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HomeMy WebLinkAboutMIN COUNCIL 2022-05-19 2020-2022 Hawaii County Council 401h Session Special Session Hawaii County Building 25 Aupuni Street Hilo, Hawaii May 19, 2022 INVOCATION: Pastor John Endriss of Engage Church Hilo gave the morning's invocation. CALL TO The Special meeting of the Hawaii County Council was called to order at ORDER: 9:00 a.m., in the Council Chambers, Hilo, by Ms. Maile Medeiros David, Chair. ROLL CALL: Present: Ms. Maile Medeiros David, Chair Mr. Holeka Goro Inaba, Member (via videoconference from Kona) Mr. Matt Kaneali`i-Kleinfelder, Member Ms. Ashley L. Kierkiewicz, Member Ms. Heather L. Kimball, Member Ms. Susan L. K. Lee Loy, Member (came in later) Mr. Herbert M. "Tim" Richards, III, Member Ms. Rebecca Villegas, Member (via videoconference from Kona) Absent& Excused: Mr. Aaron S. Y. Chung, Vice Chair PLEDGE OF The Chair directed the Council to the next order of business, Pledge of ALLEGIANCE: Allegiance. (At this time, County Clerk Jon Henricks led the Council in the Pledge of Allegiance.) STATEMENTS The Chair directed the Council to proceed to the next order of business, FROM THE Statements from the Public on Agenda Items. PUBLIC ON AGENDA ITEMS: The following individuals registered to speak and came forward when called by the Chair: Lucille V. Chung: Bill 127, Draft 2 (Comm. 663), in support. (representing North Hilo Community Council) Jodi Mercier: Bill 126, Draft 2 (Comm. 645), comment. Hawaii County Council-40 May 19,2022 Debbie Hecht: Bill 126, Draft 2 (Comm. 645), comment. Deborah Ward: Bill 126, Draft 2 (Comm. 645), comment. BILLS FOR The Chair directed the Council to proceed to the next order of business, Bills for ORDINANCES Ordinances, (First Reading). (FIRST READING Bill 126: ESTABLISHES AN OPERATING BUDGET FOR THE COUNTY OF HAWAII FOR THE FISCAL YEAR JULY 1, 2022, TO JUNE 30, 2023 From Mayor Mitchell D. Roth, dated March 1, 2022, transmitting for consideration the proposed Operating Budget for the County of Hawaii for the fiscal year ending June 30, 2023. This balanced budget includes estimated revenues and appropriations of$689,903,974, which represents a proposed 13.1 percent increase compared to the fiscal year 2021-2022 Operating Budget. Reference: Comm. 645 Intr. by: Mr. Kaneali`i-Kleinfelder(B/R) Approve: FC-136 Public Hearing: May 17, 2022 and Comm. 645.40: From Mayor Mitchell D. Roth, dated May 5, 2022, transmitting Bill 126, Draft 2. Draft 2 reflects an increase in estimated revenues and appropriations of $89,774,066 over the first draft, reflects higher than expected real property tax collections, and proposes corresponding funding adjustments. ; and Bill 126: ESTABLISHES AN OPERATING BUDGET FOR THE COUNTY OF (Draft 2) HAWAII FOR THE FISCAL YEAR JULY 1, 2022, TO JUNE 30, 2023 Draft 2 includes estimated revenues and appropriations of$779,678,040. Intr. by: Mr. Kaneali`i-Kleinfelder(B/R) Motion to Approve: Mr. Kaneali`i-Kleinfelder moved to pass Bill 126 on first reading. Seconded by Ms. Lee Loy. CHR. DAVID: I just want to note that pursuant to Article 10, Section 10-2, of the Hawaii County Charter, the Mayor has submitted an amended Operating Budget to the Council on May 5, 2022. Just a reminder, we have to amend draft one with the mayor's proposed Draft 2 before we can discuss any amendments. So Council Members, any discussion on Draft 1 before we amend to Draft 2? Seeing none, all those in favor ofI'm sorry. Page 2 Hawaii County Council-40 May 19,2022 Motion to Amend: Mr. Kaneali`i-Kleinfelder moved amend Bill 126, Draft 2, with the contents of Comm. 645.40. Seconded by Ms. Lee Loy. CHR. DAVID: Discussion, Council Members? MR. KANEALI`I-KLEINFELDER: For Draft 2—as amended? CHR. DAVID: Yes. MR. HENRICKS: You could call for the vote to amend to Draft 2, or you could discuss prior to. CHR. DAVID: Okay. Alright. MR. HENRICKS: Either way works. But to really move forward we would need to amend to Draft 2. CHR. DAVID: Okay. Anyone else wants to discuss before I take a vote on draft two? Seeing none, all those in favor of amending Bill 126, Draft 2, please say "aye." Vote on Motion The motion to amend Bill 126, Draft 2, with the contents of to Amend: Comm. 645.40 was carried by the following voice vote: (Approved) Ayes: Council Members Kaneali`i-Kleinfelder, Kierkiewicz, Kimball, Lee Loy, Richards, Villegas, and Chair David–7. Noes: None. Absent: Council Members Chung and Inaba–2. Excused: None. CHR. DAVID: Ms. Sako, would you like to take the table? (Note: At this time, Finance Director Deanna S. Sako came forward to address the members of the Council.) MS. SAKO: Good morning. CHR. DAVID: Good morning. Page 3 Hawaii County Council-40 May 19,2022 MS. SAKO: Good morning, everyone. Thank you for the opportunity. We just wanted to go through some of the big picture changes from March to May. I know the $89 million does sound like a large number. It is, but part of that is also grant funded. So we just wanted to make sure that everybody is all on the same page. (Note: At this time, Deanna Sako provided a PowerPoint presentation to the members of the Council. For viewing of the presentation, see DVD copy of the meeting proceedings on file in the Clerk's Office navigate to the Council's video archives from the County's homepage at www.hawaiicounty.gov. A hard copy of the presentation is made a part of the record. See Comm. 645.41.) MS. SAKO: So we're happy to answer any questions, and we'll be available as you discuss the budget today. CHR. DAVID: Thank you, Director Sako. Council Members, questions? Mr. Kaneali`i-Kleinfelder. MR. KANEALI`I-KLEINFELDER: Thank you very much, Chair. Thank you, Deanna, for the presentation. Touching briefly on testimony provided this morning for the PONC (Public Access, Open Space and Natural Resources Preservation Commission) fund administrative functions, it was little concerning to hear that we're actually, I think last meeting was falling behind a little bit and required minutes,public documentation MS. SAKO: We have had some personal issues, not personnel issues but personal issues with some of the staff in that section, which I'm not going to elaborate on here, but that's the reason why. You will notice in the Property Management section of the budget we did ask to add one percent to the Property Management Division. So that we can determine what is best needed. We're still in the process of transitioning the grants from Parks and Recreation, but you know, that process has started. And so as this coming year plays out we'll see what the actual level is, but we did put in for a Senior Account Clerk. MR. KANEALI`I-KLEINFELDER: Okay. I think that helps. I just want to make sure we don't fall behind because weI don't think there's almost an issue having a meeting and being up to date with the administrative functions, which really speaks to having more personnel. MS. SAKO: I believe they are moving along, in their process as normal. They've been taking public testimony, they've been doing site visits, they've been looking at grant applications, and they've been doing pretty much everything, so yeah. Page 4 Hawaii County Council-40 May 19,2022 MR. KANEALI`I-KLEINFELDER: Okay. Second question. Draft 2, is based on the Real Property Tax value decreases proposed by the Mayor, correct? MS. SAKO: Real property tax rate decreases. MR. KANEALI`I-KLEINFELDER: The rate decreases, yeah? MS. SAKO: Correct. MR. KANEALI`I-KLEINFELDER: When would a resident see the benefit of the proposed tax rate decreases? MS. SAKO: So, those would become effective with the August and next February payments. MR. KANEALI`I-KLEINFELDER: So this August they would see it? MS. SAKO: Right. So we set the values on January 1st when the rates are set by Council next month, then those will be applied to the bills that will come out in July. So it will be any of—we split it in half, so basically August of 2022 and February of 2023. MR. KANEALI`I-KLEINFELDER: Okay. Are all of the recent bargaining unit increases covered under this budget? MS. SAKO: We believe so. There are still two bargaining units that have not completed arbitration or any negotiations. We did base our estimate on the other bargaining units that have completed negotiations, as well as, you know, we stay in close contact with our Human Resources Director to ensure that we—we do feel we've adequately budgeted for that. But because they're not finalized yet, one is currently on arbitration so it's up to the arbitrator. And we do our best to estimate, so we hope we have it all covered. MR. KANEALI`I-KLEINFELDER: Which are the two outstanding right now? MS. SAKO: Fifteen and twelve. Fifteen is the Water Safety Officers, which guard the beaches, and that's a relatively smaller bargaining unit. The larger one, BU (Bargaining Unit) 12, is SHOPO (State of Hawaii Organization of Police Officers) or