Loading...
HomeMy WebLinkAboutCOM 0689.000 2012-2014 .40-57 Os h ; Walter K.M. Lau Managing Director William P. Kenoi :.i ` "'\*/;+ Mayor ▪ -f Randall M.Kurohara ▪ _Vi•µ;'`` Deputy Managing Director 'rAtfosH'� County of Hawaii Office of the Mayor 25 Aupuni Street,Suite 2603 • Hilo,Hawaii 96720 • (8o8)961-8211 • Fax(808)961-6553 KONA: 74-5044 Ane Keohokalole Hwy.,Bldg.C • Kailua-Kona,Hawaii 9674o (808)323-4444 • Fax(808)323-4440 February 28, 2014 J Yoshimoto, Chair -. And Honorable Members of the Hawai`i County Council County of Hawai`i 25 Aupuni Street Hilo, HI 96720 v Aloha Council Members: As required by the Hawai`i County Charter, submitted with this message is the proposed operating budget for the County of Hawai`i for the fiscal year ending June 30, 2015. This balanced budget includes estimated revenues and appropriations of$412,608,475, and includes the operations of eleven of the county's special funds as well as the general fund. This FY 2014-2015 budget is $9,403,477 or 2.3 percent larger than the budget in effect when this administration took office in 2008. During the past five years of budget challenges caused by the national and international recession, we have continued to invest in county infrastructure while restricting spending and coping with increased health care and other costs. This budget reflects those efforts to control the cost of government while always maintaining essential police, fire and other core county government services. After five years of declining revenues, we are finally witnessing a modest, measured recovery in property values. This will gradually translate into a stronger economy and a brighter budget picture. However, we also face a new challenge in the form of $18.4 million in additional employee expenses in the year ahead. Most of these costs were the result of public worker arbitration decisions and negotiated agreements that significantly increase salaries, wages, social security contributions and retirement obligations. These new employee and retiree costs reflect the difference between last year's budget and this year's budget. Despite those additional costs, this proposed balanced budget does not require any increase in property taxes. / Comm. No. (O ' Ref.To: Fe- Ref. Date rut 2 R ?014 2-0p County of Hawaii is an Equal Opportunity Provider and Employer. / Honorable Members of the Hawai`i County Council February 28,2014 Page 2 Population vs. Budget 192,000 $420 190,000 $410 188,000 $400 186,000 $390 184,000 $380 'o 182,000 $370 0 180,000 $360 178,000 $350 176,000 $340 OOcb�ol ryOOg1O �yL titi1ry 1ry'y� y"i NIX +Population ry� ry do �O ti0 --f-Budget Investing In Our Communities From the beginning of this administration, we have crafted budgets that limit spending, but also allow for targeted investment in our communities and our future. Through carefully selected initiatives we created or improved parks and playgrounds, built or rebuilt roads and other public infrastructure, and improved public services. Our primary objective has always been to make the County of Hawai`i a better place for our families to live and work. We have used the county's borrowing power and excellent credit rating to help stimulate the economy and create jobs during a period of low interest rates and favorable bid prices. In Kona, we answered residents' calls for relief from traffic congestion by advancing projects such as the La'aloa Avenue Extension, the Ka`iminani Drive Reconstruction and the Ane Keohokalole Highway, and we will soon begin work on the Mamalahoa Bypass. In Hilo, we are repairing downtown streets starting with the Kilauea Avenue Reconstruction, followed by the Kamehameha Avenue Reconstruction project. We will continue in the months ahead with repairs and improvements to Ponahawai and Komohana Streets. We have partnered with the University of Hawaii at Hilo, which has emerged as a critical component of our economy. Our university allows our young people to achieve better lives for themselves while providing a skilled workforce to help our island economy to grow and innovate. To help the university expand, we are advancing the Kapi`olani Street Extension to open up lands for new student housing, additional classroom space, and to alleviate traffic congestion. We are investing in parks, gyms, and playgrounds across the island where our families can engage in positive activities, and where our coaches can teach our youth respect, discipline, and teamwork. We opened covered play courts at Pana`ewa Park in Hilo, and built the Kamakoa Nui Park in Waikoloa. We have added seven playgrounds islandwide, and will soon be opening the Honorable Members of the Hawaii County Council February 28, 2014 Page 3 new Kali District Gym & Shelter. We renovated popular recreational facilities such as the Waiakea Recreation Center, Edith Kanaka`ole Stadium, Laupahoehoe Pool, Keokea Beach Park, and Pahoa Pool. We will soon make the largest investment in recreation in the history of the county by constructing district parks