CA-0007 – Repeal and Replace Sections 10-15 and 10-16 – PONC Fund and Maintenance Fund

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III. FINDINGS AND RECOMMENDATIONS During its first meeting, the ad hoc committee identified a number of topics of interest. The committee focused its investigation and discussion on these topics during its subsequent meetings. These topics and the committee's findings and recommendations with respect to these topics are as follows: 1. Subsection 10-15(a) provides that a minimum of two percent of real property tax revenues shall be appropriated to the public access, open space, and natural resources preservation fund. Is this an appropriate figure? Findings: A) County appropriations from real property tax revenues in the State of Hawai`i range from: Honolulu - 0.5% Kauai - minimum 0.5% Maui - minimum 1% Hawai`i County - minimum 2%. B) Hawai`i County's rate is by far the highest in the State. Recent fiscal challenges have demonstrated the need to consider the appropriateness of this minimum 2% rate. C) Fiscal Impact of Reduction of Hawai`i County's PONC Rate Upon Core Services (Assuming FY2018-2019 RPT rates) 2%to 1.5%=0.5% Amount of Savings $1,500,000 Core Services that could be fiiuded with Cost Savings Example: Police Officers* 15 police officers 2% to 1.0% = 1.0% $3,000,000 30 police officers 2% to 0.5%= 1.5% $4,500,000 45 police officers *Numbers of police officers was used to illustrate the impact on FONC appropriation amounts on one sector of core services. D) The FY 2018-19 real property tax estimated revenues of Hawai`i County ($317,000,000) and Maui County ($321,907,576) are comparable. Consequently, Maui County's rate of a minimum of 1% is worth considering. Recommendation: The ad hoc committee recommends that the Commission consider reducing the percentage of the real property tax appropriated to the PONC preservation fund from a minimum of 2% to flat rates of either 1% or 0.5%. Option 1: Three members of the committee endorsed a reduction to a flat rate of 0.5%. -6-