Police Officers. MR. KANEALI`I-KLEINFELDER: Wow, okay. Was the recent decision by the State to increase minimum wage to $12 an hour ? MS. SAKO: We're still analyzing that, but I believe it will have an impact if it gradually increases over the years. BU-3 is one of the units I'm worried about. Page 5 Hawaii County Council-40 May 19,2022 So we have a lot of clerks within the County, SR-8's, 10's, 11's, in that range. They, for whatever reason when they negotiated, did not get step movements this year. So they did get across the board raises but not step movements. So because they're not having step movements, I am concerned that some of them could be low and we'll have to take a closer look at that. MR. KANEALI`I-KLEINFELDER: Okay. Does that affect 2022-2023? MS. SAKO: I hope not. I think it would probably be the following year, because I think it's stepped up, right? I don't have the final bill in front of me. MR. KANEALI`I-KLEINFELDER: Okay, that's it for right now, Chair. Thank you, I yield. Thank you, Deanna. CHR. DAVID: Thank you. Mr. Kaneali`i-Kleinfelder. Mr. Richards, go ahead. MR. RICHARDS: Thank you, Chair. Thanks, Deanna. Thanks for the quick update on where we are in the added proposed expenditures into our budget. Couple things on this Deanna, I also wanted to compliment you on the relative comparisons to the other counties, that's something that gets lost. We have a huge County and that's part of our problem. No matter what department we're talking about, it dilutes out our efforts. I also appreciate the fact you're coming up with economy of scales, that's so glaringly evident, which is part of our challenges going forward. Deanna, can you comment on our contributions? Because I know through the whole pandemic, we kind of throttled back and then we started to ramp up. Could you just kind of give a brief overview of where we were, what we did, and now where we're headed? MS. SAKO: So when the pandemic started, we were in fiscal year (FY) 2020, and we had budgeted, and I believe we were able to pay the full amount of our OPEB (Other Post-Employment Benefits). Then in fiscal 2021 when the tourism decreased, revenue's decreased, we did not budget for that full amount. We were allowed not to pay the full amount of OPEB based on the Governor's proclamation, so we may have made a small contribution, but not very much. Then in fiscal year 2022, the State Legislature did suspend it so we all had to pay the pay as you go amount of the current premiums, but we didn't have to pay that additional actuary portion. So with the loss of TAT (Transient Accommodation Tax), that is what we did not pay, basically, when the revenue's decreased. So now with TAT returning, or the Hawaii County TAT not the State giving us TAT, we have fully funded that again in the FY 2023 budget. Page 6 Hawaii County Council-40 May 19,2022 We did budget for and are making a small contribution in FY 2022, but it's not the full amount. We're probably going to be about$12-15 million short at the end of the year. MR. RICHARDS: And the plan for catching that up, so we're back on schedule? MS. SAKO: So the actuaries will basically—it will be applied to the next 20 years or so as they do the actuarial portion. But, you know, what we pay now gets to earn interest and accrue that towards our actuarial liability. So by not paying it, you know, we will be paying more in the future. MR. RICHARDS: Okay, thank you, appreciate that. Total contributions again, for people listening, what numbers are we talking about on this, again rough numbers? MS. SAKO: Yeah, so our total amount budgeted for FY 2023, is $42.9 million. MR. RICHARDS: Okay, I just wanted to put that in context for people. Okay, thank you. Again,jumping over to the GE(General Excise) Tax and our portion, that half percent. You and I have discussed this, that's probably the best way we can measure our economy in this County. I know we took a hit during the pandemic, we're bouncing back. Have you made any calculations as far as what you think our economy is doing based upon the first five months of this calendar year? MS. SAKO: So it's one of the ones that, you know, whatever the stores collect in January they pay in February, and we get in March. So there's definitely a delayed reaction, but Steve does monitor that for us, and we are on track. For the current fiscal year, we believe we're on track to collect about$50 million, maybe a little bit over. So it's definitely recovering rather quickly. MR. RICHARDS: Okay, so that$50 million again, rough numbers, will translate to a $10 billion economy, which is up from previous. So from an economic standpoint it looks like we're more than just recovering. We're actually starting to build a little bit, which I think is what we as a Council need to be mindful as we go forward, when we're planning our revenues and expenditures. Okay, thanks Deanna, appreciate that. Chair, I yield at this point. CHR. DAVID: Thank you, Mr. Richards. Anyone else on this side? Ms. Lee Loy, go ahead. MS. LEE LOY: Yeah, thank you. Thank you, Deanna. And I really want to thank my first two colleagues, they really laid a great foundation of questions. Deanna, can you take us back to slide seven on the May General Fund expenditures? I know you know this like the back of your hand, and you went Page 7 Hawaii County Council-40 May 19,2022 real quick. I just wanted you to slow down a little bit around the percentage for public safety, you mentioned Police, Fire, Prosecutors are in there. You also mentioned MS. SAKO: Pie chart? MS. LEE LOY: Yeah, the pie chart, that's the one. MS. SAKO: So these are the ones that the account numbers are any department with a 200 in front of it, so in the 200 series. So basically Police, Fire, Civil Defense, Prosecuting Attorney, and these do include their grants as well. You know, these are departments that definitely go after grants. It also includes Animal Control, Civil Defense, Liquor, I think I said Prosecuting Attorney and I think that's it. Building Inspection is also in there, not Building Permits but the Building Inspection. MS. LEE LOY: The Inspectors, correct? MS. SAKO: Yes. And there's a very little bit for flood control as well. But by far Police and Fire are the largest amounts. MS. LEE LOY: And then the other one that you mentioned that caught my attention was the General Government, and then the Pension and Retirement. MS. SAKO: So General Government has all of you, the legislative branch, the Mayor's Office, Finance, Corporation Counsel, Planning, Department of Human Resources, Research and Development, and Public Works. The non-inspection, non-highway fund, but General Services, Building R&M (Repairs and Maintenance), Automotive, Public Works Administration, and part of their Engineering Division. MS. LEE LOY: Perfect. And then the last one I had was on Pensions and Retirement. MS. SAKO: So Pension and Retirement covers both the ERS (Employees Retirement System) contribution, or primarily the ERS contribution, but also FICA (Federal Insurance Contributions Act). I don't think I'm forgetting anything, and that does include the portion for the pay raises as well. MS. LEE LOY: That was asked earlier, right? MS. SAKO: Yeah. I mean the related portion for like the FICA. So for General Fund the retirement benefits are 64.5 percent, and FICA is 7.5, and then we must have the additional provision. So retirement benefits, as a reminder, they have not gone up. This would be the second year we haven't had to pay an increase rate Page 8 Hawaii County Council-40 May 19,2022 and we are very thankful for that. However, we do pay 41 percent for Police and Fire, and 24 percent for all other employees. So that larger section of the pie that has Police and Fire in it, is what we do pay the 41 percent directly to ERS on. MS. LEE LOY: Got it. Then earlier the question was asked about where we are with our Bargaining Unit contracts, and some of that also comes with health care premium coverage, right? MS. SAKO: I believe those have all been maintained at the 60/40. MS. LEE LOY: At the 60/40. Any indication that portion will go up because health care cost has gone up? MS. SAKO: Health care cost has been going up. We budgeted a little bit lower this year. Part of that is our mix of plans, too. You know, when we hire people, we're not sure if they're going to take the single, two-party, or family, so some of that can just be the mix as well. MS. LEE LOY: Okay, great. Thanks, Deanna. Chair, I yield. CHR. DAVID: Thank you, Ms. Lee Loy. I'm going to go to Kona, if you folks have any comments, Kona? MR. INABA: Not at this time, Chair. CHR. DAVID: Thank you. Ms. Kierkiewicz, go ahead. MS. KIERKIEWICZ: Thank you, Chair. Thank you, Director Sako, for the overview. I just want to take the opportunity to mahalo you for always finding a way. I know we come to you with a lot of requests. I came to