in Pahoa, Waimea and Kona. Despite the budget challenges of recent years, we continue to invest in alternative energy and agriculture because we understand those sectors are essential for a sustainable economy. We installed solar arrays on county buildings to reduce oil consumption and utility costs, and will use wind power at Lalamilo to provide clean energy to supply water to our communities. We are encouraging growth in agriculture by investing in training and support for farmers, and provided 1,739 acres of county-owned lands for ranching and community-based agriculture at the Kapulena Agricultural Park. We joined in a public-private partnership to upgrade the Pa'auilo Slaughterhouse and provide a new rendering facility to support our grass-fed beef industry. At the same time, we have preserved funding for public safety and essential core services. We funded additional police officers for the Puna and Kali communities, and opened the new Makalei Fire Station. We protected funding for nutrition, recreation and other services for seniors, and preserved and expanded programs for our children and youth. We maintained county funding to non-profit organizations serving the people most in need in our communities. Employee Count 2,800 2,750 2,700 2,650 2,600 1 "b' 2,550 11/30/08 11/30/09 11/30/10 11/30/11 11/30/12 11/30/13 Fewer Employees, Growing Costs We want to thank our county workers for their efforts during the Great Recession, which was a time when people across our island made sacrifices. Many of our employees accepted furloughs even as overtime was cut and staffing levels in county agencies were reduced because of hiring restrictions. County employees' workloads increased, but their hard work and dedication allowed us to continue to deliver essential county services and protect public safety. During these many challenging budget years, the size of the county workforce declined from 2,787 in November 2008, to a total of 2,628 five years later. Honorable Members of the Hawai`i County Council February 28,2014 Page 4 Even with that smaller workforce, the new negotiated collective bargaining agreements will significantly increase our employee costs in the year ahead. Wages, salaries and fringe benefits including health care and retirement for all of our employees will increase in all departments by a total of$18.4 million in Fiscal Year 2014-2015, with almost all of that increase attributable to these new agreements. County of Hawai`i tax collections in the year ahead will be $6.5 million or 2.9 percent more than the amount of property taxes collected when this administration began in 2008. However, the combined cost of employee wages, fringe benefits and health care expenses has grown by $30.44 million or 16.95 percent during the same period. OPERATING BUDGET BY FUND The following table describes the budgeted expenditures for FY 2013-14 and the proposed budget for FY 2014-15 for each fund: OPERATING BUDGET BY FUND (Amounts in thousands) FY13-14 FY14-15 Increase Percent FUND Budget Proposed (Decrease) Change General Fund $300,565 $314,514 $13,949 4.6% Highway Fund 34,524 35,597 1,073 3.1% Sewer Fund 9,757 10,743 986 10.1% Cemetery Fund 10 10 0 0.0% Bikeway Fund 171 171 0 0.0% Beautification Fund 183 452 269 147.0% Vehicle Disposal Fund 2,475 3,655 1,180 47.7% Solid Waste Fund 25,368 26,515 1,147 4.5% Golf Course Fund 1,206 1,232 26 2.2% Geothermal Royalty Fund 1,700 1,700 0 0.0% Housing Fund 18,060 17,969 (91) -0.5% Geothermal Asset Fund 300 50 (250) -83.3% $394,319 $412,608 $18,289 4.6% Honorable Members of the Hawai`i County Council February 28,2014 Page 5 REVENUES BY SOURCE The following table presents a summary of projected FY 2014-15 revenues from various sources and the changes from the current budget: REVENUES BY SOURCE (Amounts in thousands) Increase (Decrease) Percent From Percent FY14-15 of FY13-14 Increase Source Amount Total Amount (Decrease) Real Property Tax $232,400 56.3% $13,000 5.9% Public Service Company Tax 10,340 2.5% 195 1.9% Fuel Tax 7,330 1.8% 80 1.1% Public Utilities Franchise Tax 11,047 2.7% (520) -4.5% Licenses and Permits 21,968 5.3% 2,227 11.3% Revenue from Use of Money&Property 1,121 0.3% 215 23.7% Intergovernmental Revenue 60,082 14.5% (1,067) -1.7% Charges for Service 22,789 5.5% 34 0.1% Other Revenues 8,491 2.1% 771 10.4% Fund Balance Carryover 37,040 9.0% 3,354 9.9% $412,608 100.0% $18,289 4.6% REVENUE CHANGES The major changes in projected revenues are as follows: Real Property Tax. Real property tax revenues are expected to increase by 5.9%, or $13 million, due to new construction and an increase in taxable values. Public Utilities Franchise Tax. Decreased public utility revenues are expected to result in a decrease of$520,000, a reduction of 4.5% in franchise tax revenue. Licenses and Permits. Increases in vehicle registration revenue and vehicle weight tax revenue have contributed to an increase of$2.2 million, or 11.3% in this revenue source. Intergovernmental Revenue. Reductions in grant revenues