability. The County's policy is to fund its required contribution annually
(see Note 13).
' -51-
COUNTY OF HAWAII
Notes to the Basic Financial Statements ,
June 30, 2007
Operating Revenues and Expenses
Revenues and expenses are distinguished between operating and nonoperating items for the '
proprietary funds. Operating revenues generally result from providing services in connection
with the proprietary funds' principal ongoing operations. The principal operating revenues of
the proprietary funds are fees charged to residents for rent and rental subsidies received from
the federal government. '
Operating expenses include the costs associated with providing housing for tenants, such as ,
utilities, lease rent, and maintenance and repairs; administrative expenses; and depreciation
on capital assets. All revenues and expenses not meeting these definitions are reported as
nonoperating revenues and expenses.
Use of Estimates
The preparation of the basic financial statements in conformity with GAAP requires ,
management to make estimates and assumptions that affect the reported amounts of assets and
liabilities, as well as disclosure of contingent assets and liabilities at the date of the financial
statements, and the reported amounts of revenues, expenditures, and other financing sources
and uses during the reporting period. Actual results could differ from those estimates.
2. STEWARDSHIP, COMPLIANCE AND ACCOUNTABILITY ,
Annual Budget
The County follows these procedures in establishing its operating and capital budgets:
• On or before March 1, the Mayor submits to the County Council proposed operating and ,
capital projects budgets for the fiscal year commencing the following July 1. The
operating budget includes proposed expenditures for the general fund and special
revenue funds, and the means of financing them. A project length budget is submitted to ,
the County Council for the capital projects fund.
• The Mayor submits to the County Council amendments to the proposed operating and
capital budgets within ten working days after the close of the state legislature, but not
later than May 5.
• The County Council conducts public hearings on the proposed operating and capital '
budgets after March 1 but prior to the first reading on the budget bills, which must be
after May 5.
• On or before June 30, the County Council adopts the budgets. The legal level of
budgetary control is the department level because the Mayor can transfer funds from any
unencumbered appropriation to another within a department or agency without County
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COUNTY OF HAWAII
' Notes to the Basic Financial Statements
June 30, 2007
' Council approval. During the year, the budget may be amended by action of the County
Council, except for appropriations required by law and appropriations for debt service,
' which may not be decreased or deleted. Supplemental appropriations were made during
the 2006-2007 fiscal year to recognize revenue from sources not anticipated at the time
of the original budget and to establish the authorization for such funds to be expended.
Such supplemental appropriations totaled $20.4 million in the general fund and $8.9
million in the special revenue funds. Legally adopted budgets include the General Fund,
Highway Fund, Sewer Fund, Solid Waste Fund, Cemetery Fund, Parking Meter Fund,
' Vehicle Disposal Fund, Bikeway Fund, Workforce Investment Act Fund, Golf Course
Fund, Geothermal Relocation Revolving Fund, Beautification Fund, Housing Agency
and Park Dedication Fund.
' • Appropriations for the operating budget lapse at the end of the fiscal year to the extent
that they have not been expended or encumbered. Appropriations for capital
expenditures that are not encumbered lapse at the end of two fiscal years following the
fiscal year that the appropriation was made.
• Formal budgetary integration is employed as a management control device during the
year for the general fund, special revenue funds, and capital projects fund. Formal
budgetary integration is not employed for debt service funds because effective budgetary
control is alternatively achieved through general obligation bond indenture provisions.
' The accompanying statement of revenues, expenditures and changes in fund balances--
budget and actual (budgetary basis) for the general fund presents a comparison of the
legally adopted budget with actual data on a budgetary basis. Accounting principles
applied for purposes of developing data on a budgetary basis differ significantly from
those used to present financial statements in conformity with GAAP. On the budgetary
basis, intergovernmental revenues are recognized when awarded by the granting agency,
encumbrances and unexpended allotments are treated as expenditures, accounts payable
are not accrued, and all leases are treated as operating leases. In preparing the financial
statements on a GAAP basis, accounts payable are accrued and treated as a reduction of
' encumbrances for balance sheet presentation.
-53-
COUNTY OF HAWAII
Notes to the Basic Financial Statements '
June 30, 2007 '
Budget to GAAP Reconciliation ,
The following is a summary of the adjustments necessary to convert fund balances of the '
County's general fund from a GAAP basis to a budgetary basis at June 30, 2007:
General Fund '
Ending fund balance- GAAP basis $44,610,351
Encumbrance adjustments: '
Beginning encumbrances and unexpended allotments 7,850,955
Ending encumbrances and unexpended allotments (12,518,470)
Other adjustments (4.323.541)
Ending fund balance - Non-GAAP budgetary basis WWI=
3. CASH AND INVESTMENTS
The Director of Finance is responsible for the safekeeping of all monies paid to the County.
The Director of Finance invests any monies of the County which in the Director's judgment
are in excess of the amounts necessary for meeting the day-to-day operating needs of the ,
County. Legally authorized investments include obligations of or guaranteed by the U.S.
government, obligations of the State, federally insured savings and checking accounts, time
certificates of deposit, and repurchase agreements with federally insured financial institutions. ,
Cash
The County maintains approximately 18 bank accounts for various purposes at locations
throughout the state. Bank deposits are under the custody of the Director of Finance. For
financial statement reporting purposes, cash and short-term investments consist of cash, time '
certificate of deposit, and money market accounts. Cash and short-term investments also
include repurchase agreements and U.S. government securities with original maturities of
three months or less. ,
The carrying amount of the County's unrestricted and restricted deposits (cash, time
certificates of deposit, and money market accounts) as of June 30, 2007 was $136,887,257
and $311,788, respectively, for the primary government and $6,177,651 and $637,000,
respectively, for the fiduciary funds.
Information relating to bank balance, insurance and collateral of cash deposits is determined
on a county-wide basis. Total bank balances of deposits for the primary government and
fiduciary funds amounted to $249,548,841 at June 30, 2007. Of that amount, $249,374,585
represents bank balances covered by federal deposit insurance or by collateral held by the
County's fiscal agents in the name of the County. The remaining bank balances of $174,256
represent deposits held by a management agent and were uncollateralized. Accordingly, these
-54- ,
COUNTY OF HAWAII
' Notes to the Basic Financial Statements
' June 30, 2007
' deposits were exposed to custodial credit risk. Custodial credit risk is the risk that in the
event of a bank failure, the County's deposits may not be returned to it. For demand or
' checking accounts and time certificates of deposit, the County requires, in accordance with
State statutes, that the depository banks pledge collateral based on the available bank balances
to limit its exposure to custodial credit risk. All securities pledged as collateral are held by
the County's fiscal agents in the name of the County. The County also requires that no more
than 60% of the County's total funds available for deposit may be deposited in any one
financial institution, in accordance with State statutes.
Investments
The County holds investments both for its own benefit and on behalf of some of the Fiduciary
Funds. The County's investments of funds not required for immediate payments are
predominately comprised ofU.S. government securities (all rated AAA), while equity
securities are held by the fiduciary fund.
' The County's investments and maturities at June 30, 2007 are as follows:
' Maturity (in years)
Fair Value Less than 1 1-5
Investments - Primary Government:
' Certificates of deposit $ 85,410,110 $ 85,410,110 $
U.S. government securities 69,003,295 44,003,295 25,000,000
$154,413,405 $12_9.413.405 25.400,000
i Investments - Fiduciary Funds: _
Certificates of deposit $3,225,232 $3,225,932 $
' Equity securities 1,104,658
Interest Rate Risk: As a means of limiting its exposure to fair value losses arising from rising
' interest rates, the County's investment policy generally limits maturities on investments to not
more than five years from the date of investment.
' Credit Risk. The County's investment policy limits investments in state and U.S. Treasury
securities, time certificates of deposit, U.S. government or agency obligations, repurchase
agreements, commercial paper, bankers' acceptances, and money market funds, or other
' securities maintaining a Triple-A rating.
Custodial Risk: For an investment, custodial risk is the risk that, in the event of failure of the
' counterparty, the County will not be able to recover the value of its investments or collateral
securities that are in the possession of an outside party. The County's investments are held by
its fiscal agent and the securities held by the fiduciary fund are held by the County. In
-55-
COUNTY OF HAWAII
Notes to the Basic Financial Statements
June 30, 2007
addition, the County requires the institutions to set aside in safekeeping, certain types of
securities to collateralize repurchase agreements.
Concentration of Credit Risk. The County's investment policy contains no limitations on the '
amount that can be invested in any one issuer beyond that stipulated by the Hawaii Revised
Statutes.
Restricted Cash and Cash Equivalents and Investments
Cash and cash equivalents and investments classified as restricted assets amounted to ,
$948,788 at June 30, 2007 and consist of the following:
Primary government $311,788 ,
Fiduciary funds 637,000
$90,188 1
The County entered into a capital lease to purchase a new financial accounting computer
system. Upon execution of the lease documents, the leasing company deposited into an '
escrow account in the County's name the full lease proceeds. As progress billings are
received for the new system, the County will authorize withdrawals from this escrow
account to pay the bills. The balance in this account at June 30, 2007 was $80,569.
Tenant security deposits received by the County for the Kulaimano Elderly Housing
Project and the Ouli Ekahi Affordable Housing Project are recorded as restricted assets.
Such funds amounted to $10,625 and $22,009, respectively, at June 30, 2007. '
Restricted amounts set aside by the Kulaimano Elderly Housing Project under its loan
agreement with the Farmers Home Administration totaled $183,832 at June 30, 2007. This '
amount is restricted for debt service, or for other purposes with prior approval from the
Farmers Home Administration. An operating reserve fund was established by the Ouli
Ekahi Affordable Housing Project pursuant to an agreement with the developer of the ,
project. This restricted reserve amounted to $14,753 at June 30, 2007.
The Improvement District No. 17 Fund has restricted $637,000 as a bond reserve at ,
June 30, 2007 to comply with the requirements of its Kaloko Subdivision bond issuance.
-56-
COUNTY OF HAWAII
' Notes to the Basic Financial Statements
' June 30, 2007
' 4. RECEIVABLES
' Receivables as of June 30, 2007, for the County's individual major funds and nonmajor funds
in the aggregate, including the applicable allowances for uncollectible accounts, are as
follows:
' Governmental activities:
Capital Nonmajor
General Projects Governmental
Fund Fund Funds Total
Receivables:
Real property taxes $ 7,631,259 $ $ $ 7,631,259
Accounts receivable:
Sewer 1,973,637 1,973,637
' Solid waste 2,649,110 2,649,110
Capital projects 878,665 878,665
Intergovernmental 6,373,988 7,516,935 719,291 14,610,214
Gross receivables 14,005,247 8,395,600 5,342,038 27,742,885
Less: allowance for
uncollectibles 1 6~ , 00,120) 51,600,120)
Net total receivables $14.005.247 ~9 6QQ $3.741.918 $2 ,142.765
Business-type activities:
Enterprise
Funds
Receivables:
Accounts receivable:
Rent $57,709
Other 2,531
Gross receivables 60,240
Less: allowance for
' uncollectibles Net total receivables 560.240
During fiscal year 2005, the County issued $3,887,493 in general obligation bonds on behalf
of Improvement District No. 18, an agency fund. At June 30, 2007, the outstanding balance
of $3,804,937 is reflected in the government-wide statement of net assets as a receivable (see
Note 10).
-57-
COUNTY OF HAWAII
Notes to the Basic Financial Statements ,
June 30, 2007 ,
5. INTERFUND RECEIVABLES AND PAYABLES '
Interfund receivables and payables consist of the following at June 30, 2007: '
Receivable Fund Payable Fund Amount
General fund Capital projects fund $ 10,679 ,
Other governmental funds 410,680
421,359
Capital projects fund General fund 185,056
Other governmental funds 80,186
265,242
Other governmental funds General fund 77,363
Capital projects fund 275,100
Other governmental funds 30,652 ,
383,115
Total SIMML6
Other governmental funds Enterprise funds 12-7M
'
The above interfund balances result from the time lag between the dates that interfund goods
and services are provided or reimbursable expenditures occur, transactions are recorded, and '
payment between funds are made.
Transfers for the fiscal year ended June 30, 2007 consisted of the following:
Transfers out:
Nonmajor
General Governmental
Fund Funds Total
Transfers in: '
Capital projects fund $9,244,816 $6,141,687 $ 15,386,503
Nonmajor governmental funds 43,752,217 43,752,217
552.997.033 $ 17- 59,138,720 ,
The interfund transfers noted above include transfers from the general fund to provide
support for various County programs and to provide resources for the payment of debt '
services. In addition, some of the nonmajor governmental funds have made transfers to the
capital projects fund for the construction of various projects.
-58-
COUNTY OF HAWAII
Notes to the Basic Financial Statements
' June 30, 2007
6. CAPITAL ASSETS
Capital asset activity for the year ended June 30, 2007 for the County was as follows:
' Balance Balance
June 30, Retirements/ June 30,
' 2006 Additions Transfers 2007
Governmental activities:
Capital assets not being depreciated:
Land $ 22,737,854 S 261,314 $ S 22,999,168
Construction in
progress 86,742,320 28,253,686 (5,229,565) 109,766,441
Total capital assets not
being depreciated 109,480,174 28,515,000 [5,229,565) 132,765,609
Capital assets being depreciated:
Buildings and
improvements 265,234,373 3,180,636 268,415,009
Machinery and
equipment 76,509,196 10,232,837 (2,228,193) 84,513,840
' Infrastructure 258,162,085 13,024,276 - 271,186,361
Total capital assets
being depreciated 599,905,654 26,437,749 (2,228,193) 624,115,210
' Less accumulated depreciation for:
Buildings and
improvements (45,346,622) (3,391,324) (48,737,946)
' Machinery and
equipment (44,654,333) (5,166,983) 1,545,099 (48,276,217)
Infrastructure (102,784,281) (11,160,605) (113,944,886)
Total accumulated
depreciation (192,785,236) (19,718,912) 1,545,099 (210,959,049)
Total capital assets,
being depreciated,
net 407,120,418 6,718,837 (683,094) 413,156,161
Governmental
activities capital
assets, net X516.600.592 $35.233.837 05.912.659) $545.921.770
-59-
COUNTY OF HAWAII
Notes to the Basic Financial Statements
June 30, 2007
Balance Balance
June 30, Retirements/ June 30, ,
2006 Additions Transfers 2007
Business-type activities:
Capital assets not being depreciated: '
Land $ 753,877 $ 753,877
Capital assets being depreciated:
Buildings 1,136,008 1,136,008
Ground and site
improvements 261,000 261,000
Furnishings and
equipment 93,946 3,387 (2,837) 94,496
Total capital assets '
being depreciated 1,490,954 3,387 (2,837) 1,491,504
Less accumulated depreciation for: ,
Buildings (658,589) (24,615) (683,204)
Ground and site
improvements (170,893) (3,755) (174,648)
Furnishings and ,
equipment (78,429) (5,296) 2,459 (81,266)
Total accumulated
depreciation (907,911) (33,666) 2,459 (939,118) ,
Total capital assets,
being depreciated, ,
net 583y043 31 0,279) 378 552,386
Business-type
activities capital '
91) _7$~ 30b.2G3
assets, net $1,3~6 9 0 MI X91)
-60-
COUNTY OF HAWAII
Notes to the Basic Financial Statements
1 June 30, 2007
Depreciation expense was charged to functions/programs of the primary government as
follows:
Governmental activities:
General government $ 1,397,729
Public safety 1,840,133
Highways and streets 12,261,153
Sanitation 3,021,822
Health, education and welfare 110,744
Culture and recreation 1,087,331
Total depreciation expense - governmental activities 11171&21-2
Business-type activities:
Kulaimano Elderly Housing Project $33,666
Total depreciation expense - business-type activities $3 3,666
7. DEFERRED REVENUE
Deferred revenue consists of the following at June 30, 2007:
Capital Other Total
General Projects Governmental Governmental
Fund Fund Funds Funds
Real property taxes $ 7,969,370 $ $ $ 7,969,370
Liquor control revenue 155,870 155,870
Sewer revenue 1,127,318 1,127,318
Solid waste revenue 1,895,309 1,895,309
Intergovernmental 3,206,998 7,407,157 29,287 10,643,442
Total presented in
fund financial
statements 11,332,238 7,407,157 3,051,914 21,791,309
' Less adjustments for
accrual of revenues (7,631,259) (3,022,628) (10,653,887)
Total government-
wide financial
statements $ 3.700.979 $ 29.286 11.137 42
Enterprise
Funds
Unearned rental income X2.858
-61-
COUNTY OF HAWAII
Notes to the Basic Financial Statements ,
June 30, 2007
8. LEASES
The County leases machinery and equipment under noncancellable leases expiring at various ,
dates through April 2012 which meet the criteria for capitalization. These capital leases are
financed from general fund resources.