you with housing production fund request, and you delivered beyond my wildest dreams. So I want to just thank you and recognize all the great work that our County workers do. You know, Council Member Richards talked about our economy bouncing back. I really think we've catapulted forward, and we are awash with cash. We have been for so long just been trying to get by pinching pennies, and I think in this time of abundance, I can see from the budget breakdown that you've provided here that we're just trying to solve for a lot of long-term challenges. I just question though, are we investing too much too fast? Because I worry about our capacity and our ability to be able to deliver, but also to be able to sustain this level of government. MS. SAKO: So couple different things factor into that. One is we have been trying to do things like housing production, something that's not a one-time shot. We want to continue to fund that over time, but at the same time if the economy Page 9 Hawaii County Council-40 May 19,2022 really started to contract, we could pull back on it. We tried to be deliberative about the positions that we added in, knowing that also comes with fringe benefits. The State has taken action though, so that anyone hired after July 1, 2000, on or after July 1, 2012, is not entitled to the same retirement benefits as people hired prior to that date. And so they do not earn retirement benefits on their overtime, for example. So as we see like some of our longer-term, long-time employees retire the newer employees are not going to be accruing at the same benefits. So even though we have to pay 41 percent on Police and Fire wages, the ones that were hired on July 1, 2012 or later, we do not have to pay that 41 percent. So over time we should see a savings in those benefit areas, as well as our County, actually all the counties in Hawaii really worked hard to fund our OPEB from an early date. I forget the exact percentage funded, but I want to say we're getting close to 40 percent funded now. So that is really going to help us in the long run to hopefully decrease those. It might be another 10 or more years before we see a significant reduction, but we're trying to work to save and put money aside now to save for the future. We all want our kids to be able to come home and afford to live here. We try to be strategic about it, but we do know what goes up must come down. I mean we've said it many times. Our Real Property Tax market, the values have continued to increase, and we know there'll be a correction at some point and time. MS. KIERKIEWICZ: Right, and that's really what I'm trying to brace myself for, it's not a matter of if but when. Are we ready for that? I'm just curious around, you know, within this increase of revenues that we have seen, I mean is the rolling this is like my third budget cycle, so really trying to get the grounding here. Is there this unspoken rule or written rule around every dollar that comes in must be expended? I mean is there a way for us to be carving some of that out for contingency plans? MS. SAKO: So we can put additional funding into the Budget Stabilization fund, so if there's a revenue loss in the future, we could be prepared for that. We tried I believe we transferred money to Self-Insurance Fund, because we never know when we're going to have claims. We have been hit with some large claims in the past, which is why we did budget for excess insurance so that when we get hit with large claims in the future, the intent is that the insurance would help us to cover that and the County wouldn't have to fork that out, you know, completely. So we try to make some good decisions as part of this budget as well, but it's always a concern, I mean we never know what the economy is going to do. This is the first time we've had a significant inflation in 40 years, or whatever it is. So every year, it's not just the three years, you've been on Council, but every year is Page 10 Hawaii County Council-40 May 19,2022 a different challenge to both the Administration and Council as we work through the budget. MS. KIERKIEWICZ: Thanks Director. Off the top of your head, sorry to put you on the spot, but I'm sure you know this, are you able to kind of tell us how much exactly is in the Budget Stabilization fund, if there was any increase this year? And historically, what has the Self-Insurance fund looked like? You talked about some kuleana that we have based on some of the decisions that were made here and my prior councils, so can you just give us a ballpark or precise number of what are in these funds? MS. SAKO: So historically, the Self-Insurance fund had about$1 million to $3 million in it, and we did have some large claims, and that went down so only had a few hundred thousand dollars. So we are putting a million in and we hope to do that for each of the next few years to kind of build that back up. It is only used for claims that exceed $1 million and that has to be approved by Council before we can expend that, so that's significant. The Budget Stabilization fund should be getting close to about$7 million now. We had put in funds previously, you know, probably that time when the values went up that year. So it then per County Code,we're require to put$250,000 in a year so that has been growing slowly. It's also the way the Code is written, we can use it if there's something like a 9-11 event, you know, where suddenly tourism stops that we didn't anticipate, or perhaps even COVID (coronavirus disease), where a mid-year reduction occurs, then we can come to Council to ask to release some of that funding. MS. KIERKIEWICZ: Because of CARES funding there was no need to tap that Stabilization Fund? MS. SAKO: Correct. MS. KIERKIEWICZ: Okay, so we're at about$7 million. When was the last time we kind of pulled from that fund? MS. SAKO: I don't think we've ever had to pull from it? MS. KIERKIEWICZ: Okay, not even during lava? MS. SAKO: No, not even during lava. MS. KIERKIEWICZ: Okay, that's really helpful context. Thank you. I'm just back to, I remember when the federal government mailed all of us stimulus checks, oh, did I wanted to go shopping but my partner's like, "Uh-uh, you're saving, we're just getting what we need." So that's really what I'm trying to do Page 11 Hawaii County Council-40 May 19,2022 here. It's just making sure that our budget supports what our needs are because at the end of the day, when constituents see this huge number, they expect the quality of life to improve, right? They want to know if we're going to be investing in highways, I want to make sure that Kalaniana`ole is pau. I want to make sure that I am a lava survivor, and I can get back home. They want to know that if we're going to be investing in wastewater, that these treatment plants are functioning and that we're not going to be saddled with any fines or fees from the EPA (Environmental Protection Agency). So where I'm a little bit stuck, too, is there are other things that I hoped to have seen at this point, like where we're at with ARPA (American Rescue Plan Act) and how we're spending that. We talked about wanting to support workforce development, economic development, filling the gap for childcare, which continues to be need, supporting farmers. I have farmers on a regular basis calling me saying, "Ash,pigs and sheep are eating my stuff, I need support with fencing." There is no program within R & D (Research and Development) to kind of support that, and that's something that I, and I know Council Member Richards has been advocating for, for a long time. I'm thinking about we're in hurricane season, all the albizia trees that are around this island and what happened in 2014 with Iselle, and where are ways we can use some of our funding to support invasive species mitigation. I also think about how this budget aligns with one of the main themes of this administration, and that's sustainability. I just don't know if I'm seeing those particular earmarks connecting to these like values and shared visions that we all have, waste reduction, waste diversion. So I'm just going to say today, at first reading, I'm going to vote no on this budget because what I'm hoping I can learn between now and second reading is because I support this, Deanna. I support the investments we're making, but I want to make sure that at the end of the day, the community knows that we can deliver. That is the part that I just don't see here, the plan for communicating out the progress that we're making. People want to see the return on investment. So I just want to make sure that we're in a position to be able to communicate that out. Does that make sense? I don't know if that's a dashboard online, you know, that's something that Sue and I have been asking for a long time now. How do we make sure that every single dollar that we are expending, because we're