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Honorable Members of the Hawai`i County Council May 5, 2011 Page 2 Collecting Less Taxes In the coming year, the County of Hawaii will once again collect less in property taxes than it collected when this administration began in 2008. Tax collections in 2008 -09 totaled $225.9 million, while budgeted tax collections for the coming year are $207.3 million. This continuing slide in tax collections has been coupled with years of cost increases in areas such as employee health care and retirement costs, utilities and fuel. It will cost us more to deliver the same services next year that we delivered this year, and we will have less money available next year to provide those services. This pattern creates the continuing budget shortfalls, which represent the difference between the projected cost of providing government services, and the anticipated revenue that will be available to fund those services. This administration has coped with budget shortfalls that are unprecedented in county history. We faced a $38.1 million shortfall in the 2009 -2010 fiscal year, a $44.8 million shortfall in this fiscal year, and we had to contend with a $38.8 million shortfall for next year. We have dealt with those combined shortfalls of more than $121 million over three years by engaging in a three -year program to roll back government, and to make it more affordable. Reducing County Spending This budget marks the third consecutive year this administration has reduced spending. This administration dramatically reduced spending on consulting contracts by 48 percent for a savings of more than $6 million in fiscal 2010. Overtime spending was reduced by 22 percent in fiscal 2010, for an additional savings of $2.6 million. The county also eliminated the purchase of police fleet vehicles, restricted out -of -state travel, reduced golf subsidies, and halted plans to buy new equipment. The county eliminated funding for the Kahalu`u Ranger Park Program, and discontinued funding for the police cadet program. The county cut funding for Hawai`i Island Humane Society animal control programs, and reduced the hours at solid waste transfer stations. Our agencies cancelled or delayed vehicle purchases, cut mileage payments and delayed replacement of aging computers. Agencies cut advertising budgets for the mass transit system and other public education campaigns, delayed purchases of computer software, and deferred or eliminated employee training. The Department of Environmental Management suspended the amnesty program for abandoned vehicles, deferred equipment leases, and reduced the use of security guards at recycling and transfer stations. At the Corporation Counsel, the budgets for law clerks' salaries and expert witnesses and depositions were cut. The Fire Depat lnient deferred purchases of new fire trucks. The Department of Parks & Recreation cut funding for roof and gutter repairs, playground resurfacing projects and building fumigation. The Department of Information Technology deferred computer server upgrades, and the Office of Housing and Community Development