The estimated value of the leased machinery and equipment at the inception of the capital
leases and accumulated depreciation, amounting to $10,780,339 and $3,940,848, respectively,
and the related present value of the remaining obligations under the capital leases amounting
to $4,085,735 at June 30, 2007 are included in capital assets and long-term debt, respectively.
The County also leases land, office facilities and other equipment under noncancellable
operating leases expiring through July 2020. Expenditures for such operating leases were
$1,763,493 for the fiscal year ended June 30, 2007.
The future minimum obligations under capital and operating leases at June 30, 2007 are as
follows:
Governmental
Activities -
Capital Operating
Leases Leases
Year Ending June 30:
2008 $1,560,143 $1,824,436
2009 1,061,387 1,691,017
2010 859,545 1,237,408
2011 546,924 1,147,365
2012 385,235 96,519 '
2013 - 2017 179,401
2018 - 2021 - 1,110
Total minimum lease payments 4,413,234 $,177,25_6 ,
Less amount representing
interest (327,499)
Obligations under capital leases ,
9. SOLID WASTE LANDFILL CLOSURE AND POSTCLOSURE CARE COSTS
Hilo Landfill The County owns and operates a landfill located in the city of Hilo. State and
federal laws require the County to place covers on certain landfill sites and to monitor and ,
maintain the sites for thirty years after the facility is closed. Although the closure and
postclosure care costs will be paid near and after the date that the landfill stops accepting
waste, the County recognizes a portion of the closure and postclosure care costs in each
-62-
COUNTY OF HAWAII
Notes to the Basic Financial Statements
June 30, 2007
operating period. The liability for these costs is included in the government wide statement
of net assets. The amount recognized each year is based on the landfill capacity used as of
the balance sheet date. At June 30, 2007, the County recognized a liability of $12,855,000,
based on the use of 96% of the estimated capacity of the landfill. During the fiscal year
ended June 30, 2007, $227,819 was spent on closure of the landfill. The remaining $571,449
in estimated cost of closure and postclosure care will be recognized as the remaining
estimated capacity is used. The estimated remaining useful life of the landfill is
approximately four years. These amounts are based on what it would cost to perform the
required closure and postclosure care in 2007. Actual costs at that time may be higher due to
inflation, changes in technology, or changes in regulations.
The County's permit to operate the landfill expired October 9, 1998. The County filed for an
extension which was approved by the state until permitted capacity is reached. In accordance
with state statute, the County is allowed to continue operations provided that the County acts
consistently with the permit previously granted and the extension application, plans,
specifications and all other information contained therein.
Kealakehe In October 1993, the County closed its Kealakehe landfill in Kona. Under state
and federal requirements, the County would have to monitor and maintain this site for ten
years from the closure date. However, the County anticipates monitoring and maintaining the
site for thirty years because there is presently a subterranean fire which requires active
' management. The estimated cost of closure and postclosure is $15,250,000, based on what it
would cost to perform the required closure and postclosure care in 2007. Actual costs may be
higher due to inflation, changes in technology, or changes in regulations. Through
June 30, 2007, $6,863,972 was spent on closure and postclosure care of the landfill. The
remaining estimated liability of $8,386,000 is included in the government-wide statement of
net assets. During the year ended June 30, 2007, nothing was spent on this landfill. The
County is providing financial assurance for postclosure care and remediation through self
insurance as explained below.
Pu'uanahulu In May 1993, the County contracted with a private company to construct and
operate a new landfill on County land at Pu'uanahulu in West Hawai` i. The present contract
calls for County employees to perform the daily operations of the landfill, and for the private
company to retain the overall management as well as perform all construction work on the
landfill cells. Under the terms of the contract, the County has no responsibility for
remediation, closure or postclosure care. Accordingly, no liability for this landfill is included
in the County's financial statements.
Financial Assurance For fiscal year 2007, the County has provided for financial resources
that will be available to provide for closure, postclosure care and remediation or containment
of environmental hazards at the above landfills, except Pu`uanahulu. The Environmental
Protection Agency's financial assurance rules include a local government financial test
consisting of a financial component, a public notice component, and a recordkeeping
-63-
COUNTY OF HAWAII
Notes to the Basic Financial Statements
June 30, 2007
component. Local governments are required to satisfy each of the three components to pass
the annual test. Management believes that the County has satisfied each of the components of
the local government financial assurance requirements.
10. LONG-TERM DEBT
General Obligation Bonds
The County issues general obligation bonds to provide funds for the acquisition and
construction of major capital facilities. These bonds have been issued by the County for the
primary government, component unit activities (see Note 14) and an improvement district.
The following is a summary of general obligation bond transactions reported in the
government wide statement of net assets for the County for the fiscal year ended June 30,
2007:
Bonds Issue Bond Balance Bond Balance Due within
Authorize- d Amount June 30, Issues Retirements June 30, 2007 one year
1993 Ref & PI $86,770,000 $ 35,565,000 $ - $ 4,295,000 $ 31,270,000 $ 4,530,000
1999 Series A 30,000,000 25,160,000 22,170,000 2,990,000 1,455,000
1999 Refunding 18,940,000 2,710,000 - 2,710,000 - -
2001 Series A 23,000,000 13,871,739 11,223,913 2,647,826 622,826
2003 Series A 36,310,000 36,310,000 1,440,000 34,870,000 1,470,000
2004 Series A 30,000,000 30,000,000 - - 30,000,000 1,130,000 ,
2004 Ref Series B 19,545,000 19,545,000 1,600,000 17,945,000 1,665,000
2004 Ref Series C 5,050,140 4,602,776 - 456,588 4,146,188 465,812
2004 PI Series A 2,776,400 2,776,400 - 34,317 2,742,083 35,947
2004 PI Series B 920,000 920,000 - 12,246 907,754 12,782
2004 PI Series C 191,093 191,093 - 35,993 155,100 37,073
2006 Series A 25,000,000 25,000,000 25,000,000 757,500
2007 Series A 85,000,000 85,000,000 85,000,000
2007 Series B 20,820,000 20,820,000 20,820,000 -
2007 Series C !0,787,388 10,787,388 10,787,x88 -
395,110,021 196,652,008 116,607,388 43,978,057 269,281,339 12,181,940
Add unamortized
premium 5,420,154 3,296,826 1,789,402 226,272 4,859,956 271,008
Less deferred amount
)
on refunding (2,928,759) (1,099,902 (1,534,757) (206J28) (1428,521) (248,722
9, 191 X271.712.774 $j2Z4,22
LMZ0..1.41St 1198.848932 $116_$62.033 S43
-64.
,
COUNTY OF HAWAII
Notes to the Basic Financial Statements
June 30, 2007
General obligation bonds payable reported on the government wide statement of net assets at
June 30, 2007 are comprised of the following individual issues:
Public improvement and/or refunding bonds:
1993 Refunding & PI at 5.5% to 5.6%, due through 2013 $ 31,270,000
1999 Series A at 5.75% to 6.0%, due through 2009 2,990,000
2001 Series A at 4.0% to 4.5%, due through 2010 2,647,826
2003 Series A at 2.0% to 5.125%, due through 2023 34,870,000
2004 Series A at 3.0% to 5.25%, due through 2024 30,000,000
' 2004 Refunding Series B at 3.5% to 5.0%, due through 2015 17,945,000
2004 Refunding Series C at 2.5% to 3.7%, due through 2014 4,146,188
2004 PI Series A at 4.75%, due through 2039 2,742,083
2004 PI Series B at 4.375%, due through 2039 907,754
2004 PI Series C at 3.0%, due through 2010 155,100
2006 Series A at 4.0% to 5.0%, due through 2026 25,000,000
2007 Series A at 4.0% to 5.0%, due through 2027 85,000,000
2007 Series B at 3.75% to 5.0%, due through 2018 20,820,000
2007 Series C at 4.0% to 5.0%, due through 2021 10,787,388
' Total general obligation bonds payable $269.281.339
Annual debt service requirements to maturity for the above general obligation bonds are as
r follows:
Governmental Activities
Fiscal year ending June 30: Principal Interest
2008 $ 12,181,940 $ 12,159,202
2009 15,426,981 11,765,031
2010 16,198,683 11,008,188
2011 16,950,530 10,264,615
2012 17,757,789 9,476,301
2013 - 2017 71,644,063 35,630,272
2018 - 2022 61,310,954 20,241,562
2023 -2027 49,454,033 6,849,813
2028 -2032 6,924,223 546,791
2033 -2037 834,012 240,020
2038 -2040 598,131 42,592
Total $269.281.339 $118.224.387
-65-
COUNTY OF HAWAII
Notes to the Basic Financial Statements
June 30, 2007
Refunded Bonds
2047 Series B In fiscal year 2007, the County issued $20,820,000 in refunding bonds as the
2007 Series B general obligation bond issue. The refunding bonds have a true interest cost of
3.900% and were issued to advance refund the $20,795,000 of callable bonds outstanding of
the 1999 Series A general obligation bond issue.
The bonds refunded bore interest at rates ranging from 5.125% to 5.625%. The par amount of
$20,820,000 plus a premium of $900,326 and a payment of $235,039 from the debt service
fund, minus $140,110 in underwriting fees, insurance and other issuance costs resulted in net
proceeds of $21,815,255. The net proceeds were used to purchase U.S. government
securities, which were deposited in an irrevocable trust administered by an escrow agent and
will provide full payment on the outstanding 1999 Series A refunded bonds on May 15, 2009. '
The bonds were considered defeased and are not included in the government-wide statement
of net assets.
The County's total debt service requirements over the next twelve years will decrease by
$2,464,752 as a result of the refunding, and the net economic gain (difference between the
present values on the old and new debt) after taking into account all allocable costs of ,
issuance of the bonds was $1,389,253.
2007 Series C Also in fiscal year 2007, the County issued $10,787,388 in refunding bonds as
the 2007 Series C general obligation bond issue. The refunding bonds have a true interest
cost of 3.987% and were issued to advance refund the $10,627,174 of callable bonds
outstanding of the 2001 Series A general obligation bond issue.
The bonds refunded bore interest at rates ranging from 4.50% to 5.50%. The par amount of
$10,787,388 plus a premium of $409,477 and a payment of $23,218 from the debt service
fund, minus $78,408 in underwriting fees, insurance and other issuance costs resulted in net
proceeds of $11,141,675. The net proceeds were used to purchase U.S. government
securities, which were deposited in an irrevocable trust administered by an escrow agent and
will provide full payment on the outstanding 2001 Series A refunded bonds on July 15, 2011.
The bonds were considered defeased and are not included in the government-wide statement
of net assets.
The County's total debt service requirements over the next fifteen years will decrease by
$1,062,695 as a result of the refunding, and the net present value savings was $851,672.
As of June 30, 2007, bonds outstanding considered defeased amounted to $31,422,174.
Bond Premiums
During the year, a bond premium of $1,789,402 was received from the 2007 Series A general
obligation bonds. At June 30, 2007, total unamortized bond premiums were $4,859,956,
which is being amortized over the remaining fife of the respective bond issues. ,
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COUNTY OF HAWAII
Notes to the Basic Financial Statements
June 30, 2007
Bonds Authorized and Unissued
The County Council has authorized the issuance of $47 million in general obligation bonds to
finance specified capital improvement projects. At June 30, 2007, $7 million were not yet
issued.
Subsequent Events On September 11, 2007, the County Council authorized the issuance
of $40 million in general obligation bonds to finance a portion of the Waikoloa
Workforce Housing Project. In addition, on October 19, 2007, the County Council
authorized the issuance of $147,000 in general obligation bonds for the Department of
Water Supply to finance the Andrade Camp waterline improvements.
State Revolving Fund Loans
The County has obtained loans to assist in financing mandated wastewater projects from the
State Water Pollution Control Revolving Fund (SRF). The purpose of this revolving fund is
to provide low-interest, long-term loans and other financial assistance to the four counties in
the state to finance construction of wastewater projects. The County has fifteen projects
approved for funding with these loans. The schedule below shows the County's SRF
transactions for the fiscal year ended June 30, 2007:
Loans Approved Loan Balance Loan Balance Due within
Au on ed Arnoun June 30, 2006 Additions- Retirements June 30 2007 one year
Hilo WWTP $12,724,311 $ 5,244,784 $ S 694,910 $4,549,874 S 712,283
Waiakea Mill 1,300,000 602,676 68,987 533,689 70,711
WaiakeaHslts 459,321 190,098 - 25,187 164,911 25,817
WaiakeaHshs 11 5,024,266 3,723,065 244,084 3,478,981 250,506
Ainako A&B 2,239,174 1,079,618 117,450 962,168 119,882
Kalanianaole 1,499,944 850,372 - 78,686 771,686 81,080
KalanianaoleRH 5,000,000 1,455,696 - 63,337 1,392,359 65,043
Alii Drive A&B 3,210,243 1,537,828 Y 173,943 1,363,885 178,813
AM Drive C&D 3,780,000 2,031,078 195,781 1,835,297 199,835
Ahi Drive E&F 2,112,654 1,288,364 - 111,993 1,176,371 115,400
Waiaha Bay 3,697,893 2,050,838 - 191,394 1,859,444 196,752
Kealakehe 1,300,071 601,578 68,861 532,717 70,583
Holualoa Bay 3,080,000 1,901,109 156,369 1,744,740 161,127
PaukaaCCS 2,143,448 1,558,119 103,564 1,454,555 105,978
Cesspool Conv 8,908,035 6,254,922 6,254,922 302,487
Pahoehoe 2.817.760 2.298.119 126.967 2.171.152 130.308
$59.297.120 526.413.342 ~ 9 ~Q246.~5.1
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COUNTY OF HAWAII
Notes to the Basic Financial Statements
June 30, 2007
The loans bear interest at 0.50% to 3.02%, exclusive of a 1.00% loan fee for all loans except
for the Hawaii County Cesspool Conversion Project which is subject to a 0.25% loan fee, and
require payments through fiscal year 2027. Debt service to maturity for disbursements to date
on these projects are as follows:
Governmental Activities
Fiscal year ending June 30: Principal Interest
2008 $ 2,786,605 $ 942,190
2009 2,856,028 866,454
2010 2,923,237 792,777
2011 2,992,267 717,132
2012 3,062,984 639,648
2013 - 2017 10,199,622 1,625,292
2018 - 2022 3,688,237 269,653
2023 -2027 1,737,771 40,345
Total $30,246,751 $5193,491
Other General Long-Term Obligations
The following is a summary of other general long-term obligations transactions for the fiscal
year ended June 30, 2007:
Balance Deductions Balance Due within
June 30, 2006 Additions & Payments June 30, 2007 one ear
Governmental activities:
Compensated absences $24,066,380 $11,071,723 9,389,945) $25,748,158 $ 6,606,708
Claims and judgments
(see Note 12) 21,340,393 1,495,883 (4,527,984) 18,308,292 3,282,252
Capital lease obligations
(see Note 8) 2,864,515 2,402,731 (1,181,511) 4,085,735 1,418,078
Landfill closure costs
(see Note 9) 18,663,000 2,806,000 _(228,000) 21,241,000 183,103
Total 66.934,288 S17,776,337 ($15.3_27,440) $69.383,185 $11,490.141
Fund Balances - Debt Service Funds
The fund balance in the debt service funds at June 30, 2007 includes $16,990,625, which is
available for principal payments on general obligation bonds and $1,770,527, which is ,
reserved for the payment of interest on the bonds.
Enterprise Fund Notes Payable
The Kulaimano Elderly Housing Project (Project) is indebted to the U.S. Department of
Agriculture, Farmers Home Administration on two notes payable with balances aggregating
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COUNTY OF HAWAII
Notes to the Basic Financial Statements
' June 30, 2007
$995,854 at June 30, 2007. The notes, which mature in September 2029, are repayable in
monthly installments of $7,826 including interest and are collateralized by substantially all of
the project's property and equipment. Although the stated annual rate of interest on the notes
is 9%, such rate is reduced to 7% for as long as the Project has a U.S. Department of Housing
and Urban Development Section 8 Housing Assistance Payment contract in effect for all or
part of the units within the Project.