delivering excellent service, but like people see that they're money is being well used? MS. SAKO: So we do understand those concerns and so some of the things why were they in the foundation in this budget, maybe it doesn't stand out, and it's because we're working on getting the electric buses and the hydrogen buses and all of that. So we have entered into, I believe the Council approved that multi- year commitment with sustainability partners to be able to, you know, get the Page 12 Hawaii County Council-40 May 19,2022 infrastructure in place, but it's probably going to be starting the end of next fiscal year. So it is budgeted in the General Excise Tax fund for buses, there are vehicles that, you know, the intention is that to get as many as possible of electric vehicles in the coming year. So some of them we specifically put hybrid in, we didn't go back and change every single one. We're not ready to do it with our big trucks yet, but we do want to start with the sedans and smaller SUVs just to ensure that, you know, we are trying to be more cost effective and efficient. I forget some of the other things you mentioned but definitely—and one of the things that you did say that I just feel the need to point out, but invasive species is covered by the state and it's their kuleana. You know, yes, we end up taking over a lot of the state's kuleana all the time and can we do it? Yes, but when is the state going to step up? When is the state going to take care of it? You know, someone posted after the Star Bulletin article—we've had coqui frogs on this island for how long. In the Star Bulleting article on the coqui frog hotline, they don't even list the Big Island. It's only for Kauai, Maui, and Oahu? Because we know how to deal with it already? Because we had to deal with it? The state has never stepped in to help. Same thing for the goats, the sheep, the fire ants, and everything else, but especially the albizias. So if the State could kind of work on some of those issues or partner with us, that would be really helpful. The fact they don't even list us on the hotline, that's shame. MS. KIERKIEWICZ: I kako`o that 100 percent and I understand that we need to be in our own wa`a, rowing with excellence, but we also approved Bill 111 to deal with homelessness issues, which really is the responsibility of the State to tackle. So you know, there are shared responsibilities. I'm not saying that we have to solve every single one of these items, but there's a piece that we hold in the puzzle. MS. SAKO: So Doug Adams has laid out the ARPA funding, so he does have that and one piece of it was also for Agriculture. MS. KIERKIEWICZ: Thank you, Director. I hope you can just respect the decision that I'm making today and that we can have a bit more conversation around how we ensure that all the hard work that, you know, we're doing, the investments that we're making, can be properly articulated out into community and that they have assurances around like when they are going to see this money working for them. Thanks Director. Chair, I appreciate the latitude, I yield. CHR. DAVID: Thank you, Ms. Kierkiewicz. Mr. Richards. MR. RICHARDS: Thanks Chair. Deanna, I echo some things that Ashley has said. You've seen the $90 million bump and about half of it, and you know me, I'm a round numbers guy, about half of it is grant funding, and I appreciate that. So the public does need to know that is very appropriate for that. The other side Page 13 Hawaii County Council-40 May 19,2022 of the coin is that the value, like I said, I really like the numbers here as they pertain to square mile,population, et cetera, but it comes down to the value of what we need. Something that you and I have touched on, we're also very mindful of reduction of our tax liabilities could impact the funding out of (Washington) DC and converting that from a grant to a loan, and we don't want to do that. MS. SAKO: We do not want to do that. MR. RICHARDS: We do not want to do that. So I think that's $140 million, if I recall right, of what we received from the federal government. What is that tax liability, real property tax collection that we should not go below that would put that in jeopardy? MS. SAKO: So if I did the calculation correctly, our controller, Kay Oshiro, did provide the increase, I believe our real property taxes need to be at about $402.5 million. MR. RICHARDS: Okay, so roughly $400 million then. Okay. Also noted that in our budget, normally I've always thought about real property tax, which is our primary funding source, about 60 to 62 to 63 percent. This next year it looks like it's dropping to low 50's. A good portion of that is because of that grant funding. MS. SAKO: Correct. MR. RICHARDS: As we go forward, we as a Council, we struggle back and forth, and I think this is something that we've talked about, by Charter, we must have a balanced budget. MS. SAKO: Correct. MR. RICHARDS: Which is excellent because that means we're not in tough financial shape. But what that means is our expenditures must be less than our revenue. They don't have to match, and this is something that Ashley was touching on, and that's what we're trying to figure out how to navigate going forward. So I just want, again, the public to understand what we are trying to do and on the one hand, we have so many needs in this county that have been deferred. Parks and Recreation is an example of that. MS. SAKO: So that is one of the places we've added money to, along with DPW (Department of Public Works) because, you know, I did hear the testimony about Papa'aloa gym. We are all very saddened by that. Until they went in and crawled underneath the damage, we didn't realize it was in that bad a shape. But by devoting additional dollars to it, though it might not help Papa'aloa, we are Page 14 Hawaii County Council-40 May 19,2022 hopeful that it will help prevent that from happening to some of our other facilities. MR. RICHARDS: Yeah, and so I appreciate this. So that's what we're struggling with, but you know that because it's always kind of a dance to make this thing work. So Chair, I'm going to yield at this point and per discussion, I do have something I want to talk about, but you tell me when you want to do that. CHR. DAVID: Okay, thank you. Let me go to Mr. Kaneali`i-Kleinfelder. MR. KANEALI`I-KLEINFELDER: Thank you, Chair. Deanna, last night, I was doing some late night reading online and a lot of fingers the current stock market outlook, everything is pointing towards recession. I'm not going to try and rebuild what we think could happen, but I think sometimes it's best to just look back. So 2009, when did we hit recession from when the bubble burst in the real estate market in 2008-ish, 2009-ish? MS. SAKO: I didn't bring that with me but when the Kenoi Administration came in the 2008-2009 fiscal year, we started to see signs of a decrease and the following fiscal year 2010 budget and beyond were all contractionary or smaller budgets. MR. KANEALI`I-KLEINFELDER: Okay, and what—and looking back at that, I mean best to look back right there because I think we were crested yeah? I've heard of both ways, I could be wrong, but if we're cresting and we're looking, like I said, look back then to what we did in 2010, what decisions, because you were here during that time, what decisions would you have made then,prior to that contractionary time period, that we could grow from right now? I mean obviously we're flushed, that's great, but I don't think this is going to last, and also like Ms. Kierkiewicz touched on, how do we prepare for that? MS. SAKO: So we definitely did prepare for—save for a raining day basically, so we did boost up several of our reserves at that time. So it was one-time investments, that's why we do have the money in some of those funds that we have today, not just the Rainy-Day Fund or the Budget Stabilization Fund, but also Disaster and Emergency funds and whatnot because, you know, one of the things that we can guarantee is we will have another disaster on this island. I think we have more FEMA (Federal Emergency Management Agency) disasters than any place. It doesn't mean they're big ones, but you know, it damages our infrastructure, it impacts our people, and we have to recover from it every single time. So the voters did pass the one percent of real property taxes to the Disaster Fund. This is the first year that, you know, that monies are going in. So that fund will continue to grow at that rate of one percent of real property taxes, so this year it's about$4 million or whatever that is. Page 15 Hawaii County Council-40 May 19,2022 So you know definitely, we could put more money aside in like the Budget Stabilization Fund and things like that, but we are trying to do like those one-time fixes. The fact that our two largest police stations in Kona and over here in Hilo, you know, that we