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COUNTY OF HAWAII Notes to the Basic Financial Statements June 30,2006 government to honor. GASB Statement No.46 did not have an impact on the County's basic financial statements for the fiscal year ended June 30,2006. The County adopted GASB Statement No.47,Accounting for Termination Benefits,effective July 1,2005. This statement establishes standards for employers'accounting of benefits associated with either voluntary or involuntary terminations. GASB Statement No.47 did not have an impact on the County's basic financial statements for the fiscal year ended June 30, 2006. 2. STEWARDSHIP,COMPLIANCE AND ACCOUNTABILITY Annual Budget The County follows these procedures in establishing its operating and capital budgets: • On or before March 1,the Mayor submits to the County Council proposed operating and capital projects budgets for the fiscal year commencing the following July 1. The operating budget includes proposed expenditures for the general fund and special revenue funds,and the means of financing them. A project-length budget is submitted to the County Council for the capital projects fund. • The Mayor submits to the County Council amendments to the proposed operating and capital budgets within ten working days after the close of the state legislature,but not later than May 5. • The County Council conducts public hearings on the proposed operating and capital budgets after March 1 but prior to the first reading on the budget bills,which must be after May 5. • On or before June 30,the County Council adopts the budgets. The legal level of budgetary control is the department level because the Mayor can transfer funds from any unencumbered appropriation to another within a department or agency without Council approval. During the year,the budget may be amended by action of the Council,except for appropriations required by law and appropriations for debt service,which may not be decreased or deleted. Supplemental appropriations were made during the 2005-2006 fiscal year to recognize revenue from sources not anticipated at the time of the original budget and to establish the authorization for such funds to be expended. Such supplemental appropriations totaled$10.1 million in the general fund and$5.4 million in the special revenue funds. • Appropriations for the operating budget lapse at the end of the fiscal year to the extent that they have not been expended or encumbered. Appropriations for capital expenditures that are not encumbered lapse at the end of two fiscal years following the fiscal year that the appropriation was made. - 54-