The following is a summary of enterprise fund notes payable transactions for the fiscal year
ended June 30, 2007:
Balance at June 30, 2006 $1,019,386
Deductions (23,532)
Balance at June 30, 2007 995,854
Less current portion (24,994
Note payable, net of
current portion $ 970.$Q
The following is a summary of the annual maturities for the enterprise fund notes payable:
Business-type Activities
Fiscal year ending June 30: Principal Interest
2008 $ 24,994 $ 68,918
2009 26,801 67,111
2010 28,738 65,174
2011 30,816 63,096
2012 33,043 60,869
2013 - 2017 204,694 264,866
2018 - 2022 290,179 179,381
2023 -2027 356,589 59,124
Total $925,85A $828,539
Special Assessment Bonds
The County has outstanding special assessment bonds for one improvement district. In 1991,
the County issued $14 million of special assessment bonds for Improvement District No. 17,
Kaloko Subdivision, to finance a roadway and water system. In 2001, the County refunded
the remaining bonds outstanding of $6,370,000. The bonds mature annually through 2011
and bear interest at 7.375%.
Total special assessment bonds payable were $3,870,000 at June 30, 2007. These are not
general obligation bonds and the County is not obligated in any manner for the repayment of
these bonds. The bonds are secured by a first lien on the land benefited by the improvements,
and are to be repaid from the annual assessments levied against the owners of the land. The
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COUNTY OF HAWAII
Notes to the Basic Financial Statements
June 30, 2007
County acts as an agent for the property owners within the improvement districts to collect
assessments receivable, forward payments to bond-paying agents at appropriate dates and, if
required, administer foreclosure proceedings. Accordingly, these bonds are not reflected on
the County's government wide statement of net assets.
The following is a summary of special assessment bond transactions for Improvement District
No. 17, Kaloko Subdivision, for the fiscal year ended June 30, 2007:
Balance at June 30, 2006 $4,490,000
Deductions (6L10001
Balance at June 30, 2007 _
The following is a summary of the annual maturities for the special assessment bonds:
Year ending June 30: Principal Interest
2008 $ 670,000 $260,706
2009 715,000 209,634
2010 770,000 154,875
2011 825,000 96,059
2012 890.000 32,820
4
Total $3 $754.09
The County has issued general obligation bonds on behalf of Improvement District No. 18 for
water improvements (see Note 4). The Improvement District is responsible for the payment of
the debt service on these bonds, but the County remains liable because they are general
obligations of the County. The bonds mature annually through 2039 and bear interest at 3.0%
to 4.75%. Total general obligation bonds payable included in the government wide statement
of net assets were $3,804,937 at June 30, 2007.
The bonds are secured by a first lien on the land benefited by the improvements, and are to be
repaid from the annual assessments levied against the owners of the land. The County acts as
an agent for the property owners within the improvement districts to collect assessments
receivable, forward payments to bond-paying agents at appropriate dates and, if required,
administer foreclosure proceedings.
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COUNTY OF HAWAII
Notes to the Basic Financial Statements
June 30, 2007
The following is a summary of bond transactions for Improvement District No. 18,
CoastviewlWonderview Water Improvements, for the fiscal year ended June 30, 2007:
Balance at June 30, 2006 $3,887,493
Additions
Deductions (82,556)
Balance at June 30, 2007 13,80,237
The following is a summary of the annual maturities for the improvement district general
obligation bonds:
Year ending June 30: Principal Interest
2008 $ 85,802 $ 172,927
2009 89,181 169,479
2010 92,699 165,889
2011 96,362 162,149
2012 58,449 158,883
2013 - 2017 335,659 749,990
2018 - 2022 421,386 662,267
2023 -2027 529,033 552,108
2028- 2032 664,223 413,766
2033 -2037 834,012 240,020
2038 -2040 598.131 42,593
Total $x$04.937 LAM M
11. COMMITMENTS AND CONTINGENCIES
Contractual commitments - Contractual commitments for capital projects, expenses, and
supplies at June 30, 2007, except in the enterprise funds, are reflected in the balance sheets as
fund balance reserved for encumbrances. Contractual commitments for the enterprise funds
were immaterial.
Intergovernmental revenues - The County has received federal and state grants for specific
purposes that are subject to review and audit by grantor agencies. Such audits could lead to
requests for reimbursement to the grantor agency for expenditures disallowed under terms of
the grant. In the opinion of management of the County, disallowed costs, if any, would not be
material.
Claims - Numerous claims and lawsuits have been filed against the County in the normal
course of its operations. A liability for probable losses is included on the government wide
statement of net assets (see Note 12). Although the outcome of the various claims and
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COUNTY OF HAWAII
Notes to the Basic Financial Statements
June 30, 2007 r
lawsuits is not presently determinable, in the opinion of the County's Corporation Counsel,
the resolution of such matters will not have a material adverse affect on the financial
condition of the County.
ADA compliance - The County has entered into two stipulated agreements approved by the
federal court to implement provisions of the Americans with Disabilities Act (ADA). With
respect to the first stipulated agreement relating to curb cuts, the County, with the help of a
consultant, surveyed 669 intersections, then ranked them in order of priority. A transition
plan, along with a funding commitment, was approved by the County Council. The total cost
of all curb cuts was estimated to be $6.2 million. The cost of the first phase of the plan was
$3 million, to be used in high priority areas such as government facilities, schools, and
hospitals. The remaining cost will cover curb cuts at parks and in low density single family
residential areas. All corrective action was to be completed by July 2005, with an estimated
682 ramps to be completed. Funding allocated so far for this effort is $10.6 million. Since
the proposed timetable proved to be too ambitious, the parties amended the agreement to
require contracting by July 2005, rather than completion by that date. Pursuant to the April
2005 Stipulation of the Parties and Order of the Court, all curb ramps for 2005 and most curb
ramps for 2004 were deferred. In the first phase, construction of curb ramps commenced in
2000 and ended in 2004, whereby 229 curb ramps were completed. In the second phase, 153
proposed curb ramps were deferred and 161 curb ramps were to be constructed; 151 out of
the 161 are substantially completed, the remaining 10 curb ramps are being evaluated. We
will be seeking closure of this matter with the federal court. In addition, the Department of
Public Works has developed and advertised Procedures for Requesting New Curb Ramps or
Modifications to Existing Curb Ramps within the County Streets.
The second stipulated agreement relates to the Department of Parks and Recreation (the Parks
Department). The agreement required the Parks Department to establish practices, policies
and procedures regarding its programs, and prepare a transition plan by the middle of the year
2000. The self-evaluation and transition plan for programs, practices and procedures has
been completed and approved by the County Council. The cost impact of implementation is
not material because the necessary modifications are primarily procedural. This is an
ongoing effort. The second part of this stipulated agreement is the reevaluation of all County
facilities, which was completed and accepted by the County Council on June 30, 2000.
Approximately 240 County facilities were surveyed as part of this effort. The tentative
completion date of all necessary repairs and renovations is 12 years from the date the County
Council accepted the self-evaluation. The original estimated cost of the facilities repairs was
$14.8 million, which will be spent over the 12 year period. Funding allocated so far for
facilities repairs is $17.5 million, with another $4 million of federal funding anticipated
through community development block grants over the next2 years. Since 2000, the
Department of Parks and Recreation has requested $2 to $3 million a year for the different ,
park facilities' ADA projects, and recently, the Department of Public Works has requested an
additional $2 million a year for the other County ADA facilities' project. Parties are
currently working on a plan to ensure implementation of a Transition Plan with the assistance
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COUNTY OF HAWAII
Notes to the Basic Financial Statements
June 30, 2007
of a court Monitor and an ADA Specialist, to obtain extensions on the initial deadlines for
completion that were set in the Original Transition Plan and to establish a Revised Transition
Plan to satisfy the requirements of the ADA. In addition, the County's ADA coordinator
(Equal Opportunity Officer) has access to an identifiable account of $50,000 to handle
requests for reasonable accommodations for County departments; the procedures for these
requests have been drafted, but not finalized.
12. RISK MANAGEMENT
The County is exposed to various risks of losses related to torts; theft of, damage to, and
destruction of assets; errors and omissions; injuries to employees; and natural disasters. The
County maintains fire and commercial multiple peril insurance on County facilities, flood
insurance on selected structures, medical malpractice insurance for emergency medical
technicians, general liability insurance for water safety officers, aviation liability for
helicopter operations, automobile coverage on transit buses, and no-fault insurance coverage
for privately owned police vehicles. There was no reduction in insurance coverage during the
year from coverage in the prior year. During the past three fiscal years, the amount of
settlements in cases covered by insurance have not exceeded the insurance coverage. The
County is substantially self-insured for its vehicles as well as for all other perils including
workers' compensation and general liability.
' Liabilities are reported when it is probable that a loss has occurred and the amount of that loss
can be reasonably estimated. These losses include an estimate of claims that have been
incurred but not reported (IBNR). Claim liabilities, including IBNR, are based on the
estimated ultimate cost of settling the claims, and include incremental costs for the hiring of
special counsel and expert witnesses. Claims liabilities are estimated by a case-by-case
review of all claims and the application of historical experience to outstanding claims.
Estimates of IBNR are based on historical experience. The liability for claims and judgments
is reported on the government-wide statement of net assets. At June 30, 2007, the amount of
this liability was $18,308,292. This is the County's best estimate based on available
information. Changes in the reported liability since June 30, 2005 are given below.
General Workers' Total
Liability Compensation Liabili
Balance at June 30, 2005 $9,963,152 $16,639,137 $26,602,289
Incurred claims (including IBNR)* (412,874) 52,510 (360,364)
Claim payments (1,856,902) (3,044,630) 4,9L 01,532)
Balance at June 30, 2006 $7,693,376 $13,647,017 $21,340,393
Incurred claims (including IBNR)* 403,514 1,092,369 1,495,883
Claim payments (2,093,882) (2,434,102) (4,527,984)
Balance at June 30, 2007 16,003,008 2,305,284 $18,308,292
*Net of new claims liability and old claims resolved at less than previous estimate.
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COUNTY OF HAWAII
Notes to the Basic Financial Statements
June 30, 2007 j
13. EMPLOYEE BENEFIT PLANS
Pension Plan
Plan description All full-time employees of the County participate in the Employees'
Retirement System of the State of Hawaii (System), a cost sharing multiple-employer
defined benefit pension plan. The System was established by Chapter 88 of the Hawaii
Revised Statutes (HRS) and is governed by a Board of Trustees. All contributions, benefits
and eligibility requirements are established by Chapter 88, HRS, and can be amended by
legislative action.
The System regards the County, including its component unit, as one employer. Therefore,
separate information for the primary government and its component unit is not available. All
information given below on the pension plan is for the reporting entity as a whole, including
both the primary government and its component unit.
All of the County's full-time employees are eligible to participate in the System. The System
consists of a contributory retirement plan and a noncontributory retirement plan. Eligible
employees, in service and a member of the existing contributory plan on June 30, 1984, were
given an option to remain in the existing plan or join the noncontributory plan, effective
January 1, 1985. All new eligible employees hired after June 30, 1984 generally become
members of the noncontributory plan. Both plans provide death and disability benefits and a
cost of living adjustment. In the contributory plan, employees generally may elect normal
retirement at age 55 with 5 or 10 years of credited service or elect early retirement at any age
with 25 years of credited service. Such employees are generally entitled to retirement
benefits, payable monthly for life, of 2% or 2'/z % of their average final salary, as defined, for
each year of credited service with certain limitations. Benefits fully vest on reaching five
years of service; retirement benefits are reduced for early retirement. In the noncontributory
plan, employees may elect normal retirement at age 62 with 10 years of credited service or at
age 55 with 30 years of credited service, or elect early retirement at age 55 with 20 years of
credited service. Such employees are entitled to retirement benefits, payable monthly for life,
of 1.25% of their average final salary, as defined, for each year of credited service. Benefits
fully vest on reaching ten years of service; retirement benefits are reduced for early
retirement.
On July 1, 2006, a new hybrid contributory plan will become effective pursuant to Act 179,
Session Laws of Hawaii of 2004. Members in the hybrid plan will contribute 6% of their
salary to the plan and will be eligible for retirement at age 62 with 5 years of credited service
or age 55 and 30 years of credited service. Members will receive a benefit multiplier of 2%
for each year of credited service in the hybrid plan. The benefit payment options are similar
to the current contributory plan. Most of the new employees hired from July 1, 2006 will be
required to join the hybrid plan.
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COUNTY OF HAWAII
Notes to the Basic Financial Statements
June 30, 2007
The System issues a Comprehensive Annual Financial Report that may be obtained by writing
to the Employees' Retirement System of the State ofHawai`i, 201 Merchant Street, Suite
1400, Honolulu, Hawaii 96813.
Funding policy All funding requirements are established by Chapter 88, HRS, and can be
amended by the state legislature. Covered contributory plan employees are required to
contribute 7.8% or 12.2% of their salary to the plan; the County is required to contribute the
remaining amounts necessary to pay contributory plan benefits when due. The County is also
required to contribute all amounts necessary to pay noncontributory benefits when due. The
County's contribution requirements are actuarially determined based on actuarial assumptions
established by Chapter 88, HRS. Effective July 1, 2005, employer contribution rates are a
fixed percentage of compensation, including the normal cost plus amounts required to pay for
the unfunded actuarial accrued liability. The employer contribution rates in effect at June 30,
2007 were 15.75% for Police and Fire employees and 13.75% for all other employees. The
County's contributions to the System for the fiscal years ended June 30, 2005, 2006 and 2007
were $10,487,763, $15,452,562 and $16,337,218, respectively, equal to the required
contributions for each year.
Post-Retirement Benefits
In addition to providing the pension benefits described above, the County is required by state
statute to contribute to the Hawaii Employer-Union Health Benefits Trust Fund (the EUTF),
a statewide program which provides health and group life insurance for all retired and active
County employees, their dependents and their beneficiaries. The state and other counties also
participate in the fund. For employees hired prior to July 1, 1996 who retire with at least ten
years of credited service, the County is required to pay 100% of the premiums of the medical,
adult dental, prescription drug, vision, and group life insurance plans elected by the retiree.
For employees hired prior to July 1, 1996 who retire with less than ten years of credited
service, the County is required to pay half of the monthly premium cost of the above plans.
For employees hired July 1, 1996 or after, the amount of the premium cost the County is
required to pay varies depending on the employee's years of service at the time of retirement.
Currently, the County has 1,131 former employees who have retired with at least ten years of
credited service and are receiving the full benefit. Two additional employees have retired
with less than ten years of service and have half of their medical premiums paid by the
County. For each retiree and retiree's spouse eligible for Medicare, the County also pays
$93.50 per month as reimbursement of their Medicare premiums.
The County's contribution is recorded as an expenditure when paid. The amount of the
contribution is limited by state statute to the actual cost of benefit coverage. During the fiscal
year ended June 30, 2007, the County's contribution to the EUTF for retired employees
totaled $6.8 million.
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COUNTY OF HAWAII
Notes to the Basic Financial Statements t
June 30, 2007
Deferred Compensation Plan
County employees are permitted to participate in a deferred compensation plan of the State of
Hawaii, adopted pursuant to Internal Revenue Code (IRC) section 457. The plan permits
eligible employees to defer a portion of their salary until future years by contributing to a
fund managed by a plan administrator. The deferred compensation amounts are not available
to employees until termination, retirement, death, or unforeseeable emergency.
All plan assets are held in a trust fund to protect them from claims of general creditors and
from diversion to any uses other than paying benefits to participants and beneficiaries. The
County has no responsibility for loss due to the investment or failure of investment of funds
and assets in the plans, but does have the duty of due care that would be required of an I
ordinary prudent investor. Therefore, in accordance with GASB Statement No. 32,
Accounting and Financial Reporting for Internal Revenue Code Section 457 Deferred
Compensation Plans, deferred compensation plan assets are not reported in the accompanying
basic financial statements.
14. COMPONENT UNIT DISCLOSURES
Deposits and Investments
At June 30, 2007, cash, time certificates of deposit, money market funds, and repurchase
agreements of $67,105,777, with bank balances of $69,446,242, were held by the County on
behalf of the Department. These balances were fully insured or collateralized with securities
held by the County's agent in the County's name.