can't even get the air conditioning to work right. We're trying to fund some of those things that are one-time things so that we can take care of it, because if we don't fix it this year, there's probably not going to be money to do it for a long time to come. MR. KANEALI`I-KLEINFELDER: Okay. Beyond that, I mean in the case of a large emergency like an eruption, we're going to fall back to the state and the feds for funding. MS. SAKO: We will. MR. KANEALI`I-KLEINFELDER: So that's where my mind goes. Just in light of what we know, what we've been through already, again, are there things that we should be doing besides putting $1 million towards our Budget Stabilization Fund, I'm sorry, Self-Insurance fund, $250,000 to Budget Stabilization, I mean what did we learn from that 2010 year where look, we were flushed with money in 2008 and 2007, but it would have been real nice if we have done this? MS. SAKO: We're a very labor-intensive—you know, our product is service so whether it's police, it's fire, all of it is people. All of it is people, it's not like, you know, we can go buy something and buy something ahead of time. You buy a computer, it's going to be outdated soon so you can't like stock up on it ahead of time or things like that, but we are trying to automate things where we can, you know, trying to have more online services where we can. Once we get everybody on REAL ID, then it's more likely we can go online to renew our drivers' licenses, but you know, there are a lot of rules, most from the state and federal level that prohibit us right now from doing some of these things. So the one way is to make things more automated and make the investment there. We're trying to get the new financial system, hopefully it'll make payroll and other things easier as well. But as we ask for dashboards and other things as well, you know, that also takes people and time and labor to set those kinds of things up. Once they're set up, you know, great, it works but it takes an investment and time, so labor is our biggest thing. One of the differences between back in 2010 and now is if you look at the percentages that we're required to pay to ERS, it's much, much larger. You know, we were back at I think it was less than 12 percent before, and now we're paying 41 percent for Police and Fire. It's never going to be like it was before, unfortunately. So there could be hard choices in the future, but you know, when people call 9-11, they really want somebody to respond. Page 16 Hawaii County Council-40 May 19,2022 MR. KANEALI`I-KLEINFELDER: Okay, so noI'm not getting any shiny examples of it would have been really nice if we took care of this, paid off debt, you know, addressed this situation here, given what we know is about toI mean I think it's going to happen. Okay, I'm going to go back and take a look at that. Question. Sorry Chair, I'm looking over the revenues, Vehicle Disposal Fund, $3 million into the capital projects. What is that? Is that normal for one to transfer that much from the Vehicle Disposal Fund into the Capital Improvement Projects? MS. SAKO: It has been for the last few years. I think you recall them talking about doing all the environmental cleanup at our facilities in both West Hawaii and East Hawaii where they're stock piling cars, the vendor was, and there was you know, vehicles have fluids that end up draining. So they have been doing all the remediation themselves to not have an impact on the General Fund. So they have been paying the debt service that they had to borrow that wasn't enough that they transferred. So they've been paying the entire debt service and paying for all of those costs themselves from that fund. MR. KANEALI`I-KLEINFELDER: Okay, then within that same Highway Fund too, looking back to Police or Public Safety, we have two fairly large moves, $835,000 for South Hilo and $800,000 for Kona. MS. SAKO: Are you in the Highway Fund? MR. KANEALI`I-KLEINFELDER: I'm in the Highway Fund and then movingsorry, Highway Fund, yes. MS. SAKO: So South Hilo Police, that is both of the Traffic Enforcement Units, for both the east and west side. MR. KANEALI`I-KLEINFELDER: Okay. Then touching on the Short-Term Vacation Rental Enforcement Fund. What is the funding mechanism for that? MS. SAKO: When you register your short-term vacation rental, if you're in, I'm not going to get most of the right words, but one of those areas you're not supposed to be in, you have to pay a larger fee. The others, you register one time, so those are the fees that Director Kern has talked about re-evaluating to make the fund more sustainable going forward. MR. KANEALI`I-KLEINFELDER: So this year it looks like $422,000 and some change, yeah? MS. SAKO: Right. Initially, there was some big initial fee, but now that appears to be the kind of an annual amount. Page 17 Hawaii County Council-40 May 19,2022 MR. KANEALI`I-KLEINFELDER: Off the top of your head, what is that covering within their fund,just their ability to enforce noncompliance? MS. SAKO: Also to do the paperwork and process the paperwork as well. MR. KANEALI`I-KLEINFELDER: Do they have extra staffing that this funding is covering? MS. SAKO: They initially had additional staffing, yes. MR. KANEALI`I-KLEINFELDER: Initially? MS. SAKO: I don't know how many people still service this because not everyone has to register annually anymore, but they do have set positions. I just don't think they have quite as many as they did before. MR. KANEALI`I-KLEINFELDER: Okay. MS. SAKO: I can grab my binder if you want to know specifically how many. MR. KANEALI`I-KLEINFELDER: No, no problem, Director, I'm just kind of touching on things that caught my eye. I really do caution—what I'm seeing, inflation and then when we start basing our revenue stream for the future, I'm really cautioning that we be very careful right now. I mean I saw mentioned of seeing gas prices double on the mainland, go to $10 a gallon. Whether that's true or not, I don't know, but if we see something like that, it's going to reset how we see life. So if we're basing revenues, we look at GET (General Excise Tax), we look at Highway Fund, we look at all of these revenue sources, there's a good possibility they will not be at the numbers we hope to see. I really the proposed changes to our tax rates proposed by the Mayor, guiding the budget right now, I really just—the folks who need the help, I don't think are being helped. When I look at the rates decrease to specific categories, I do not think that decreasing certain categories leads to cost savings for the residents who need the help. One of our testifiers said that in an email, and I thought about that statement, and I think it's very true. Homeowners, Residential, there's a large category of parcels, our property tax classes. The folks who need the help, I don't think that these rates are going to address the help that needs to be done. That's my thoughts. With that, thank you. Thank you for your time, Deanna, I appreciate it. Thank you, Chair, I yield. CHR. DAVID: Thank you, Mr. Kaneali`i-Kleinfelder. Going to Kona, anyone? Page 18 Hawaii County Council-40 May 19,2022 MR. INABA: Thank you, yes, Chair. Good morning, Director Sako. Regarding the rates, what guided the setting of these rates and the reduction of certain classes? MS. SAKO: So we did try to look at the budget as a whole and, you know, hotels did take a big hit during COVID. They were empty for much of 2020 and part of 2021, so we did try to help them by reducing those rates. Conservation goes along with the Hotels and Resorts because that is primarily the golf courses that are there. Then ag has also suffered. They do have a lower rate so they may not have seen as substantial of a discount, but we do, obviously,understand they really got us through the pandemic. I believe the justification is actually listed on page five of the Mayor's message. Then Apartments, for a long time, we kind of have felt that they should be at the same rate as Residential, it's primarily condominiums, it's not big apartment building and whatnot. They're individual, multi-family dwelling so they should be at the same rate. Then Commercial and Industrial, you know, we all have heard that the amounts went up, so we tried to reduce their rates as well. Then Homeowners and Affordable Rentals, we do know that they're paying increased prices at the stores. Values did go up, but those two categories are also protected by the three percent cap, so it's not like, you know, they were adjusted to market value. They did not see as much of a decline as maybe people think, but they also didn't see a great increase in their taxes either. MR. INABA: Okay, and then for somebody in the Homeowner class with the five-cent reduction in their rate, what does that look like for somebody with a $500,000 assessed property versus someone with a $1 million assessed property? What