of about $1 million reflect those grants we are aware of at this time. Fund Balance Carryover. This budget reflects a higher projection of carryover savings ($3.3 million) from the current year operations. Honorable Members of the Hawai`i County Council February 28, 2014 Page 6 EXPENDITURES BY FUNCTION The following table presents a summary of projected FY 2014-15 expenditures from various sources and the changes from the current budget: EXPENDITURES BY FUNCTION (Amounts in thousands) Increase (Decrease) Percent From Percent FY14-15 Of FY13-14 Increase Function Amount Total Amount (Decrease) General Government $49,149 11.9% $1,082 2.3% Public Safety 120,382 29.2% 3,631 3.1% Highways&Streets 25,550 6.2% 2,088 8.9% Health,Education&Welfare 25,592 6.2% 88 0.3% Culture&Recreation 20,756 5.0% 1,144 5.8% Sanitation&Waste Removal 37,330 9.0% 3,741 11.1% Debt Service 38,338 9.3% (1,561) -3.9% Pension&Retirement 39,381 9.5% 4,287 12.2% Health Fund 35,305 8.6% 1,939 5.8% Miscellaneous 20,825 5.1% 1,850 9.8% $412,608 100.0% $18,289 4.6% EXPENDITURE CHANGES Increases in salary and wages are reflected in all functional areas of county government. After several years of furloughs or no wage increases, new wages were negotiated for all bargaining units represented in the county. All salary and wages are reported in each department with the exception of the Unit 11 Fire agreement, which has not yet been approved by the legislature and is estimated in the provision for compensation adjustment account. Major changes in projected expenditures are as follows: General Government • Planning. Appropriations are increased by $495,000 for work on the General Plan update. Public Safety • Prosecuting Attorney. Three temporary, grant funded positions have been added for victim services. • The majority of other changes in public safety are attributable to salary and wage increases explained above. Honorable Members of the Hawai`i County Council February 28, 2014 Page 7 Highways & Streets • Public Works Road Maintenance. Approximately $350,000 is appropriated for additional maintenance equipment. • Mass Transit Agency. Increased appropriations of approximately $1.3 million are attributable to an increase in the cost of insurance and bus driver contracts. Culture & Recreation • Parks and Recreation Department. Eight positions to provide maintenance and recreation are being added for new locations that will be serving the public, including Ka`u District Gym & Shelter and `O`oma shoreline. • The majority of other changes in culture and recreation are attributable to salary and wage increases explained above. Sanitation & Waste Removal • Vehicle Disposal Fund An increased appropriation of approximately $1 million will provide additional funding for environmental cleanup. • Solid Waste Fund. The appropriation for landfill tonnage costs has increased by about $1.7 million because of increased operations costs. Debt Service • Transfer to Debt Service. As the result of refinancing old bond issues, there is a reduction of debt service cost of$1.5 million for the upcoming year. Pension & Retirement • Retirement Benefits. Contributions to the employee retirement system will increase by approximately$4.3 million, or 12.2%, as the result of new salary and wage costs and rate increases established by the state legislature. Health Fund • Health Benefits. Contributions to the state employee health system will increase by $1.9 million, which includes an increase of$1 million for future post-employment health benefits. Miscellaneous • Provision for Compensation Adjustment. This provision contains the estimated cost of salary and wages pursuant to contract negotiations that have not been fully approved, and increased by about $2 million. The $5.8 million appropriation is related to pending increases for Unit 11 Fire employees. Honorable Members of the Hawai`i County Council February 28,2014 Page 8 Conclusion This proposed budget represents a collaborative effort by our departments to address the growing needs of our growing population in a way that is both responsive and fiscally responsible. Our years of careful planning and conservative budgeting have positioned us to invest in our communities while maintaining core services and meeting our obligations to our employees. The recent, modest gains in property values point to a gradual economic recovery, and we remain cautiously optimistic that the economic and budget outlook will continue to improve. We believe our efforts to promote renewable energy, agriculture and higher education are an investment in the future of our island. We will continue to invest in recreational projects to support our youth and families and to protect public safety, and we ask for your support in these efforts. We look forward to working closely with the County Council in the months ahead to address our community's new and continuing demands for public services while also maintaining a balanced and responsible budget. Aloha, William P. Kenoi MAYOR Attachment