The deposits and investments include investments received by the Department that are
refundable or restricted as to use, and is recorded as a restricted asset. Such funds amounted
to $16,207,996 at June 30, 2007.
At June 30, 2007, the Department's investment portfolio consists primarily of repurchase
agreements, certificates of deposit, and a discounted note held by the County on behalf of the
Department.
Capital Assets
The Department began operations as of January 1, 1950. At that date, the utility plant in
service was transferred to the Department from the County at the cost of the utility plant
assets acquired by the County for its water system from January 1, 1924 to
December 31, 1949, less accumulated depreciation. Acquisitions prior to 1924 and
acquisitions by gift or grant prior to 1950 are not included in utility plant. Additions to utility
plant since January 1, 1950 are stated at original cost and include contributions by
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COUNTY OF HAWAII
Notes to the Basic Financial Statements
I June 30, 2007
governmental agencies, private subdividers and customers at their cost or estimated cost.
Construction costs include amounts for contract work, engineering supervision and other
direct and indirect costs. Construction period interest is capitalized on utility plan constructed
with tax-exempt debt.
Depreciation on the Department utility plant assets in service is computed using the
straight-line method over the estimated useful lives of the assets as follows:
Structures and improvements 40 to 50 years
Machinery and equipment 5 to 20 years
Water systems 10 to 40 years
' The capital assets of the Department at June 30, 2007 were as follows:
Utility plant in service $295,675,414
Less: accumulated depreciation (140.830 13)
154,841,401
Land and rights 815,962
Construction in progress 42,489,082
Net capital assets $198.146.445
Long-Term Debt
The County has issued general obligation bonds on behalf of the Department. The
Department is responsible for the payment of the debt service on these bonds, but the County
remains liable because they are general obligations of the County. The Department has
recorded a liability for these general obligation bonds, which amounted to $36,708,368
at June 30, 2007.
i
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COUNTY OF HAWAII
Notes to the Basic Financial Statements
June 30, 2007
General obligation bonds payable issued on behalf of the Department and other long-term
debt at June 30, 2007 are comprised of the following:
Public improvement bonds:
1993 Series A at 5.05% to 5.6%, due through 2013 $ 4,395,000
1998 Series A at 4.5%, due through 2033 672,800
2001 Series A at 4.0% to 5.5%, due through 2010 1,080,000
2004 Series D at 4.5%, due through 2039 255,832
2006 Series A at 4.0% to 5.0%, due through 2026 24,242,500
Total public improvement bonds 30,646,132
Public improvement refunding bonds:
2004 Series at 5.0%, due through 2015 309,624
2007 Series at 4.0% to 5.0%, due through 2021 5,752,612
Total public improvement refunding bonds 6,062,236
State revolving fund loan, interest at 0.41% to 1.37%,
due through 2027 5,599,767
Total 42.308.13
At June 30, 2007, future principal payments for long-term debt are scheduled as follows:
Fiscal year ending June 30:
2008 $ 2,200,000
2009 2,282,000
2010 2,388,000
2011 2,528,000
2012 2,637,000
2013 - 2017 11,070,000
2018 - 2022 11,540,000
2023 -2027 7,308,000
2028 -2032 233,000
2033 -2037 100,000
2038 -2039 22,135
Total $42308.135
Contributions in Aid of Construction
Effective July 1, 2000, the Department adopted GASB Statement No. 33, Accounting and
Financial Reporting for Nonexchange Transactions, which requires the Department to
recognize contributions in aid of construction as nonoperating revenues. Contributions in aid
of construction were previously recognized as contributed capital. The Department
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COUNTY OF HAWAII
Notes to the Basic Financial Statements
I June 30, 2007
recognized $5,730,506 of contributions in aid of construction as nonoperating revenues for
the fiscal year ended June 30, 2007.
Commitments and Contingent Liabilities
Claims and judgments - The Department is self-insured for workers' compensation and
other perils. The liability at June 30, 2007 for workers' compensation claims of $202,000
was estimated based on a combination of case-by-case review and the application of historical
experience to outstanding claims.
Construction contracts - The Department is obligated under construction contracts for the
utility plant and other projects. Such commitments approximated $17,659,000 at
June 30, 2007.
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NONMAJOR GOVERNMENTAL FUNDS
SPECIAL REVENUE FUNDS
1 HIGHWAY FUND - Used to account for the costs of maintaining the County's highways and streets.
Financing is provided primarily by fuel, motor vehicle weight and public utility franchise taxes.
SEWER FUND - Used to account for costs of operating the County's various sewerage systems. Financing
is provided by charges to users for sewer services
SOLID WASTE FUND - Used to accumulate moneys for the operation, maintenance, and administration of
the County's solid waste management, collection and disposal systems. Financing is provided by tipping
fees at the landfills and by disposal permit fees.
CEMETERY FUND - Used to accumulate moneys to guarantee the future maintenance of County cemetery
' sites. Financing is provided from the sale of burial lots in County cemeteries.
PARKING METER FUND - Used to account for the costs of maintaining County on-street and off-street
parking areas. Financing is provided by the proceeds from parking meters.
VEHICLE DISPOSAL FUND - Used to accumulate moneys for the towing, removal, disposal and recycling
of abandoned or discarded automobiles and automobile parts. Financing is provided by annud fees
' collected with motor vehicle registrations.
BIKEWAY FUND - Used to accumulate moneys for the construction of bikeways within the County.
Financing is provided by bicycle license fees.
WORKFORCE INVESTMENT ACT FUND - Used to account for employment and training services
provided to economically disadvantaged adults, dislocated workers and youth. Financing is provided by
federal grants.
GOLF COURSE FUND - Used to account for the cost of operating the Hilo Municipal Golf Course.
Funding is provided from green fees and payments from restaurant and pro shop concessionaires.
GEOTHERMAL RELOCATION REVOLVING FUND -Used to account for the County's share of
geothermal resource royalties received from the operator of a geothermal power plant located in he County.
The funds are earmarked for a geothermal relocation program.
BEAUTIFICATION FUND - Used to accumulate moneys for the beautification of highways and disposal of
abandoned vehicles within the County. Financing is provided by assessments on vehile registrations.
HAWAII COUNTY HOUSING AGENCY- Used to account for Federal and County moneys used to provide
public housing assistance within the County.
PARK DEDICATION FUND - Used to account for moneys deposited with the County by subdividers to
provide land for parks and playgrounds in subdivisions.
DEBT SERVICE FUNDS
INTEREST FUND - Used to accumulate moneys for payment of interest on general obligation bonds.
Moneys required to service interest maturities are transferred annually from the Geneal Fund.
BOND REDEMPTION FUND - Used to accumulate moneys for the payment of general obligation bonds.
Moneys required to retire the bonds are transferred from the General Fund one year in advance of maturity.
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COUNTY OF HAWAII
Nonmajor Governmental Funds
Combining Balance Sheet
June 30, 2007
Special Revenue Funds
Solid Parking
Highway Sewer Waste Cemetery Meter
Fund Fund Fund Fund Fund
Assets '
Cash and cash equivalents $10,327,743 $ 8,877,990 $5,355,257 $ 50,409 $112,717
Investments - - - - -
Imprest fund - 200 250 - -
Receivables:
Due from other governments 68,098 2,983 303,206 - -
Due from other governmental funds 280,964 18,696 15,953 - - '
Due from other nongovernmental funds - 2,700 - - -
Trade, net of allowance for doubtful accounts - 1,127,318 1,895,309 - -
Other 762,646 - 765,311 - -
11111,708 1,151,697 2,979,779 - -
Total assets $11,4392451 $10,029,887 $8,335,286 $50140 9 $112,717
Liabilities and Fund Balances
Liabilities:
Accounts payable $ 658,417 $ 103,677 $1,498,868 $ - $ -
Due to other governmental funds 121,500 10,251 15,912 - -
Unearned revenue - 1,127,318 1,924,596 - -
Accrued liabilities 703 13,389 - - -
Total liabilities 780,620 1,254,635 3,4391376 - -
Fund balances:
Reserved for: '
Encumbrances 3,883,426 1,062,129 1,849,367 - -
Debt service - - - - - ,
Unreserved: 6,775,405 7,713,123 3,046,543 50,409 112,717
Total fund balances 10,658,831 8,775,252 4,895,910 50,409 112,717
Total liabilities and fund balances $11,439,451 $10,029,887 $8,335,286 $ 50,409 $112,717
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Special Revenue Funds
Vehicle Workforce Golf Geothermal Beauti- Park
Disposal Bikeway Investment Course Relocation fication Housing Dedication
Fund Fund Act Fund Fund Rev. Fund Fund Agency Fund
$2,720,175 $ 386,992 $ - $ 19,626 $ 2,588,611 $ 804,919 $ 2,411,596 $ -
- - - - - 3,204,614 80,958
- - - 2,000 - - 200 -
330,883 - - - 14,121 -
' - - - - - - 67,502
38,994 2,028 = 79,780 =
369,877 2,028 161,403
$2,720,175 $ 386,992 $ 369,877 $ 23,654 $ 2,588,611 $ 804,919 $ 5,777,813 $ 80,958
' $ 135,097 $ 75 $ - $ 1,078 $ - $ 1,163 $ 52,251 $ -
-
369,877 3,978
- - - - = - 114,103 =
135,097 75 369,877 5,056 1,163 166,354
242,171 3,232 - 54,469 1,640,416 - 2,958,542 -
t 2,342,907 383,685 = (35,871) 948,195 803,756 2,652,917 80,958
2,585,078 386,917 18,598 2,588,611 803,756 5,611,459 80,958
$2,720,175 $ 386,992 $ 369,877 $23,654 $ 2,5~ 88,611 $804,919 $ 5,777,813 $ 80,958
(Continued)
-83-
COUNTY OF HAWAII
Nonmajor Governmental Funds
Combining Balance Sheet
June 30, 2007
(Concluded)
Debt Service Funds Total
Bond Nonmajor ,
Interest Redemption Governmental
Fund Fund Funds
Assets '
Cash and cash equivalents $1,843,048 $ 1,286,597 $ 36,785,680
Investments - 15,944,028 19,229,600
Imprest fund - - 2,650
Receivables:
Due from other governments - - 719,291
Due from other governmental funds - - 383,115 '
Due from other nongovernmental funds - - 2,700
Trade, net of allowance for doubtful accounts - - 3,022,627
Other - - 1,648,759
5,776,492
Total assets $1,843,048 $ 17,230,625 $ 612794,422
Liabilities and Fund Balances
Liabilities:
Accounts payable $ - $ - $ 2,450,626
Due to other governmental funds - - 521,518
Deferred revenue - - 3,051,914
Accrued liabilities 72,521 240,000 440,716
Total liabilities 72,521 240,000 6,464,774
Fund balances: '
Reserved for:
Encumbrances - - 11,693,752
Debt service 1,770,527 16,990,625 18,761,152 ,
Unreserved: - - 24,874,744
Total fund balances 1,770 527 16,990,625 55,329 648
Total liabilities and fund balances $1,843,048 $ 17,230,625 $ 61,794,422 '
See accompanying independent auditors' report.
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COUNTY OF HAWAII
Nonmajor Governmental Funds
Combining Statement of Revenues, Expenditures, and Changes in Fund Balances (Deficit)
For the Fiscal Year Ended June 30, 2007 '
Special Revenue Funds '
Solid Parking
Highway Sewer Waste Cemetery Meter
Fund Fund Fund Fund Fund
Revenues
Fuel tax $ 8,471,453 $ - $ - $ - $ - '
Public utility franchise tax 8,520,133 - - - -
Licenses and permits 6,816,451 - - - -
Intergovernmental 409,198 2,983 1,284,311 - -
Charges for services - 7,326,584 9,118,704 - 13,478
Investment earnings - _ _ - -
Miscellaneous 484,640 92 84 11,750 - '
Total revenues 24,701,875 7,329,659 10,403,099 11,750 13,478
Expenditures
Current:
Public safety 4,916,044 - - - -
Highways and streets 10,975,887 - -
Sanitation - 5,175,592 24,391,432 - -
Health, education and welfare - - _
Culture and recreation - - _ - -
Pension and retirement contributions 1,446,438 365,161 825,225 - -
Employees' health insurance 643,513 166,605 368,697 - -
Miscellaneous 502,957 325,717 172,394 - -
Debt service:
Principal - - 819,213 - - '
Interest - - 82,098 - -
Total expenditures 18,484,839 6,033,075 26,659,059 - -
Excess (deficiency) of revenues
over expenditures 6,217,036 1,296,584 (16,255,960) 11,750 13,478
Other Financing Sources (Uses) '
Transfers in 812,000 - 14,656,244 - -
Increase in capital leases - - 2,402,731 - -
Transfers out (6,141,687) - - - _ '
Total other financing sources (uses) (5,329,687) - 17,058,975 - -
Net change in fund balances 887,349 1,296,584 803,015 111750 13,478 '
Fund balances (deficit) at beginning of year 9,771,482 7,478,668 4,092,895 38,659 99,239
Fund balances at end of year $ 10,658,831 $ 8,775,252 $ 4,895,910 $ 50,409 $112,717
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Special Revenue Funds
Vehicle Workforce Golf Geothermal Beauti- Park
Disposal Bikeway Investment Course Relocation fication Housing Dedication
Fund Fund Act Fund Fund Rev. Fund Fund Agency Fund
2~037,484 27,035 - - - 169,800 - -
- 1,652,602 - - 11,547,079
406 751,831
- - - - - - 176,226 3,187
- - - - 589,982 - 298,174 -
2,037,890 27,035 1,652,602 751,831 589,982 169,800 12,021,479 3,187
' - 6,146 = 38,786 = =
1,220,511
- - 1,652,602 - - - 13,584,884 -
- - - 845,649 - - -
17,139 - - 134,269 - - 414,324 -
105247 - - 683938 - - 139,266 -
- - - 10,612 - - -
- 1,629
_ - - - =
339
11247,897 6,146 1,652,602 1,059,468 - 38,786 14,140,442
789,993 20,889 - (307,637) 589,982 131,014 2,118,963) 3,187
- - - 342,531 - - 1,295,399 -
- - - 342,531 - - 1,295,399 -
' 789,993 20,889 - 34,894 589,982 131,014 (823,564) 3,187
1,795,085 366,028 1( 6,296) 1,998,629 672,742 6,435,023 77,771
$2,585,078 $ 386,917 $ - $ 18,598 $ 2,588,611 $ 8035756 $5,611,459 $ 80,958
(Continued)
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COUNTY OF HAWAII
Nonmajor Governmental Funds
Combining Statement of Revenues, Expenditures, and Changes in Fund Balances (Deficit)
For the Fiscal Year Ended June 30, 2007
(Concluded)
Debt Service Funds Total ,
Bond Nonmajor
Interest Redemption Governmental
Fund Fund Funds
Revenues
Fuel tax $ - $ - $ 8,471,453
Public utility franchise tax - - 8,520,133
Licenses and permits - - 9,050,770
Intergovernmental - - 14,896,173
Charges for services - - 17,211,003
Investment earnings - - 179,413
Miscellaneous - - 1,384,722
Total revenues - - 59,713,667
Expenditures
Current:
Public safety - - 4,916,044
Highways and streets - - 11,020,819 '
Sanitation - - 30,787,535
Health, education and welfare - - 15,237,486
Culture and recreation - - 845,649 '
Pension and retirement contributions - - 3,202,556
Employees' health insurance - - 1,397,266
Miscellaneous - - 1,011,680
Debt service:
Principal - 14,894,839 15,715,681 ,
Interest 9,773,759 - 9,856,196
Total expenditures 9,773,759 14,894,839 93,990,912
Excess (deficiency) of revenues
over expenditures 9,773,759) (14,894,839) 34,277,245
Other Financing Sources (Uses)
Transfers in 11,258,133 15,387,910 43,752,217
Increase in capital leases - - 2,402,731
Transfers out - - (6,141,687)
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Total other financing sources (uses) 11,258,133 15,387,910 40,013,261
Net change in fund balances 1,484,374 493,071 5,736,016
Fund balances (deficit) at beginning of year 286,153 16,497,554 49,593,632
Fund balances at end of year $1,770,527 $ 16,990,625 $55,329,648
See accompanying independent auditors' report.
