2019-06-18 Letter to Aaron Chung re Bill 30 (Draft 4) Fiscal Year 2019-20 Operating Budget

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Harry Kim Mayor CCouutu Patinilt`i Wil Okabe Managing Director Barbara J. Kossow Deputy Managing Director Mffirt of fir Atavor 25 Aupuni Street, Suite 2603 • Hilo, Hawai'i 96720 • (808) 961-8211 • Fax (808) 961-6553 KONA: 74-5044 Ane Keohokalole Hwy., Bldg C • Kailua-Kona, Hawaii 96740 (808) 323-4444 • Fax (808) 323-4440 June 18, 2019 Aaron Chung, Council Chair, and Members of the Hawai`i County Council County of Hawai`i 25 Aupuni Street Hilo, Hawai`i 96720 RE: Bill 30 (Draft 4), Fiscal Year 2019-20 Operating Budget COUNTY CLERIC COUNTY OF HAWAII RECEIVED Time 2 0 c By " I have returned Bill 30, Draft 4, the Operating Budget for Fiscal Year 2019-20, to take effect without my signature. The major points of concern which led to the return of the bill without my signature are as follows. Fiscal Responsibility The amendments adopted by the County Council increased the budget by $1,589,618, which does include two grants that were added to the budget. Fund Balance was increased by approximately $1 million, of which $630,000 went to Council Contingency Funds. While the fund balance increase is still within our estimates, we need to be conservative in our spending. It should be pointed out that the expected fund balance is primarily the result of departments being urged to cut spending where possible because of the anticipated fiscal year 2019-20 collective bargaining and other needs. As noted in the budget message, the provision for compensation adjustment was our largest increase between March and May. As we enter fiscal year 2019-20, we have yet to complete collective bargaining/arbitration for five of our eight bargaining units. While we have budgeted the expected impact of this in our Provision for Compensation Adjustment, the actual outcome is unknown and our estimate may not be adequate. In addition, the fourth and final Employees' Retirement System rate increase will be effective in fiscal year 2020-21. As you know that increase will be another sizable one. Impact on Operations One of the amendments adopted was to transfer the overtime in the General Fund to the Finance . Department. While this amendment did not grow the budget, the resources necessary to enact this provision are too great. It is understood that this amendment was to have better oversight and transparency on this issue, but in reality it does neither. Our Administration does share your County of Hawai`i is an Equal Opportunity Provider and Employer.