COM 0111.075 2010-2012 - Laserfiche WebLink

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Veto Message — Bill 29 June 15, 2011 Page 2 Council Actions Violate Separation of Powers The council's amendments to Bill 29 would increase overall county spending beyond what our administration proposed, and would shift some spending within the budget. To accomplish this, the council amended the budget to include a fabricated "Council Adjusted Expense Account" that appears to be unprecedented in Hawaii government history, and represents the most serious of the defects in the council budget amendments. The Hawai`i County Council has the power to reduce specific appropriations, which is the proper way for the council to cut spending. However, this Council declined to do so. Instead, the Council attempted to use this fabricated "Council Adjusted Expense Account" to press our administration to make cuts that the council was apparently unwilling or unable to make. Corporation Counsel on June 14, 2011 issued a legal analysis advising County Director of Finance Nancy Crawford that this Council use of the "Council Adjusted Expense Account" is in effect a violation of the separation of powers mandated in Article III of the Hawaii County Charter. Council Action on PONC Apparently Violates County Code An additional council amendment to Bill 29 proposes to cut funding for the Public Access, Open Space and Natural Resources Preservation Fund (PONC) by $1 million. This Council amendment would reduce funding for the PONC from 2 percent of county tax collections to about 1.5 percent of projected property tax collections for fiscal year 2012. However, Hawaii County Code Chapter 2, Article 42, clearly requires that 2 percent of county tax collections must be deposited into the PONC fund annually. Corporation Counsel therefore advises Finance Director Crawford that this council budget amendment appears to violate the County Code. Council Refuses to Increase Budget Reserves A third critical flaw involves the council budget amendment to divert funding away from the county's Budget Stabilization Fund. We recently witnessed dire events overseas with impacts that rippled out to affect our local economy, ranging from the Great Recession of 2007 -2009 to the tragic March 11, 2011 tsunami that devastated parts of Japan. Those events dramatized the need for a budget reserve fund to stabilize county finances during challenging economic periods. With those risks in mind, our administration's budget set aside $2.8 million in anticipated labor savings from collective bargaining to build up the county's budget reserves. The council disregarded that proposal, and instead amended the budget to spend the entire $2.8 million immediately, saving none of those funds for later. This is unwise because it fails to set aside additional reserves for what may be challenging times ahead. It is also risky, because this $2.8 million the council proposes to spend may not materialize. Depending on the outcome of statewide collective bargaining later this year, the labor savings could be smaller than we have projected. That is one important reason we urged the council to be cautious, and to place these funds in a reserve fund for the future. Unfortunately, the council refused. County of Hawaii is an Equal Opportunity Provider and Employer.