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COUNTY OF HAWAII
' Highway Fund
Schedule of Revenues, Expenditures and Changes in Fund Balance -
Budget and Actual (Budgetary Basis)
' For the Fiscal Year Ended June 34, 2007
Actual Variance
' Original Final (Budgetary Positive
Budget Budget Basis) (Negative)
Revenues:
Taxes:
Fuel tax $ 7,895,000 $ 7,895,000 $ 8,471,453 $ 576,453
Public utility franchise tax 7,500,000 7,500,000 8,520,133 1,020,133
Total taxes 15,395,000 15,395,000 16,991,586 1,596,586
Licenses and permits - motor vehicle weight taxes 6,305,141 6,305,141 6,816,451 511,310
' Intergovernmental 302,817 302,817 409,198 106,381
Charges for current services 180,000 180,000 342,778 162,778
Miscellaneous 89,950 99,950 141,862 41,912
Total revenues 22,272,908 22,282,908 24,701,875 2,418,967
Expenditures:
Public safety - traffic engineering 5,435,188 5,627,188 4,796,038 831,150
Highways and streets 11,696,193 12,899,427 11,083,204 1,816,223
Highways and streets - mass transit 1,021,231 1,671,231 1,082,014 589,217
' Pension and retirement contributions 1,427,408 1,455,620 1,446,438 9,182
Health fund 918,750 750,538 643,513 107,025
Miscellaneous 1,190,000 1,190,000 493,448 696,552
Total expenditures 21,688,770 23,594,004 19,544,655 4,049,349
Excess (deficiency) of revenues over expenditures 584,138 (1,311,096) 5,157,220 6,468,316
Other financing uses - transfers in (out) -
General Fund 700,000 839,015 812,000 (27,015)
Capital Projects Fund (4,908,415) (6,168,702) (6,141,687) 27,015
Total other financing uses (4,208,415) (5,329,687) (5,329,687)
Deficiency of revenues over expenditures
' and other uses (3,624,277) (6,640,783) (172,467) 6,468,316
Fund balance at beginning of year 9,771,482 9,771,482 9,771,482 -
Fund balance at end of year $ 6,147,205 $ 3,130,699 $ 9,599,015 $ 6,468,316
See accompanying independent auditors' report.
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COUNTY OF HAWAII
Sewer Fund '
Schedule of Revenues, Expenditures and Changes in Fund Balance -
Budget and Actual (Budgetary Basis)
For the Fiscal Year Ended June 30, 2007 1
Actual Variance
Original Final (Budgetary Positive '
Budget Budget Basis) (Negative)
Revenues: 1
Charges for current services - sewer fees $ 6,355,220 $ 6,355,220 $ 7,326,584 $ 971,364
Intergovernmental - - 2,983 2,983
Miscellaneous 200 200 92 (108) 1
Total revenues 6,355,420 6,355,420 7,329,659 974,239
Expenditures: 1
Sanitation 6,173,517 6,173,517 5,302,433 871,084
Pension and retirement contributions 518,706 518,706 365,161 153,545 '
Health fund 243,475 243,475 166,605 76,870
Miscellaneous 1,126,323 1,126,323 59,787 1,066,536
Total expenditures 8,062,021 8,062,021 5,893,986 2,168,035 1
Excess (deficiency) of revenues over expenditures (1,706,601) (1,706,601) 1,435,673 3,142,274
Fund balance at beginning of year 7,478,668 7,478,668 7,478,668 - 1
Fund balance at end of year $ 5,772,067 $ 5,772,067 $ 8,914,341 $ 3,142,274 1
See accompanying independent auditors' report.
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COUNTY OF HAWAII
' Solid Waste Fund
Schedule of Revenues, Expenditures and Changes in Fund Balance -
Budget and Actual (Budgetary Basis)
' For the Fiscal Year Ended June 30, 2007
Actual Variance
' Original Final (Budgetary Positive
Budget Budget Basis) (Negative)
Revenues:
Intergovernmental $ 974,000 $ 976,500 $ 911,909 $ (64,591)
Charges for services - tipping fees 10,535,671 10,535,671 9,118,704 (1,416,967)
Miscellaneous - - 84 84
Total revenues 11,509,671 11,512,171 10,030,697 (1,481,474)
' Expenditures:
Sanitation 25,660,373 25,666,873 21,575,282 4,091,591
Pension and retirement contributions 925,500 925,500 825,225 100,275
Health fund 561,000 561,000 368,697 192,303
Miscellaneous 320,000 320,000 176,402 143,598
i Total expenditures 27,466,873 27,473,373 22,945,606 4,527,767
Deficiency of revenues over expenditures (15,957,202) (15,961,202) (12,914,909) 3,046,293
Other financing sources:
Transfers in - General Fund 14,483,706 14,487,706 14,656,244 168,538
' Excess (deficiency) of revenues and other
sources over expenditures (1,473,496) (1,473,496) 1,741,335 3,214,831
' Fund balance at beginning of year 4,092,895 4,092,895 4,092,895 -
Fund balance at end of year $ 2,619,399 $ 2,619,399 $ 5,834,230 $ 3,214,831
See accompanying independent auditors' report.
-91-
COUNTY OF HAWAII '
Cemetery Fund
Schedule of Revenues, Expenditures and Changes in Fund Balance - ,
Budget and Actual (Budgetary Basis)
For the Fiscal Year Ended June 30, 2007
Actual Variance
Original Final (Budgetary Positive ,
Budget Budget Basis) (Negative)
Revenues - miscellaneous - sale of cemetery plots $ 10,000 $ 10,000 $ 11,750 $ 1,750
Expenditures - health, education and welfare 10,000 10,000 - 10,000
Excess of revenues over expenditures - - 11,750 11,750 '
Fund balance at beginning of year 38,659 38,659 38,659 -
Fund balance at end of year $ 38,659 $ 38,659 $ 50,409 $ 11,750
See accompanying independent auditors' report. '
-92-
COUNTY OF HAWAII
Parking Meter Fund
Schedule of Revenues, Expenditures and Changes in Fund Balance -
Budget and Actual (Budgetary Basis)
For the Fiscal Year Ended June 30, 2007
Actual Variance
' Original Final (Budgetary Positive
Budget Budget Basis) (Negative)
' Revenues-
Charges for current services - highways and streets $ - $ - $ 13,478 $ 13,478
' Expenditures -
Highways and streets - - - -
' Excess of revenues over expenditures - - 13,478 13,478
Fund balance at beginning of year 99,239 99,239 99,239
Fund balance at end of year $ 99,239 $ 99,239 $ 112,717 $ 13,478
See accompanying independent auditors' report.
-93-
COUNTY OF HAWAII ,
Vehicle Disposal Fund
Schedule of Revenues, Expenditures and Changes in Fund Balance - '
Budget and Actual (Budgetary Basis)
For the Fiscal Year Ended June 30, 2007
Actual Variance
Original Final (Budgetary Positive '
Budget Budget Basis) (Negative)
Revenues:
Licenses and permits - vehicle disposal fee $1,908,000 $ 1,908,000 $ 2,037,484 $ 129,484
Charges for services - towing charges - - 406 406 '
Total revenues 1,908,000 1,908,000 2,037,890 129,890
Expenditures: '
Sanitation 2,740,769 2,740,769 1,253,319 1,487,450
Pension and retirement contributions 25,050 25,050 17,139 7,911
Health fund 20,700 20,700 10,247 10,453
Total expenditures 2,786,519 2,786,519 1,280,705 1,505,814
Excess (deficiency) of revenues over expenditures (878,519) (878,519) 757,185 1,635,704 ,
Fund balance at beginning of year 1,795,085 1,795,085 1,795,085 -
Fund balance at end of year $ 916,566 $ 916,566 $ 2,552,270 $ 1,635,704
See accompanying independent auditors' report. '
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COUNTY OF HAWAII
Bikeway Fund
' Schedule of Revenues, Expenditures and Changes in Fund Balance -
Budget and Actual (Budgetary Basis)
For the Fiscal Year Ended June 30, 2007
Original Actual Variance
and Final (Budgetary Positive
Budget Basis (Negative)
' Revenues - licenses and permits -
bicycle tax $ 25,000 $ 27,035 $ 2,035
Expenditures - highways and streets 171,000 378 170,622
Excess (deficiency) of revenues over expenditures (146,000) 26,657 172,657
Fund balance at beginning of year 366,028 366,028 -
Fund balance at end of year $220,028 $392,685 $172,657
See accompanying independent auditors' report.
-95-
COUNTY OF HAWAII '
Workforce Investment Act Fund
Schedule of Revenues, Expenditures and Changes in Fund Balance - '
Budget and Actual (Budgetary Basis)
For the Fiscal Year Ended June 30, 2007
Actual Variance
Original Final (Budgetary Positive ,
Budget Budget Basis) (Negative)
Revenues - intergovernmental - federal grants $ - $ 4,530,271 $ 4,522,176 $ (8,095) '
Expenditures - health, education and welfare - 4,530,271 4,522,176 8,095
Excess of revenues over expenditures - - - -
Fund balance at beginning of year - - -
Fund balance at end of year $ - $ - $ - $ - '
See accompanying independent auditors' report.
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-96-
COUNTY OF HAWAII
' Golf Course Fund
Schedule of Revenues, Expenditures and Changes in Fund Balance -
Budget and Actual (Budgetary Basis)
For the Fiscal Year Ended June 30, 2007
r
Actual Variance
' Original Final (Budgetary Positive
Budget Budget Basis) (Negative)
' Revenues:
Charges for services $ 844,500 $ 844,500 $ 751,831 $ (92,669)
Miscellaneous - - - -
Total revenues 844,500 844,500 751,831 (92,669)' Expenditures:
Culture and recreation 861,276 886,276 857,363 28,913
Pension and retirement contributions 138,554 138,554 134,269 4,285
' Health fund 85,150 85,150 68,938 16,212
Miscellaneous 16,000 16,000 10,612 5,388
Total expenditures 1,100,980 1,125,980 1,071,182 54,798
Deficiency of revenues over expenditures (256,480) (281,480) (319,351) (37,871)
Other financing sources:
Transfers in - General Fund 256,480 281,480 342,531 61,051
Excess of revenues and other sources
over expenditures - - 23,180 23,180
Deficit at beginning of year (16,296) (16,296) (16,296) -
Fund balance (deficit) at end of year $ (16,296) $ (16,296) $ 6,884 $ 23,180
See accompanying independent auditors' report.
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-97-
COUNTY OF HAWAII
Geothermal Relocation Revolving Fund
Schedule of Revenues, Expenditures and Changes in Fund Balance - '
Budget and Actual (Budgetary Basis)
For the Fiscal Year Ended June 30, 2007 ,
Original Actual Variance
and Final (Budgetary Positive
Budget Basis) (Negative)
Revenues - miscellaneous - geothermal royalties $ 150,000 $ 589,982 $ 439,982 '
Expenditures - general government 150,000 150,000 -
Excess of revenues over expenditures - 439,982 439,982
Fund balance at beginning of year 1,998,629 1,998,629 -
Fund balance at end of year $ 1,998,629 $ 2,438,611 $ 439,982
See accompanying independent auditors' report. '
-98- ,
COUNTY OF HAWAII
i Beautification Fund
' Schedule of Revenues, Expenditures and Changes in Fund Balance -
Budget and Actual (Budgetary Basis)
For the Fiscal Year Ended June 30, 2007
Actual Variance
' Original Final (Budgetary Positive
Budget Budget Basis (Negative)
' Revenues - licenses and permits - highway
beautification $160,000 $160,000 $ 169,800 $ 9,800
Expenditures - highways and streets 225,000 225,000 37,623 187,377
Excess (deficiency) of revenues over expenditures (65,000) (65,000) 132,177 197,177
' Fund balance at beginning of year 672,742 672,742 672,742 -
Fund balance at end of year $ 607,742 $ 607,742 $ 804,919 $ 197,177
See accompanying independent auditors' report.
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-99-
COUNTY OF HAWAII
Hawaii County Housing Agency
Schedule of Revenues, Expenditures and Changes in Fund Balance - ,
Budget and Actual (Budgetary Basis)
For the Fiscal Year Ended June 30, 2007 '
Actual Variance
Original Final (Budgetary Positive ,
Budget Budget Basis) (Negative)
Revenues: ,
Intergovernmental -
Federal - HUD - Voucher program $ 10,947,700 $11,547,700 $11,529,057 $ (18,643)
Other 54,134 54,134 18,021 (36,113) '
Interest earned 2,290 2,290 176,226 173,936
Resale of property - - 275,000 275,000 ,
Other - 23,128 23,174 46
Total revenues 11,004,124 11,627,252 12,021,478 394,226
Expenditures:
Health, education and welfare 11,622,433 12,644,188 12,642,106 2,082
Pension and retirement contributions 464,600 464,600 414,324 50,276 '
Health Fund 143,200 143,200 139,266 3,934
Miscellaneous 2,290 2,290 - 2,290
Total expenditures 12,232,523 13,254,278 13,195,696 58,582 ,
Deficiency of revenues over expenditures (1,228,399) (1,627,026) (1,174,218) 452,808
Other financing sources: '
Transfers in - General Fund 1,228,399 1,295,399 1,295,399 -
Excess (deficiency) of revenues and other ,
sources over expenditures - (331,627) 121,181 452,808
Fund balance at beginning of year 6,435,023 6,435,023 6,435,023 - ,
Fund balance at end of year $ 6,435,023 $ 6,103,396 $ 6,556,204 $ 452,808
See accompanying independent auditors' report. ,
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- 100 - ,
COUNTY OF HAWAII
Park Dedication Fund
' Schedule of Revenues, Expenditures and Changes in Fund Balance -
Budget and Actual (Budgetary Basis)
For the Fiscal Year Ended June 30, 2007
Actual Variance
' Original Final (Budgetary Positive
Budget Budget Basis (Negative)
Revenues - interest $ - $ - $ 3,187 $ 3,187
Expenditures - culture and recreation - - - -
' Excess of revenues over expenditures - - 3,187 3,187
Fund balance at beginning of year 77,771 77,771 77,771 -
Fund balance at end of year $77,771 $77,771 $80,958 $3,187
See accompanying independent auditors' report.
-101-
,
COUNTY OF HAWAII ,
Agency Funds '
Combining Balance Sheet
June 30, 2007 ,
Performance ,
State Improvement Improvement Improvement and
Weight District District District Refundable
Tax No. 17 No. 18 Revolving Deposits ,
Assets
Cash and cash equivalents $ 870,041 $ 844,758 $ 356,547 $ - $ 189,429 '
Investments - - 1,072,456 374,553 -
Due from other agency funds - - - - - ,
Other receivables - 34,846 10,283 - 4,151
Restricted assets - ,
cash and cash equivalents - 637,000 - - -
Total assets $ 870,041 $ 1,516,604 $ 1,439,286 $ 374,553 $ 193,580
Liabilities
Due to other agency funds $ - $ - $ - $ - $ 1,680 ,
Accrued liabilities 870,041 39,483 13,549 - -
Customer advances and deposits - - - - 191,900
Assets held for the benefit of
improvement districts - 1,477,121 1,425,737 374,553 -
Total liabilities $ 870,041 $ 1,516,604 $ 1,439,286 $ 374,553 $ 193,580
See accompanying independent auditors' report.