does that savings look like? Are you able to share that? MS. SAKO: I'll see if I can calculate that fast enough. Hopefully our real property tax people are listening, and they'll text me back because I don't want to be off on a zero. Sorry. MR. INABA: Okay sorry, not to put you just wondering, I mean, because yes, we understand that hotels were vacant, but right now we're seeing outrageous rates and high occupancy levels. MS. SAKO: They're definitely recovering, yes. MR. INABA: Okay, so is this something that we intend to keep at a reduced rate because we're dropping them down $0.45? Is this a temporary thing in the administration's mind or something we intend to have bounce back once there's this idea of recovery having taken place? Page 19 Hawaii County Council-40 May 19,2022 MS. SAKO: No, it was intended to be temporary, especially for the Hotel and Resort classification. MR. INABA: Temporary as in this fiscal year? MS. SAKO: This fiscal year, yeah. MR. INABA: Okay. Alright. Thank you, Chair, that's all the questions I have right now. I do think we may need to have further conversation regarding these rates, but again, with the ability to get some of the projects done. I'm generally supportive of this budget. Thank you, Director. CHR. DAVID: Thank you, Mr. Inaba. Anyone else here or in Kona? No? Okay, before I take a short—go ahead, Ms. Lee Loy. MS. LEE LOY: Just a follow-up question. Deanna, in this particular budget, the Mayor has proposed a bunch of new positions. Ballparking it, and building off of something Ms. Kierkiewicz said, too much, too fast, you mentioned it, we're a service industry. How much are all of these new positions created going to cost us? MS. SAKO: Three million dollars for the salaries and wages. MS. LEE LOY: Okay, thanks. Yeah, nice and round. On top of all of these new positions, how many do we still have that are funded but no warm body in it? MS. SAKO: I don't have the exact figure. Definitely, there are some. Obviously, the ones we just added have no warm bodies in them. Some of those were not funded for a full year though either. MS. LEE LOY: Correct. MS. SAKO: But you know, the ultimate truth of the matter is for the vacant positions that are still funded, somebody has to do the work. MS. LEE LOY: Got to do the work. Okay. And maybe not so much a total, position numbers, how many do we have that are funded but no warm body? Is it 80 positions? 100 positions? I know because we have a lot in Police and Fire, but I understand why because they go through the recruit class. I was lucky enough to be part of the chamber conversation where they start off with the number of recruits, but as they go through their year of training, they find out the job is just not for them. So we budget for an entire recruit class but when they actually do move in, we start with 20 but we actually only get nine new officers. Then we saw retirement. Page 20 Hawaii County Council-40 May 19,2022 MS. SAKO: Right. So one thing that,just to remind the Council, what's unique about Police and Fire, we don't actually fund the recruits, we pay for it from the savings of those vacant Police and Firefighters. So I would really recommend that those numbers don't be adjusted or they'll be coming back for an amendment next fiscal year. For the other departments, much of it is, you know,just like for us, we may not have all of our clerk positions filled but someone's having to still renew their driver's license, renew the vehicle registrations and so somebody has to pay that, and it ends up getting paid out in overtime unfortunately. MS. LEE LOY: So again, ballparking. MS. SAKO: I don't know, and I don't want to guess. MS. LEE LOY: Okay. Could you just email me some of that information? Yeah,just really highlighting, you know, we are a service industry, we have a number of open positions, and I know why for some. Then others, is that something that we look at as far as retooling their description so that we can move them into categories in which that minimum wage is addressed at the same time, given the job duties are adjusted a little? That was my question. Thanks. Thanks Chair, I yield. CHR. DAVID: Thank you, Ms. Lee Loy. We're going to take a short recess but Deanna, before you leave MS. SAKO: I'm pretty sure I'll be here all day. CHR. DAVID: Yeah, I know. I know you're not going to leave. You mentioned that this was the reductions, the intention, is it temporary? MS. SAKO: Sorry, for Hotels and Resorts, I think in the message it does say for the current year. You know, really, none of us can predict the future. I mean we hearI think you guys heard Lisa mention the other day we tend to like the mainland, so we do watch what's happening on the mainland because our values tend to lag by a year or two. So we don't know exactly what's going to happen this year and next year. Hotel and Resorts is one of the areas that have significant increases, but at the same time, part of that is because they did make those additional investments, so they would have seen those increases even if the market wasn't going crazy. So we were just trying to help a little bit because when they were shut down, you know, they really did try hard. I think they tried to have medical for their employees and different things to keep helping the workforce. So we're intending it for it to be a one-year thing, but that's also saying not knowing what the future Page 21 Hawaii County Council-40 May 19,2022 brings. Even with COVID, we don't know where we're going to be a year from now, what phase we're going to be in. CHR. DAVID: If we're going on fiscal, you need, if it's a temporary reduction — I just don't see it in this draft two, the intention that this, you know, you'll see how it goes. I mean there's no reference to MS. SAKO: Under the Hotels, Resorts, and classifications, I said, "being proposed to decrease for the current year. . . ." The rest—but ultimately, it's up to Council to set the real property tax rates, so even though we might be recommending like a reduction this year, it would take Council action to increase it again in the future. CHR. DAVID: Okay. I was just kind of curious about the intention that you mentioned. Okay, I'm going to take a short recess, Council Members. We shall reconvene at 10:30 and then Mr. Richards can set up. We're in recess. Recess: At 10:19 a.m., the Chair called for a recess. Reconvene: The meeting reconvened at 10:32 a.m. CHR. DAVID: Aloha everyone, I'm taking this meeting out of recess, this special meeting. Before we proceed with Mr. Richards, Clerk Henricks, could you give us a rundown of what happens at this point as far as MR. HENRICKS: Only if Deanna comes in here and helps me out, and when I'm wrong, she gently redirects in her nurturing style that she has. CHR. DAVID: Yes, she's running. There she is. Thank you, Ms. Sako. (Note: At this time, Finance Director Deanna Sako came forward to address the members of the Council.) MR. HENRICKS: We don't know why you sit all the way back there when you know we're going to want you up here. CHR. DAVID: Director Sako, I just asked Jon to explain right now, the process what happens if this doesn't—or you know, go ahead, Jon. MR. HENRICKS: And also, for Corporation Counsel, too, with the reading of the Charter, generally, we just want to make sure that we're all on the same page as far as what we're doing today, obviously, and then what the outcomes are going forward. So,just to be clear, right now, we have a budget that is on the floor, draft two, based upon tax rates that haven't even been proposed by resolution yet. They're still perspective, and we would need to have a resolution Page 22 Hawaii County Council-40 May 19,2022 that would propose those tax rates for that to match up with the current proposal that is in front of the Council, correct? MS. SAKO: That's correct, and we usually rely on County Clerk's office or LRB (Legislative Research Branch) to help us prepare that. Thank you. MR. HENRICKS: And we would need somebody from the Council to tell us to do that, to instruct us to do that. Then if there is no resolution to adjust the rates either to what the Mayor proposed or a different rate, then the current tax rates that are in place right now would be in effect on July 1. MS. SAKO: Carry over on July 1, correct. MR. HENRICKS: Then that would mean that there would be more revenue than this budget anticipates, correct? MS. SAKO: Correct, yes. MR. HENRICKS: And if the Council then decides not to pass this bill today in the form it's in, your reading of the Charter is then that barring any other activity, then basically, the budget, as submitted by the Mayor today, that is on the floor right now, would go into effect July 1. MS. SAKO: That's correct. MR. HENRICKS: And your reading of the Charter also is that though it would seem impractical and difficult in the timeframe that