REP FC 151 11/01/2011 2010-2012 - Laserfiche WebLink

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REPORT OF THE COMMITTEE ON FINANCE DATE: November 1, 2011 PLACE: Council Chambers Hilo, Hawai`i TIME: 1:53 p.m. Council Chair and Members Hawai `i County Council Hilo, Hawaii 96720 Re: Comm. No. 435/Bill 127 Your Committee on Finance, to which was referred Bill No. 127, reports as follows: Bill No. 127, transmitted by Director of Finance Nancy Crawford, via Communication No. 435 dated October 17, 2011, is a bill for an ordinance amending Chapter 2, Article 43, of the Hawaii County Code 1983 (2005 Edition, As Amended) by amending Sections 2 -219, 2 -220, 2 -221, 2 -222 and 2 -223 and adding a new section, relating to the Budget Stabilization Fund. The purpose of this bill is to clarify the purposes of the budget stabilization fund, increase the minimum amount to be appropriated annually, establishes a policy of accruing between five and fifteen percent of the operational expenses excluding state and federal grants, codifies dissolution of the fund, and continues to demonstrate the administrations appropriate and prudent management of the County's finances. Two proposed amendments were transmitted from Council Member Brenda Ford. Those amendments contained in Communication 435.1 dated October 25, 2011 were unanimously approved. Ms. Ford commented this proposed amendment as housekeeping amendments. Those amendment contained in Communication 435.2 dated November 1, 2011 were unanimously approved. Ms. Ford commented this proposed amendment as providing clarity in Section 2 -220. Council Member Ford worked with the Finance Department Deputy Director Deanna Sako on this. Ms. Ford stated the need to increase the budget stabilization fund annually as its estimated current balance is about $2,000,000. This minimum amount of $250,000 may be increased by administration recommendation or the council could amend the budget for a higher amount. This "rainy fund" will be available should the County experience a revenue shortfall. Furthermore, a policy statement precludes the use of the funds for any reason listed in section 2- 219. This situation may be viewed positively by the rating agencies when evaluating government's credit quality if this policy is established in the Hawaii County code. She also added prudent financial management was set by Government Finance Officers Association (GFOA) recommended standards which could be found on their website. Ms. Ford seeks the support of the members. Finance Department Director Nancy Crawford and Deputy Director Deanna Sako appeared before Your Committee. Ms. Crawford stated their support, but is concerned with setting the minimum annual contribution amount with the County's unknown fiscal situation. FC Report No. 151