- 102 - ,
Non-Profit Organ and
Flexible Lapsed License Tissue
Payroll Spending Warrants Plates Education
Clearance Account Fund Fund Fund Total
' $1,601,902 $ 338,911 $ 112,788 $ 1,045 $ 443 $ 4,315,864
- - - - 1,447,009
- = 2,245 = 2,245
14,559 63,839
' - - - - - 637,000
$1,601,902 $ 338,911 $ 129,592 $ 1,045 $ 443 $ 6,465,957
' $ 545 $ - $ - $ 20 $ - $ 2,245
1,601,357 338,911 129,592 1,025 443 2,994,401
- - - - - 191,900
' - - - - - 3,277,411
$1,601,902 $ 338,911 $ 129,592 $ 1,045 $ 443 $ 6,465,957
-103-
COUNTY OF HAWAII
Agency Funds
Combining Statement of Changes in Assets and Liabilities '
For the Fiscal Year Ended June 30, 2007
Balance Balance
July 1, June 30,
2006 Additions Deductions 2007
State Weight Tax Fund
Assets
Cash and cash equivalents $ - $ 10,213,888 $ 9,343,847 $ 870,041
Liabilities
Vouchers payable $ - $ 9,320,947 $ 9,320,947 $ -
Accrued liabilities - due to State of Hawaii - 10,213,888 9,343,847 870,041
Total liabilities $ - $ 19,534,835 $ 18,664,794 $ 870,041 i
Improvement District No. 17
Assets ,
Cash and cash equivalents $ 844,320 $ 974,818 $ 974,380 $ 844,758
Restricted assets - cash and cash equiv. 637,000 - - 637,000
Other receivables 81,536 868,541 915,231 34,846
Total assets $1,562,856 $ 1,843,359 $ 1,889,611 $1,516,604
Liabilities
Vouchers payable $ - $ 890 $ 890 $ -
Accrued liabilities 92,332 864,521 917,370 39,483 '
Assets held for the benefit
of improvement districts 1,470,524 955,632 949,035 1,477,121
Total liabilities $1,562,856 $ 1,821,043 $ 1,867,295 $1,516,604 '
Improvement District No. 18
Assets
Cash and cash equivalents $ 355,144 $ 159,742 $ 158,339 $ 356,547
Investments 540,000 532,456 - 1,072,456
Other receivables 7,182 649,697 646,596 10,283
Total assets $ 902,326 $ 1,341,895 $ 804,935 $1,439,286
Liabilities
Vouchers payable $ - $ 44,186 $ 44,186 $ -
Accrued liabilities 10,591 652,963 650,005 13,549
Assets held for the benefit
of improvement districts 891,735 692,525 158,523 1,425,737
Total liabilities $ 902,326 $ 1,389,674 $ 852,714 $1,439,286
- 104 - ,
COUNTY OF HAWAII
Agency Funds
Combining Statement of Changes in Assets and Liabilities
For the Fiscal Year Ended June 30, 2007
Balance Balance
July 1, June 30,
2006 Additions Deductions 2007
Improvement District Revolving Fund
' Assets
Investments $ 356,209 $ 18,344 $ - $ 374,553
Liabilities
Assets held for the benefit
of improvement districts $ 356,209 $ 18,344 $ - $ 374,553
' Performance and Refundable
Deposits Fund
' Assets
Cash and cash equivalents $ 178,059 $ 417,623 $ 406,253 $ 189,429
Other receivables 12,320 4,151 12,320 4,151
Total assets $ 190,379 $ 421,774 $ 418,573 $ 193,580
Liabilities.
Vouchers payable $ - $ 404,936 $ 404,936 $ -
Due to other funds 1,480 1,680 1,480 1,680
' Accrued liabilities - - - -
Customer advances and deposits 188,899 405,464 402,463 191,900
Total liabilities $ 190,379 $ 812,080 $ 808,879 $ 193,580
Payroll Clearance Fund
Assets
Cash and cash equivalents $1,458,857 $ 182,966,887 $ 182,823,842 $1,601,902
Due from other funds - 176,535,354 176,535,354 -
Other receivables 1,468 2,623 4,091 -
Total assets $1,460,325 $ 359,504,864 $ 359,363,287 $1,601,902
Liabilities -
Vouchers payable $ - $ 82,119,609 $ 82,119,609 $
Payroll refunds payable 4,444 1,514 5,958 -
Due to other funds 5,866 545 5,866 545
Accrued liabilities 1,450,015 199,416,676 199,265,334 1,601,357
Total liabilities $1,460,325 $ 281,538,344 $ 281,396,767 $1,601,902
-105-
COUNTY OF HAWAII
Agency Funds
Combining Statement of Changes in Assets and Liabilities '
For the Fiscal Year Ended June 30, 2007
Balance Balance
July 1, June 30,
2006 Additions Deductions 2007
Flexible Spending Account
Assets
Cash and cash equivalents $ 324,898 $ 433,215 $ 419,202 $ 338,911
Liabilities
Accrued liabilities $ 324,898 $ 433,215 $ 419,202 $ 338,911
Lapsed Warrants Fund ,
Assets
Cash and cash equivalents $ 70,936 $ 44,526 $ 2,674 $ 112,788 '
Due from other funds 7,346 2,245 7,346 2,245
Other receivables 37,180 14,559 37,180 14,559
Total assets $ 115,462 $ 61,330 $ 47,200 $ 129,592 ,
Liabilities
Vouchers payable $ - $ 2,309 $ 2,309 $ - ,
Accrued liabilities 115,462 25,525 11,395 129,592
Total liabilities $ 115,462 $ 27,834 $ 13,704 $ 129,592 '
Non-Profit License Plates Fund
Assets
Cash and cash equivalents $ - $ 3,945 $ 2,900 $ 1,045
Liabilities i
Vouchers payable $ - $ 2,920 $ 2,920 $ -
Due to other funds - 20 - 20
Due to non-profit agency - 3,945 2,920 1,025
Total liabilities $ - $ 6,885 $ 5,840 $ 1,045
1
- 106 -
COUNTY OF HAWAII
t Agency Funds
Combining Statement of Changes in Assets and Liabilities
For the Fiscal Year Ended June 30, 2007
Balance Balance
July 1, June 30,
2006 Additions Deductions 2007
Organ and Tissue Education Fund
Assets
Cash and cash equivalents $ - $ 117,792 $ 117,349 $ 443
Liabilities
Vouchers payable $ - $ 1,297 $ 1,297 $ -
Accrued liabilities - due to State of Hawaii - 117,792 117,349 443
Total liabilities $ - $ 119,089 $ 118,646 $ 443
Total - All Agency Funds
Assets
Cash and cash equivalents $3,232,214 $ 195,332,436 $ 194,248,786 $4,315,864
Investments 896,209 550,800 1,447,009
Due from other funds 7,346 176,537,599 176,542,700 2,245
Other receivables 139,686 1,539,571 1,615,418 63,839
Restricted assets - cash and cash equiv. 637,000 637,000
Total assets $4,912,455 $ 373,960,406 $ 372,406,904 $6,465,957
Liabilities
Vouchers payable $ - $ 91,897,094 $ 91,897,094 $ -
' Payroll refunds payable 4,444 1,514 5,958 -
Due to other funds 7,346 2,245 7,346 2,245
Due to non-profit agency - 3,945 2,920 1,025
Accrued liabilities 1,993,298 201,392,900 201,263,306 2,122,892
Accrued liabilities - due to State of Hawaii 10,331,680 9,461,196 870,484
Customer advances and deposits 188,899 405,464 402,463 191,900
' Assets held for the benefit
of improvement districts 2,718,468 1,666,501 1,107,558 3,277,411
Total liabilities $4,912,455 $ 305,701,343 $ 304,147,841 $6,465,957
See accompanying independent auditors' report.
r
- 107 -
COUNTY OF HAWAII
Private Purpose Trusts
Combining Statement of Private Purpose Trust Net Assets ,
June 30, 2007
Shippers' Total
Geothermal Wharf Private-
Asset Trust Purpose
Assets Fund Fund Trusts
Cash and cash equivalents $ - $ 1,861,787 $ 1,861,787
Investments 1,778,923 1,104,658 2,883,581
Receivables - 6,980 6,980
Total assets 1,778,923 2,973,425 4,752,348
Liabilities
Accrued liabilities - - -
Total liabilities - - -
Net Assets ,
Held in trust for other parties 1,778,923 2,973,425 4,752,348
Total net assets $ 1,778,923 $ 2,973,425 $ 4,752,348
See accompanying independent auditors' report.
r
- 108 -
COUNTY OF HAWAII
Private Purpose Trusts
Combining Statement of Changes in Private Purpose Trust Net Assets
For the Fiscal Year Ended June 30, 2007
Shippers' Total
Geothermal Wharf Private-
Asset Trust Purpose
Fund Fund Trusts
Additions
Contributions:
Puna Geothermal Venture $ 50,000 $ - $ 50,000
Investment earnings:
Net increase in fair value of investments - 137,148 137,148
Dividends 46,442 46,442
Interest 90,633 84,962 175,595
Total additions 140,633 268,552 409,185
Deductions
Grant payments - 11,726 11,726
Total deductions - 11,726 11,726
Change in net assets 140,633 256,826 397,459
Net assets, beginning of year 1,638,290 2,716,599 4,354,889
Net assets, end of year $ 1,778,923 $ 2,973,425 $ 4,752,348
See accompanying independent auditors' report.
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1
1
STATISTICAL SECTION
(UNAUDITED)
Contents Page
Financial Trends - These schedules contain trend information to help help the reader understand
how the County's financial performance and wellbeing have changed over time. 111
Revenue Capacity - These schedules contain information to help the reader assess the County's
most significant local revenue source, the property tax. 115
Debt Capacity - These schedules present information to help the reader assess the affordability of
the County's current levels of outstanding debt and the County's ability to issue additional debt in
the future. 121
Demographic and Economic Information - These schedules offer demographic and economic
indicators to help the reader understand the environment within which the County's financial
acitivities take place. 124
1 Operating Information - These schedules contain service and infrastructure data to help the
reader understand how the information in the County's financial report relates to the services
provided and the activities performed by the County. 126
1
r r rr r rr rr ,rr r rr ~ r r r ~ rr r~ ~r ~r
Table 1
COUNTY OF HAWAII
Net Assets by Component
Last Six Fiscal Years
Fiscal Year
2002 2003 2004 2005 2006 2007
Governmental activities
invested in capital assets, net of related debt $ 316,909,229 $ 333,571,558 $ 336,435,768 $ 364,662,377 $ 386,861,296 $ 394,789,635
Restricted 22,122,090 27,577,754 37,333,730 41,950,262 44,737,588 54,857,023
384,644) (11,741,743) 8,885,911 21,350,091
Unrestricted (19,830,952) (13,132,955) (10,
Total governmental activities net assets $ 319,200,367 $ 348,016,357 $ 363,384,854 $ 394,870,896 $ 440,484,795 $ 470,996,749
Business-type activities
Invested in capital assets, net of related debt $ 347,480 $ 333,860 $ 324,942 $ 325,800 $ 317,534 $ 310,409
Restricted 179,028 180,782 180,782 182,167 182,797 183,832
Unrestricted 849,832 876,107 873,704 850,962 813,431 636,756
Total business-type activities net assets $ 1,376,340 $ 1,390,749 $ 1,379,428 $ 1,358,929 $ 1,313,762 $ 1,130,997
Primary government
Invested in capital assets, net of related debt $ 317,256,709 $ 333,905,418 $ 336,760,710 $ 364,988,177 $ 387,178,830 $ 395,100,044
Restricted 22,301,118 27,758,536 37,514,512 42,132,429 44,920,385 55,040,855
Unrestricted (18,981,120) (12,256,848) (9,510,940) (10,890,781) 9,699,342 21,986,847
Total primary government net assets $ 320,576,707 $ 349,407,106 $ 364,764,282 $ 396,229,825 $ 441,798,557 $ 472,127,746
NOTE: GASB 34 was implemented beginning fiscal year 2002.
Unaudited - see accompanying independent auditors' report.
Table 2
COUNTY OF HAWAII
Changes in Net Assets
Last Six Fiscal Years
Fiscal Year
2002 2003 2004 2005 2006 2007
Program Revenues
Governmental activities
Charges for services:
General government $ 2,173,770 S 1,911,070 S 1,947,554 S 3,227,420 $ 4,032,542 $ 4,460,016
Public safety 3,927,495 4,349,355 5,061,174 6,262,259 6,975,962 5,798,126
Highways and streets 4,422,416 5,324,908 6,052,544 7,629,139 9,079,084 9,354,639
Health, education and welfare 865,365 991,725 884,075 1,272,091 980,147 799,075
Culture and recreation 1,366,370 1,593,620 1,588,945 1,521,127 1,439,784 1,634,008
Sanitation 10,969,909 10,596,469 13,653,722 15,465,478 16,469,745 18,486,502
Operating grants and contributions 27,198,314 31,544,494 33,327,191 36,370,993 38,252,889 38,068,138
Capital grants and contributions 27,871,495 19,064,821 9,668,981 26,221,627 14,801,828 7,805,986
Total governmental activites program revenues 78,795,134 75,376,462 72,184,186 97,970,134 92,031,981 86,406,490
Business-type activities:
Charges for services:
Health, education and welfare $ 279,369 S 304,671 S 303,047 S 314,971 S 338,141 $ 345,802
Operating grants and contributions 147,582 147,997 143,769 135,829 141,019 134,211
Total business-type activities program revenues 426,951 452,668 446,816 450,800 479,160 480,013
Total primary grovernment program revenues S 79,222,085 ® $..,751829,130 S 72,631,002 S 98,420,934 S 92,511,141 S 86,886,503
®
Expenses
Governmental activities:
General government S 37,796,311 $ 36,461,949 S 40,085,357 $ 51,262,329 S 38,264,132 $ 46,349,904
Public safety 75,709,394 77,131,374 90,434,696 94,422,057 106,067,466 118,010,316
Highways and streets 22,627,472 15,512,957 17,563,608 20,857,341 24,783,476 28,185,968
Health, education and welfare 17,854,112 20,205,386 23,041,963 21,503,635 20,181,685 23,203,874
Culture and recreation 14,903,986 16,430,590 15,979,854 16,124,457 19,464,962 26,948,501
Sanitation 18,641,654 19,022,213 20,084,654 26,669,660 27,265,515 42,682,281
Interest on long-term debt 8,769,167 8,680,999 9,553,966 8,718,758 10,168,710 10,303,332
Total governmental activities expenses 196,302,096 193,445,468 216,744,098 239,558,237 246,195,946 295,684,176
Business-type activities:
Health, education and welfare 455,936 450,343 466,143 484,879 547,201 698,329
Total business-type activities expenses 455,936 450,343 _ 466,143 484,879 547,201 698,329
Total primary government expenses $ 196,758,032 $ 193,895,811 S 217,210,241 $ 240,043,116 S 246,743,147 S 296,382,SD5
Net Revenue (Expense)
Governmental activities S(117,506,%2), $(118,069,006) S(144,559,912) S(141,588,103) S(154,163,965) $(209,277,686)
Business-type activities (28,985) 2,325 (19,327) (34,079) (68,041) (218,316)
Total primary government net expense S (117,535,947) S (118,066,681) _S-(144,579,239) S (141,622,182) S (154,232,006) S (209,496,002)
General Revenues and Other Changes in Net Assets
Governmental activities:
General revenues:
Property taxes S 94,197,060 S 109,151,524 $ 119,864,237 S 129,775,410 S 152,182,806 S 183,611,050
Public service company taxes 5,108,291 5,063,897 5,332,478 6,351,273 6,811,483 7,396,084
Franchise taxes 4,992,959 4,816,565 5,373,144 6,016,890 7,328,887 8,520,133
Fuel taxes 6,421,837 7,343,088 7,552,317 7,580,740 7,857,394 8,471,453
Grants and contributions not restricted to
specific programs 13,501,966 13,931,403 15,251,443 16,734,850 18,510,262 18,999,596
Investment earnings 3,568,210 1,936,635 1,729,531 2,957,188 4,976,178 9,727,911
Miscellaneous 1,582,980 4,641,884 4,825,259 3,657,794 2,110,854 3,063,413
Transfers out (838,445) - -
Total governmental activities 128,534,858 146,884,996 159,928,409 173,074,145 199,777,864 239,789,640
Business-type activities:
General revenues:
Investment earnings 19,064 12,084 8,006 13,580 22,874 35,551
Total business-type activities 19,064 12,084 8,1106 13,580 22,874 35,551
Total primary government S 128,553,922 S 146,897,080 S 159,936,415 S 173,087,725 S 199,800,738 S 239,825,141
Changes In Net Assets
Governmental activities $ 11,027,896 $ 28,815,990 $ 15,368,497 $ 31,486,042 S 45,613,899 S 30,511,954
Business-type activities (9,921) 14,409 (11,321) (20,499) (45,167) (182,765)
Total primary government changes in net assets $ 11,017,975 S 28,830,399 S 15,357,176 S 31,465,543 $ 45,568,732 $ 30,329,189
NOTE: GASB 34 was implemented in fiscal year 2002.