Council could not introduce a different bill that would be a budget bill that could then be submitted to the Mayor, is your understanding that essentially the Council either revises this bill to its "liking" and then submits that to the Mayor for the Mayor's consideration or it passes the bill as is, this is the budget bill? MS. SAKO: That's the way I understand the Charter. It's spelt out step-by-step in the Charter. MR. HENRICKS: It seems pretty linear that this is the budget bill, and that the Council would either increase or decrease, according to what the Charter says MS. SAKO: Correct, they can amend at their will. MR. HENRICKS: Or pass it as is. And if it fails to do any of those things, then what is submitted and what is on the floor right now becomes the budget, and then we would need to deal with, or not,property tax rates that's still at the discretion of the Council. Page 23 Hawaii County Council-40 May 19,2022 MS. SAKO: Right. MR. HENRICKS: Okay, thank you. CHR. DAVID: Thank you so much, Clerk Henricks. Okay, Mr. Richards, the floor is yours. MR. RICHARDS: Thank you, Chair. Thank you very much for the latitude as we go into this. For my fellow Council Members,when I've asked—and those who have been on Council with me since I first got elected, working on a way of communicating and discussing the budget in context of revenue and expenditures and so we look at everything and try and talk about things together. My intention today is to share a spreadsheet that I've been working on, actually since I've been in office, and I use it each year to look at things. It's not to make any decisions but just to highlight some areas and part of the conversation we've been talking about today. Well, I think we covered some of this. I'm going to have to actually have MR. HENRICKS: Madam Chair, before Mr. Richards is logged in and begins, can you get a pre-leeway for time so that it doesn't—I'm going to assume you might need more than five-minutes to do this. Is that true, Mr. Richards? I think he's requesting a pre-extension if you will. MR. RICHARDS: I'm thinking probably 10-15 minutes to go through things, and then questions, and then—at the latitude of the Chair. CHR. DAVID: Okay, 15 is good. We'll do 15 and then if you're done before that then we can just go to questions. (Note: At this time, Mr. Richards referred to a spreadsheet being displayed on the projector screen. For viewing of the spreadsheet, please see the DVD recording of the meeting proceedings or navigate to the Council's video archives from the County's homepage at www.p w.ai:i ou y...gov. Due to the format of the spreadsheet, a hard copy is not made a part of the paper archives.) MR. RICHARDS: Okay, that sounds good. Okay, this is the start, but I want to shift so I may need you back here in a few minutes. So this is a spreadsheet and we've had the conversations this morning. First of all, we were talking about the different budgets, and I will, Chair, I'll print up some of these summary pages so people can have and see them. I went back and looked at the budget, and that's where Ms. Lee Loy always laughs because I always go back and look at history and then come forth. Back in 2000 under Mayor Yamashiro and Kim, and we had a population of about 149,000 people and the annual budget was $175 million. Page 24 Hawaii County Council-40 May 19,2022 You can go down, and again, I'll print this up so people can see it, but over the different administrations, you can see the increase and the total budget and what it was. Under Mayor Kim, for his eight years, we doubled our budget; under Mayor Kenoi, from 2009 until leaving office in 2017, we increased it, and that was by 20 percent. It went from about$387 million up to $462 million and that was during the great financial crisis. Then you could see what has happened in the last five to six to seven years. We have gone up to, and the proposal is actually $779 million right now, I didn't get this one updated, but I'll have this updated. My point on this is to put in context of what we've done with our budget and borrowing some of the information from Deanna and looking at the dollars per resident. Again, I'll have that I don't want to spend a lot of time here, but this is what I was looking at here. These numbers here is the revenue that we've spent or the revenue per person, and again, I'll print this up Chair, so people can spend more timeI don't want to get hung up on that, but I wanted to have that. What we are discussing MR. KANEALI`I-KLEINFELDER: Mr. Richards, could I ask a point of information? Or Chair? CHR. DAVID: Yes, go ahead. MR. KANEALI`I-KLEINFELDER: The different colors represent? MR. RICHARDS: The different administrations. MR. KANEALI`I-KLEINFELDER: Thank you. MR. RICHARDS: We have the transition years and so that's why you see two Mayors, and I'll have this printed up. SinceI believe I'll be sharing this with everybody, and they can ask me questions of clarification. Okay. So now with that, this is actually kind of the crux of what we're talking about today, and I'll, again, increase the you can see, I take the certified values. I go back to 2017 as when—it was the first budget cycle for myself being in office, and we can see that over the time we went from a $30 billion assessment to $32 to $33 (billion). Fiscal Year 2021 we were at$35 (billion) and about a four or five percent increase over the years. 2020-2022, again, we had another five percent increase, go up to $36 billion. Then in this last assessment, we've gone from $36 to $43 billion at 18 percent. What I wanted to focus in on, was yes, we have an average 18 percent increase but on this, I did want to show people where we were talking about where that actual increase was. You can see the Affordable Rental has gone up 19 percent, just about 20 percent; Residential about 20 percent; the Apartment about Page 25 Hawaii County Council-40 May 19,2022 15 percent; Commercial has gone up 28 percent; Industrial 29 percent; Agriculture 20 percent; Conservation only about 10 percent; Hotel and Resort has gone up 46 percent; and Homeowners about 10 percent. I wanted to look at that because I wanted to get a better understanding of where we've actually seen that increase, and our job here on Council is to work with Finance and have a better understanding of where the funds are coming from. We've all expressed our interest and concerns, but how do we better spend the money? We have two sides of the coin on this. We need the funding to take care of things, sometimes it's been deferred for a long time. On the other side, we have to be very mindful that our expenditures the funding comes from our constituents, and it's been a pretty rough year. I know, for instance, the Hotel and Resort, they have spent over $30 million through the pandemic in keeping their employees on health care, and we need to be mindful of that. There's a lot of businesses that have been taking a lot of expense with very little revenue and how are we going to try and go forward? Also, the Conversation earlier where we talked about the funds that we received from the federal government, we have to be sure that we do not reduce our taxes because that would put our funding into jeopardy,which would also trigger a problem for us. So this is a balancing act that we need to do. Further on this, and I'm going to zoom out of this a little bit so you can see the bigger spreadsheet and I'll go back in. If you see the tabs on the lower left, there's a revenue tab, and that's revenue based upon what we received from Finance. We also have the expenditure tab. You have copies of that already and they're actually in our folder today. All that have been entered into this and it all kind of feeds out there and then comes back in. The budget for the proposed budget right now, the total coming from real property tax is right here, $421,400,000. That's the number that is being used to calculate for the budget overall. Based upon existing tax rates and the estimate for the real property tax collections for the two-tier tax structure, which is set at about$12 million, and that's the only number I could really find for that estimate, if we do nothing to the tax rates, the collections would be about$434 million. I took a bad debt number of three percent. I don't know if that's spot on, but I think it's ballpark as this is what I've used in the past. Penalty and interest, $3.5 million. So long story short, the total projected budget revenue would be $424 million, and we need $421. That's if we do nothing with any of the tax rates. The Mayor's proposal is on the right-hand side in blue and—is this readable to most people? Can people read that? With the Mayor's proposal, that is a reduction of about$7.3 million to the revenue stream, and that's where, Mr. Kaneali`i-Kleinfelder, you talked about the different colors. I used that to link