Unaudited - see accompanying independent auditors report
- 112 -
Table 3
COUNTY OF HAWAII
Fund Balances, Governmental Funds
(Modified accrual basis of accounting)
Last Ten Fiscal Years
Fiscal Year
1998 1999 2000 2001 2002 2003 2004 2005 2006 2007
General Fund:
Reserved $ 8,543,602 $ 8,627,195 $ 8,453,114 $ 6,504,144 $ 5,717,010 $ 7,062,628 $ 7,452,338 $ 8,313,800 $ 11,519,135 $ 15,659,683
Unreserved 16,911,530 12,933,610 16,100,985 8,310,689 3,831,680 9,093,877 12,270,870 15,664,272 23,446,072 28,950,668
Total general fund 25,455,132 21,560,805 24,554,099 14,814,833 9,548,690 16,156,505 19,723,208 23,978,072 34,965,207 44,610,351
All other Government Funds:
Reserved 46,795,147 39,024,593 44,082,610 41,176,191 44,711,572 58,714,024 66,991,733 66,720,836 103,359,563 122,060,550
Unreserved, reported in:
Special revenue fund 6,407,427 8,152,420 8,681,266 10,684,577 12,670,179 14,336,385 15,151,534 18,525,727 20,342,112 24,874,744
' Capital projects fund 15,544,831 8,817,051 21,024,738 14,756,678 21,179,311 38,966,652 32,293,518 64,915,483 48,345,838 95,684,215
Total of other governmental funds 68,747,405 55,994,064 73,788,614 66,617,446 78,561,062 112,017,061 114,436,785 150,162,046 172,047,513
242,619,509
w
Total Fund Balances $ 94,202,537 $77,554,864 $98,342,713 $81,432,279 $88,109,752 $128,173,566 $ 134,159,993 $174,140,118 $207,012,720 $287,229,860
Unaudited - sec accompanying independent auditors report,
Tablc 4
COUNTY OF HAWAII
Changes in Fund Balances, Governmental Funds
(Modified accrual basis of accounting)
Last Ten Fiscal Years
(Amounts in thousands)
Fiscal Year
1998 1999 2000 2001 2002 2003 2004 2005 2006 2007
Revenues:
Property tax $87,420 $ 84,742 S 83,271 S 84,240 S 93,712 5109,991 5121,868 $131,087 $153,207 $181,446
Public service company tax 5,108 5,064 5,332 6,351 6,812 7,3%
Fuel tax 5,832 5,900 6,103 6,450 6,422 7,343 7,552 7,581 7,857 8,471
Public utility franchise tax 4,080 3,953 3,950 4,777 4,993 4,817 5,373 6,017 7,329 8,520
Licenses and permits 6,351 6,952 7,261 7,412 7,781 9,261 11,840 14,442 16,544 16,269 ,
Intergovernmental 42,375 43,057 38,383 55,034 68,918 65,203 58,559 73,372 69,637 63,599
Charges for services 8,885 10,148 11,215 12,056 11,689 13,481 14,467 18,149 19,852 21,685
I nvesment earnings 5,888 5,552 5,284 6,409 3,801 2,066 1,806 3,104 5,223 10,291
Miscellaneous 2,224 3,476 2,416 2,529 3,035 6,179 4,718 4,450 4,380 5,073
Total Revenues 163,055 163,830 157,883 178,907 205,459 223,405 231,515 264,553 290,841 322,750
Expenditures:
Current:
General government 20,512 20,197 21,442 22,073 20,192 22,317 23,070 26,183 31,153 37,652
Public safety 55,673 56,035 58,395 59,391 61,870 64,667 69,117 76,404 83,591 93,241
Highways and streets 6,621 8,148 8,006 9,998 8,376 8,675 9,542 9,787 12,608 14,033
Sanitation 12,082 12,287 12,856 13,481 14,789 16,629 17,602 21,883 26,565 31,817
Health, education and welfare 5,011 5,310 5,079 8,344 16,726 18,867 19,047 19,870 19,050 21,470
Culture and recreation 11,800 12,321 11,526 12,085 12,127 13,086 13,169 13,982 14,731 17,118
Pension and retirement contributions 14,044 9,785 5,641 3,679 11,019 7,926 11,081 14,204 19,937 21,7%
Employees'health insurance 9,438 9,264 9,544 10,773 12,198 12,758 14,256 16,168 16,133 16,941
Miscellaneous 3,364 3,617 4,224 4,040 5,330 5,629 7,128 6,133 6,780 5,108
Debt service.
Principal 6,473 7,974 8,862 9,399 10,025 11,800 12,826 13,150 14,060 16,076
Interest 7,755 7,508 7,759 8,416 8,467 8,469 9,283 9,534 9,914 9,894
Capital outlay 17,700 28,708 21,909 37,648 41,580 32,952 23,474 32,816 30,588 52,285
Total Expenditures 170,473 181,754 175,243 199,327 222,699 223,775 229,595 260,114 285,110 337,431
Revenues over (under) Expenditures (7,418) (17,924) (17,360) (20,420) (17,240) (370) 1,920 4,439 5,731 (14,681)
Other Financing Sources (Uses):
Sale of assets 17 54 28 16 Is 9 1,593 1,486 82 5
Capital [owes 2,677 23 930 1,353 1,474 1,369 404 2,403
State Revolving Fund loans 1,405 1,325 5,530 3,422 578 853 - 1,504 25 6,235
Sale of bands - 29,878 15,175 37,262 1,725 30,000 25,000 85,000
Refunding bonds 18,776 24,595 - 31,607
Premium on bonds - 3,025 972 3,099
Refimding bonds issuance costs (129) - (218)
Payment to refunded bond escrow agent - (18,776) (25,885) (32,699)
Refimd to lot owners - (212) - - - -
Transfars in 27,068 30,385 25,647 28,625 29,529 29,943 39,440 42,119 45,691 59,139
Transfers out 217,068) 30385 2( 5,634) 2( 8,568) (30,367) (29943 39,440 4( 2,119) 45,69159,139
Total other financing sources (uses) 1,422 1,167 38,126 3,518 15,860 39,477 4,792 35,965 26,483 95,452
Net change in fund balances S (5,996 S I _L10,766 S .16,902 S (1,380 S 39,107 $ 6,712 S 40,404 S 32,214 S 80,771
Debt service as a percentage of
noncapital expenditures 9.3% 10.1% 10.8% 11.0% 10.2% 10,6% 10.7% 10.0% 9.4% 91%
Unaudited - see accompanying independent auditor' report,
- 114-
Table 5
COUNTY OF HAWAII
Real Property Assessed Values by Classification and Tax Rates
Last Ten Fiscal Years
(Values in Thousands)
Value of Building Value of Land Value of
Fiscal Class of Net Taxable Tax Rates Net Taxable Tax Rates Net Taxable
Year Property Building Per $1000 Land Per $1000 Real Property
1998 Improved Residential $713,930 $ 8.50 $1,080,755 $ 8.50 $1,794,685
Unimproved Residential 28,096 8.50 292,207 10.00 320,303
Apartment 837,311 8.50 381,468 10.00 1,218,779
Hotel and Resort 496,133 8.50 464,217 10.00 960,350
Commercial 418,672 8.50 394,194 10.00 812,866
Industrial 184,016 8.50 202,722 10.00 386,738
Agricultural 717,233 8.50 1,622,308 10.00 2,339,541
Conservation 19,741 8.50 277,293 10.00 297,034
Homeowners 901,862 4.45 1,124,745 4.45 2,026,607
$4,316,994 $5,839,909 $10,156,903
Fiscal year 1998 total direct rate $8.37
1999 Improved Residential $710,921 $ 8.50 $978,920 $ 8.50 $1,689,841
Unimproved Residential 27,239 8.50 269,990 10.00 297,229
Apartment 840,812 8.50 389,152 10.00 1,229,964
Hotel and Resort 540,507 8.50 491,540 10.00 1,032,047
Commercial 416,363 8.50 392,477 10.00 808,840
Industrial 184,960 8.50 205,599 10.00 390,559
Agricultural 699,984 8.50 1,491,941 10.00 2,191,925
Conservation 10,843 8.50 277,820 10.00 288,663
Homeowners 947,677 4.45 1,052,698 4.45 2,000,375
$4,379,306 $5,550,137 $9,929,443
Fiscal year 1999 total direct rate $8.33
Continued next page.
Table 5
Value of Building Value of Land Value of
Fiscal Class of Net Taxable Tax Rates Net Taxable Tax Rates Net Taxable
Year Property Building Per $1000 Land Per $1000 Real Proper
2000 Improved Residential $682,289 $ 8.50 $940,477 $ 8.50 $1,622,766
Unimproved Residential 25,632 8.50 265,553 10.00 291,185
Apartment 902,922 8.50 420,396 10.00 1,323,318
Hotel and Resort 591,684 8.50 489,784 10.00 1,081,468
Commercial 428,025 8.50 414,059 10.00 842,084
Industrial 179,874 8.50 201,599 10.00 381,473
Agricultural 677,306 8.50 1,357,024 10.00 2,034,330
Conservation 10,110 8.50 274,847 10.00 284,957
Homeowners 966,540 4.45 1,053,990 4.45 2,020,530
$4,464,382 $5,417,729 $9,882,111
Fiscal year 2000 total direct rate $8.38
2001 Improved Residential $676,174 $ 8.50 $885,704 $ 8.50 $1,561,878
Unimproved Residential 26,569 8.50 254,598 10.00 281,167
--Apartment 928,776 8.50 472,629 10.00 1,401,405
o, Hotel and Resort 613,593 8.50 538,609 10.00 1,152,202
Commercial 424,849 8.50 414,440 10.00 839,289
Industrial 186,637 8.50 216,075 10.00 402,712
Agricultural 703,235 8.50 1,400,924 10.00 2,104,159
Conservation 11,546 8.50 279,024 10.00 290,570
Homeowners 1,009,482 4.45 1,040,520 4.45 2,050,002
$4,580,861 $5,502,523 $10,083,384
Fiscal year 2001 total direct rate $8.29
2002 Improved Residential $702,795 $ 8.50 $929,082 $ 8.50 $1,631,877
Unimproved Residential 34,430 8.50 266,680 10.00 301,110
Apartment 1,108,163 8.50 607,368 10.00 1,715,531
Hotel and Resort 679,994 8.50 674,698 10.00 1,354,692
Commercial 434,810 8.50 404,682 10.00 839,492
Industrial 175,926 8.50 219,603 10.00 395,529
Agricultural 721,915 8.50 1,565,525 10.00 2,287,440
Conservation 13,052 8.50 281,050 10.00 294,102
Homeowners 1,131,340 4.45 1,120,213 4.45 2,251,553
$5,002,425 $6,068,901 $11,071,326
Fiscal year 2002 total direct rate $8.28
Continued next page.
W M M M
~r ~r +ir~ .ar err ~ ~ ~ ~ ~ ~ ~ ~ ~ w ~ r
Table 5
Value of Building Value of Land Value of
Fiscal Class of Net Taxable Tax Rates Net Taxable Tax Rates Net Taxable
Year Property Building Per $1000 Land Per $1000 Real Property
2003 Improved Residential $745,956 $ 9.10 $982,098 $ 9.10 $1,728,054
Unimproved Residential 25,869 9.85 299,285 9.85 325,154
Apartment 1,298,965 9.85 692,299 9.85 1,991,264
Hotel and Resort 698,520 9.85 742,371 9.85 1,440,891
Commercial 419,126 9.85 410,289 9.85 829,415
Industrial 181,812 9.85 217,552 9.85 399,364
Agricultural 767,171 9.85 1,511,217 9.85 2,278,388
Conservation 12,708 9.85 265,025 9.85 277,733
Homeowners 1,234,939 5.55 1,185,169 5.55 2,420,108
$5,385,066 $6,305,305 $11,690,371
Fiscal year 2003 total direct rate $9.13
2004 Improved Residential $826,773 $ 9.10 $1,035,139 $ 9.10 $1,861,912
Unimproved Residential 28,212 9.85 308,963 9.85 337,175
Apartment 1,506,172 9.85 777,079 9.85 2,283,251
Hotel and Resort 780,725 9.85 856,550 9.85 1,637,275
Commercial 473,665 9.85 416,505 9.85 890,170
Industrial 207,676 9.85 227,817 9.85 435,493
Agricultural 842,650 9.85 1,522,580 9.85 2,365,230
Conservation 17,250 9.85 325,262 9.85 342,512
Homeowners 1,453,595 5.55 1,284,728 5.55 2,738,323
$6,136,718 $6,754,623 $12,891,341
Fiscal year 2004 total direct rate $9.09
2005 Improved Residential $969,500 $ 9.10 $1,264,100 $ 9.10 $2,233,600
Unimproved Residential 30,408 9.85 366,885 9.85 397,293
Apartment 1,772,930 9.85 745,530 9.85 2,518,460
Hotel and Resort 845,026 9.85 897,268 9.85 1,742,294
Commercial 516,945 9.85 455,664 9.85 972,609
Industrial 226,265 9.85 239,022 9.85 465,287
Agricultural 917,253 9.85 1,697,117 9.85 2,614,370
Conservation 24,485 9.85 346,186 9.85 370,671
Homeowners 1,714,555 5.55 1,504,821 5.55 3,219,376
$7,0179367 $7,516,593 $14,533,960
Fiscal year 2005 total direct rate $8.92
Continued next page.
Table 5
Value of Building Value of Land Value of
Fiscal Class of Net Taxable Tax Rates Net Taxable Tax Rates Net Taxable
Year Property Building Per $1000 Land Per $1000 Real Property
2006 Improved Residential $1,082,244 $ 9.10 $1,935,085 $ 9.10 $3,017,329
Unimproved Residential 29,762 9.85 470,738 9.85 500,500
Apartment 2,340,515 9.85 907,150 9.85 3,247,665
Hotel and Resort 981,538 9.85 942,988 9.85 1,924,526
Commercial 538,389 9.85 502,433 9.85 1,040,822
Industrial 255,292 9.85 280,950 9.85 536,242
Agricultural 970,198 9.85 2,082,838 9.85 3,053,036
Conservation 21,488 9.85 340,573 9.85 362,061
Homeowners 1,191,435 5.55 1,604,418 5.55 2,795,853
$7,410,861 $9,067,173 $16,478,034
Fiscal year 2006 total direct rate $8.98
2007 Improved Residential $1,281,050 $ 8.10 $2,938,402 $ 8.10 $4,219,452
°O Unimproved Residential 43,372 8.10 762,664 8.10 806,036
Apartment 3,154,981 8.10 1,347,158 8.10 4,502,139
Hotel and Resort 1,209,050 9.00 1,050,628 9.00 2,259,678
Commercial 620,567 9.00 662,801 9.00 1,283,368
Industrial 317,852 9.00 397,211 9.00 715,063
Agricultural 1,195,256 8.35 3,985,647 8.35 5,180,903
Conservation 28,472 8.55 356,316 8.55 384,788
Homeowners 1,408,215 5.55 1,947,983 5.55 3,356,198
$9,258,815 $13,448,810 $22,707,625
Fiscal year 2007 total direct rate $7.96
Source: County of Hawaii, Department of Finance, Real Property Tax Division
NOTES: Assessed value is at 100% of market value.
Property is reassessed annually.
The County Council sets the tax rates annually.
There are no overlapping property tax rates in the County of Hawaii.
I
Unaudited - see accompanying independent auditors' report.
M ~ no M M no
Table 6
COUNTY OF HAWAII
Principal Taxpayers
June 30, 2007 and 1998
Fiscal Year 2007 Fiscal Year 1998
Percentage Percentage
2006 of Total 1997 of Total
Assessed Assessed Assessed Assessed
Taxpayer Business Valuation Rank Valuation Valuation Rank Valuation
Kamehameha Schools (a) Land trust $622,224,400 1 2.3% $102,318,400 5 0.8%
Liliuokalani Trust Estate Land trust 298,188,800 2 1.1% - -
Kaupulehu Makai Venture Developer/Hotel 230,742,900 3 0.9% 201,846,500 1 1.6%
Mauna Kea Development Corp. Developer/Hotels 216,837,700 4 0.8% -
Global Resort Partners Hotel 204,812,400 5 0.8% 122,500,000 3 1.0%
WB KD Acquisition LLC Developer 158,250,000 6 0.6% - -
WB-LCP Orchid Owner LLC Hotel 136,074,700 7 0.5% - -
Mauna Lani Resort Inc. Developer/Hotel 112,047,800 8 0.4% 175,664,100 2 1.4%
Kona Coast Resort Ltd. Condo/Time Share 78,575,300 9 0.3% 45,528,800 9 0.4%
BRE/Waikoloa LLC Hotel 65,574,600 10 0.2% - -
South Kohala Resort Corp. Developer 113,631,100 4 0.9%
Mauna Kea Beach Hotel Corp. Hotel 97,097,000 6 0.8%
M. L. Hotel Investors LP Hotel - - 65,543,100 7 0.5%
KM Kona Partners Developer - - 51,313,200 8 0.4%
Mauna Kea Agribusiness Co. Agriculture 40,414,600 10 0.3%
$2,123,328,600 7.9% $1,015,856,800 8.1%
I Note: Gross valuation at January 1, 2006: $26,887,311,800
Gross valuation at January 1, 1997: 12,3 07,83 7,142
NOTES:
(a) Formerly know as BP Bishop Estate Trustees.
Source: County of Hawaii, Department of Finance, Real Property Tax Division
Unaudited - see accompanying independent auditors' report.
- 119 -
iTable 7
COUNTY OF HAWAII
Property Tax Levies and Collections
Last Ten Fiscal Years
Outstanding
Total Delinquent
Current Current Percent Delinquent Total Collections as Outstanding Taxes as
Fiscal Tax Tax of Levy Tax Tax Percent of Delinquent Percent of
Year Levv Collections Collected Collections Collections Current Lew Taxes Current Lew
1998 $ 85,002,683 $ 81,104,884 95% $ 6,315,429 $ 87,420,313 103% $11,472,887 13%
1999 82,742,351 79,473,341 96% 5,318,495 84,791,836 102% 10,669,810 13%
2000 82,395,173 80,257,472 97% 4,394,694 84,652,166 103% 10,193,392 12%
N 2001 83,634,028 81,326,746 97% 3,572,582 84,899,328 102% 9,964,717 12%
2002 91,691,607 89,306,718 97% 4,393,817 93,700,535 102% 8,383,497 9%
2003 106,778,257 103,574,909 97% 6,493,938 110,068,847 103% 6,759,326 6%
2004 117,215,364 115,374,785 98% 8,915,110 124,289,895 106% 7,801,885 7%
2005 129,700,981 123,900,564 96% 8,165,940 132,066,504 102% 6,490,197 5%
2006 148,023,474 143,679,781 97% 8,776,279 152,456,060 103% 5,468,161 4%
2007 180,674,131 173,175,565 96% 6,271,767 179,447,332 99% 7,631,259 4%
Source: County of Hawaii, Department of Finance, Real Property Tax Division
Unaudited - see accompanying independent auditors' report.
r~ MMMMM M MM M M IMM M M~ = w oo
Table 8
COUNTY OF HAWAII
Ratios of Outstanding Debt by Type
Last Ten Fiscal Years
(Amounts in thousands, except per capita)
Business-Type Component Total Primary Government
Governmental Activities Activities Unit Total Primary Government and Component Unit
General State Total General State Percentage Percentage
Fiscal Obligation Revolving Capital Notes Primary Obligation Revolving of Personal Per of Personal Per
Year Bonds Fund Loans Leases Payable Government (a) Bonds Fund Loans Income (b) Capita (b) Income (b) Capita b
1998 $120,398,500 $29,030,743 $549,928 $1,159,837 $151,139,008 $12,785,350 $ 5.27% $ 1,036 5.72% $1,124
1999 114,086,500 28,874,026 369,177 1,146,411 144,476,114 12,300,850 - 4.84% $ 983 5.25% $1,067
2000 137,606,000 32,781,475 2,872,678 1,135,139 174,395,292 11,649,200 - 5.46% $ 1,173 5.82% $1,251
t i 2001 130,512,500 34,394,028 2,399,868 1,117,954 168,424,350 10,722,800 - 5.00% $ 1,111 5.31% $1,182
2002 138,169,500 32,999,781 2,695,213 1,101,772 174,966,266 17,769,900 718,384 4.91% $ 1,134 5.43% $1,253
2003 168,607,000 31,680,295 3,293,462 1,084,667 204,665,424 16,794,600 2,842,108 5.50% $ 1,297 6.03% $1,421
2004 157,908,300 29,497,373 3,547,085 1,065,417 192,018,175 15,737,700 3,054,549 4.68% $ 1,187 5.14% $1,303
2005 182,158,285 28,760,504 3,642,928 1,041,285 215,603,002 14,657,708 2,905,354 4.87% $ 1,295 5.27% $1,401
2006 196,652,008 26,413,342 2,864,515 1,019,386 226,949,251 38,374,312 3,175,607 N/A $ 1,326 N/A $1,568
2007 269,281,339 30,246,751 4,085,735 995,854 304,609,679 36,708,368 5,599,767 N/A N/A N/A N/A
NOTES:
(a) Includes governmental activities and business-type activities.
(b) See Table 11 for personal income and population data.
Details regarding the County's outstanding debt can be found in the notes to the basic financial statements.
Unaudited - see accompanying independent auditors' report.
Table 9
COUNTY OF HAWAII
Ratios of General Bonded Debt Outstanding
Last Ten Fiscal Years
Debt Percent of
Applicable to Net Taxable
Fiscal Legal Debt Property Per
Year Margin (a) Value (b) Capita (c)
1998 $ 133,641,322 1.3% $ 934
1999 129,633,204 1.3% 910
2000 162,716,490 1.6% 1,094
2001 156,636,220 1.6% 1,032
2002 161,310,657 1.5% 1,042
2003 187,316,839 1.6% 1,180
2004 176,693,195 1.4% 1,082
2005 195,198,142 1.3% 1,167
2006 205,219,940 1.2% 1,199
2007 281,836,503 1.2% N/A
NOTES:
(a) See Table 10 for debt applicable to legal debt margin.
(b) See Table 5 for net taxable property values.
(c) See Table 11 for population data.
Details regarding the County's outstanding debt can be found in the
notes to the basic financial statements.
Unaudited - see accompanying independent auditors' report.
- 122 - '
Table 10
COUNTY OF HAWAII
Legal Debt Margin Information
Last Ten Fiscal Years
(Amounts in thousands)
Fiscal Year
1998 1999 2000 2001 2002 2003 2004 2005 2006 2007
Debt limit (a) $1,523,535 $1,489,416 $1,512,507 $1,512,507 $1,660,699 $1,753,556 $1,933,701 $2,180,094 $2,471,705 $ 3,406,144
Debt applicable to limit 133,641 129,285 162,716 156,636 161,311 187,317 176,396 195,198 205,220 281,837
Legal debt margin (b) $1,389,894 $1,360,131 $1,349,791 $1,355,871 $1,499,388 $1,566,239 $1,757,305 $1,984,896 $2,266,485 $ 3,124,307
Debt applicable to the limit
as a percentage of debt limit 8.77% 8.68% 10.76% 10.36% 9.71% 10.68% 9.12% 8.95% 8.30% 8.27%
N
w NOTES:
(a) State finance statutes limit the County's outstanding general debt to no more than 15 percent of the net assessed value of property. See Table 5 for net assessed value of property.
(b) The legal debt margin is the County's available borrowing authority under state finance statutes and is calculated by subtracting the net debt applicable to the legal debt
limit from the legal debt limit.
Legal Debt Margin Calculation for Fiscal Year 2007
Net assessed value $22,707,625
Debt limit (15% of net assessed value) $ 3,406,144
Debt applicable to limit 281,837
Legal debt margin $ 3,124,307
I
Unaudited - see accompanying independent auditors' report.
1
Table II
COUNTY OF HAWAII
Demographic and Economic Statistics
Last Ten Fiscal Years
Fiscal Personal Per
Year Resident Income Capita
Ended Population (thousands Personal School Unemployment
June 30, as of July I of dollars) Income Enrollment Rate
1997 144,445 $ 2,693,916 $ 18,650 30,599 9.3%
1998 145,833 2,865,367 19,648 30,715 8.7%
1999 146,970 2,987,074 20,324 30,926 7.8%
2000 148,677 3,195,347 21,410 30,193 4.7%
2001 151,538 3,371,216 22,247 29,792 5.0%
2002 154,348 3,563,723 23,089 29,826 4.6%
2003 157,801 3,721,683 23,585 29,635 4.6%
2004 161,798 4,101,983 25,352 29,827 3.8%
2005 166,461 4,426,436 26,591 30,262 3.2%
2006 171,191 NIA N/A 30,539 2.8%
Source: County of Hawaii, Department of Research and Development
Unaudited - see accompanying independent auditors' report.
- 124 -
t Table 12
COUNTY OF HAWAII
Principal Employers, County of Hawaii
June 30, 2007 and 1998
2007 1998
Percentage Percentage
of Total County of Total County
Employer Employees Rank Employment Employees Rank Employment
State of Hawaii 7,696 1 9.3% 7,350 1 11.9%
County of Hawaii 2,335 2 2.8% 2,350 2 3.8%
United States Government 1,231 3 1.5% 900 5 1.5%
Hilton Waikoloa Village 1,128 4 1.4% 1,375 4 2.2%
KTA Super Stores 885 5 1.1% 778 6 1.3%
Fairmont Orchid Hawaii 800 6 1.0% 750 7 1.2%
1 Four Seasons Resort Hualalai 676 7 0.8% - -
Mauna Lani Bay Hotel & Bungalows 630 8 0.8% 637 8 1.0%
Hapuna Beach Prince Hotel 572 9 0.7% 611 9 1.0%
Mauna Kea Beach Hotel 564 10 0.7% 565 10 0.9%
C. Brewer & Co. - - 1,465 3 2.4%
Total 16,517 20.1% 16,781 27.2%
Total employee count 82,750 61,950
Source: County of Hawaii, Department of Research and Development
Unaudited - see accompanying independent auditors' report.
I
1
1
1
1
- 125-
Table 13
COUNTY OF HAWAII
Full-Time Equivalent County Government Employees by Function
Last Ten Fiscal Years
1998 1999 2000 2001 2002 2003 2004 2005 2006 2007
Function
General government:
County Council 9.00 9.00 9.00 9,00 9.00 9.00 9.00 9.00 9.00 9.00
County Clerk 47.50 41.00 48.00 41,00 44.00 41.00 42.50 38.00 54.50 54,00
Mayor 25.00 17.75 19.38 15.75 17.75 17.90 19.90 21.58 21.70 20.68
Corporation Counsel 38.00 37.00 36.00 36.00 37.00 37.00 38.00 41.00 39.00 39.98
Finance 92.00 80.00 80.00 79.00 79.00 85.00 90.00 88.00 91.00 113.49
Human Resources 21.00 20.00 22.00 24.00 22.00 24.00 24.00 26.00 24.50 27.46
Planning 27.50 29.50 28.50 28.00 29.00 29.00 31.00 31.50 35.00 36.00
Research & Development 10.00 9.00 9.88 10.00 9.00 13.00 12.00 13.00 13.20 14.48
Data Systems - 13.00 15,00 14,00 15.00 16.00 15.00 14.00 17.00 17.00
Public Works Admin & Building 120.00 121.00 116.50 115.00 115.00 115.00 121.00 121.00 12140 141.97
Public Safety:
N Police 504.25 507.25 540.00 539.00 537.50 52325 526.50 520.80 536.20 557.23
O~ Fire 307.48 310.48 316.48 299.48 300.48 301.48 316.98 346.23 340.20 363.71
' Liquor Control 13.00 13.00 12.60 1100 12.00 11.00 11.00 11.00 13.00 12.00
Civil Defense 6.00 6.00 5.00 6.00 6.00 5.00 5.00 7.00 6.00 5.00
Prosecuting Attorney 74.50 78.50 77.50 74.00 81.50 84.00 86.00 83.00 86.50 93.00
Highways and Streets:
Mass Transit - 6.00 7.00 5.00 5.00 5.00 5.00 7.00 6.00 5.00
Traffic and Highways 161.00 153.00 152.00 158.00 163.00 156.00 153.00 151,00 168.00 169.98
Parking Meter 3.00 - - - - - - - - -
Sanitation:
Administration - - 1.00 - 4A0 5,00 18.00 19.50 19.49
Sewer 44.00 42.00 48.00 47.00 46.00 44.00 42,05 40.00 38.00 32.97
Vehicle Disposal 1.00 1.00 1.00 1.00 1.00 1.00 1.00 1.00 1.00 3.00
Solid Waste 58,75 55.75 57.75 57.75 56.75 52.75 56.75 57.80 69.00 86.49
Health, Education and Welfare:
Housing 30.48 30.48 32.48 35.48 38.48 39.48 42.48 43.48 39.50 43.97
Aging 8.00 9.00 9.00 7,00 10.00 10.75 10.00 10.00 12,50 13.00
Culture and Recreation 446.03 353.89 410.37 395.42 390.15 398.70 390.05 386.48 434.90 402.43
Total 2,047,49 1,943.60 2,053.44 2,009.88 2,024.61 2,023.31 2,053.21 2,085.87 2,19$.60 2,281.33
Source: County of Hawaii, Department of Finance
Unaudited - see accompanying independent auditors' report.
M M M = so
Table 14
COUNTY OF HAWAII
Operating Indicators by Function
Last Ten Fiscal Years
1998 1999 2000 2001 2002 2003 2004 2005 2006 2007
Function
Public Safety:
Police:
DUI arrests N/A 1,056 1,081 1,207 841 1,004 900 964 1,163 1,354
Traffic citations issued 37,316 55,562 59,563 52,775 52,775 38,974 58,432 51,818 54,435 54,606
Fire:
Fire responses 608 555 366 734 623 1,751 1,207 888 897 1,095
Emergency medicallrescue responses 9,506 9,498 10,055 10,169 12,003 11,944 14,693 13,671 14,945 15,502
Inspections - Occupancy/Fire Protective Equipment 5,207 6,147 2,937 5,678 5,508 6,415 4,210 1,843 2,131 1,958
Sanitation:
Refuse disposed (tons per year) 144,556 146,416 149,987 163,825 166,625 179,284 201,011 225,051 222,945 223,144
j Highways and Streets:
In-house street resurfacing (miles) 25 24 32 26 8 40 12 42 15 33
Parks and Recreation
Pavilion permits issued 1,850 1,700 1,700 1,755 1,948 1,567 1,739 1,908 1,888 1,744
Camping permits issued 4,980 3,600 3,800 4,031 4,233 4,576 4,627 4,765 5,146 5,200
Rounds of golf 103,511 93,336 103,993 91,018 87,862 88,889 80,015 79,101 74,677 82,182
Zoo attendance 76,574 60,000 80,000 84,000 137,000 133,086 156,184 163,176 171,958 172,315
Transit
Bus passengers N/A N/A N/A N/A N/A N/A N/A N/A 711,608 727,677
Public Works:
Building permits issued 2,878 3,158 3,466 3,233 3,497 4,250 4,418 5,350 5,883 5,165
Electrical permits issued 2,567 2,760 2,939 3,020 3,349 3,999 3,896 4,750 5,097 5,072
Plumbing permits issued 2,103 2,316 2,485 2,676 2,696 2,954 1,907 3,888 4,557 4,368
Sign permits issued 75 69 67 67 60 59 46 63 50 51
Source: County of Hawaii, Individual Departments
Unaudited - see accompanying independent auditors' report.
Table 15
COUNTY OF HAWAII
Capital Asset Statistics by Functions
Last Ten Fiscal Years
1998 1999 2000 2001 2002 2003 2004 2005 2006 2007
Function
Public Safety:
Police:
Stations 8 8 8 8 8 8 8 8 8 8
Substations 8 4 4 4 4 3 3 13 13 13
Fire stations 18 18 18 19 19 19 19 19 19 19
Highways and Streets:
County streets (miles) 860 870 861 902 902 903 903 903 907 927
Streetlights 8,025 8,239 8,462 9,684 8,719 8,823 8,949 9,017 9,027 9,246
Parks and Recreation:
00
Parks 118 118 118 118 118 118 119 121 122 123
Gyms and recreation centers 38 38 38 38 38 38 38 38 38 38
Sanitation:
Sanitary sewers (miles) 60 60 47 53 53 53 53 53 53 58
,Source.- County of Hawaii, Department of Research and Development
Unaudited - see accompanying independent auditors' report.
r ~ r ~ ~ . . ~ rt ~ rr . r . ~¦r~ ~ . ~i