things together. It's the $434 million less what the Mayor's proposal would be of$426 million. So it's roughly a reduction of$7 million in real property. Page 26 Hawaii County Council-40 May 19,2022 What it comes down to is what are we going to do with our real property tax rates, or potentially do with them? You can see the proposal, and again, I'll print this up after we get done with this conversation because it kind of depends what we want to do. One of the other things I think is really important when we're talking about the rates is here, and it's the relative percentage of what each of the different tax categories bring to us. What I'm talking about on this is Affordable Rental by class is .6 percent of our total revenue. The Residential is about 36 percent and the two-tiered adds another two percent, so almost 40 percent comes from Residential. The Apartment is about 2.7; the Commercial is only 5.5 percent; industrial is about four percent; Agriculture is about 14 percent; Conservation is less than one percent; Hotel and Resort only brings four percent of our total revenue in real property tax; and Homeowners is 15 percent. So the big, the lion's share comes out of Residential, Apartment, Agriculture, and Homeowners. So when we're talking about adjusting rates, we have to be cognizant of the fact that just because we're dropping one rate, relative to the whole budget not just to that individual but to the whole budget, how does that impact our budget overall? Deanna, I think if I'm right, we have to look at the total tax revenue not revenue by category, is that correct? Deanna's answer is she believes so but again, these are some of the treasury rules we have to be careful about as we go forward. So Chair, what I wanted to do is to kind of put this in context of what we're talking about. We've heard the conversations of what we need going forward from our real property tax to pay our bills. We know we have a lot of expenditures that are needed, and we have a lot of catch up to do, and I'm very mindful of that. That being said, what can we do because we still have to be sensitive to our constituents out there on what we're doing? The final thing on this spreadsheet is this area that I'm focused in on. What it does is it calculates, and it goes through the spreadsheet, and if we change this rate,just for example, if we take apartment for instance and change it from $11.70 to $10, what that would do is it trickles down through the whole thing. It's a 17 percent drop. It'll drop our overall collections by $10 million and how does that impact our revenue? We know we have to have $421 million to stick to this budget the way it is. That would reduce our total collections by $10 million which would put it down to about$414 million so there's this $7 million difference. Chair, the reason I did this is so I could see what the impacts may or may not be, and again, we can do this, and it trickles down through the whole thing. This is a tool I've used since we've been sitting on Council together, trying to calculate the rates coming forward and what that may or may not be, because what this does is Page 27 Hawaii County Council-40 May 19,2022 it looks at our revenue stream but then it alsoI have other tabs that it looks at our potential reduction in our budget side so we're trying to balance that budget. The whole intent for this is to come up with that balance budget that we're looking for. I'm not going to apologize that it's a big spreadsheet because that's what I do to make it work. It trickles down to the bottom line of what we're going to do with that. I think we can use this to help us set our tax rates going forward if we, as a Council, choose to do that. I'm not a proponent of anything at this point. I just wanted to share this with the Council because again, we're bound by the Sunshine Law. I'll print this up so people can see what it looks like. If people wanted to throw out a number based on the certified values, based upon the current rates, based upon the needs, what that impact might be for overall collections, that's what this conversation is for. With that, Chair, I yield. Deanna, do you have any comments? MS. SAKO: There's actually just one main comment because you come out higher than what our figures do. There's actually a component called the second half year homeowner exemption. So per County Code, homeowners are allowed to apply for that exemption, both by December 31 and then by June 30 for the—it would apply to the second half of the payment. So that factors another $2 million you need to reduce it by. So ours come out to about$419 million right now. MR. RICHARDS: Okay, this is why we're having this conversation, so we can kind of vet this because I do have to makeI made some assumptions that bad debt of three percent, is that a ? MS. SAKO: It kind of encompasses a lot of other things that are impacted so I think if you just take out the $2 million for the second half year homeowner exemption, then you'll be fairly close to our numbers. MR. RICHARDS: Alright, thank you, Deanna. So Chair, with that, like I said, this is what I used to kind of think about and calculate going forward. If people wanted to throw out a number, a what if number so to speak, that's what this is here for and this is the only way I could figure out how to have this conversation with everybody. CHR. DAVID: Thank you, Mr. Richards. Any questions, Council Members? Mr. Kaneali`i-Kleinfelder. MR. KANEALI`I-KLEINFELDER: Thank you. Deanna, Tim mentioned that this the proposed rate changes, tax rates, would lead us to about a$7.5 million decrease in tax revenues. Maybe I misheard but I think that was the statement that was made, yeah? Page 28 Hawaii County Council-40 May 19,2022 MR. RICHARDS: Yeah, based upon the current rates that we have in place, with no change and based upon the certified values, that's the number I come up with. Deanna has a few tweaks. MS. SAKO: We came up about$8 million, in that neighborhood. MR. KANEALI`I-KLEINFELDER: Okay, so an $8 million decrease if we except the rates proposed by the Mayor? MS. SAKO: Correct. MR. KANEALI`I-KLEINFELDER: I wanted to go back—Tim, thank you very much for this because it helps the discussion a lot. Thank you. I wanted to go back to what Jon and Deanna were discussing in the beginning of this, which was kind of summarizing what was said, which is very interesting to me. So the Mayor proposed the property tax rate decreases. The budget in front of us is based on those numbers. The Council sets the property tax rates by resolution. LRB will write that legislation, the resolution, if required by Council. Has a request been submitted to LRB to create the resolution? MR. HENRICKS: No. MR. KANEALI`I-KLEINFELDER: I'm just trying to wrap my head around this. We have a budget in front of us based on proposed tax rates that has not been submitted to LRB, so there's nothing on the table right now. MR. HENRICKS: So that was one of the options,was to have a resolution for this day, today, that would have for the tax rates they are proposed by the Mayor in this budget, but we didn't receive any instructions to put that forward. Similar scenario, in 2017 I believe, and Deanna, back of her hand, submitted a budget with a proposed rate reduction and the Council considered those rates at its second reading instead of at its first. But that could have been done today if that was instructed. We did, again,just kind of rewinding, we did the public hearing on Tuesday evening, based upon those rates just to give the Council as much feedback as possible, as early as possible from the community on the Mayor's proposal. If we were to do a the Council were to consider different rates, we would need to do a different public hearing. That's at least our understanding, and then just being safer than sorry, another public hearing that would advertise a different set of rates. And likely we would include a range of rates in that notice of a public hearing to give the Council some leeway to adjust the rates as it moves forward, without having to call another public hearing before it could adopt those tax rates. Page 29 Hawaii County Council-40 May 19,2022 MR. KANEALI`I-KLEINFELDER: Okay. So right now, no resolution, so no suggested property tax change by the Council? MR. HENRICKS: Right. As of now if there was no change in tax rates then it would, as we said earlier, it would be the current tax rates that are in place for this fiscal year would carry over so to speak, to the next fiscal year. MR. KANEALI`I-KLEINFELDER: Thank you, Jon. So that would mean, then, that the budget in front of us would not reflect greater revenues because the tax rates would not be decreased as the Mayor has proposed, and the budget would be surplus? MR. HENRICKS: I don't know if Deanna would use the word "surplus,"but she might. It would just—your revenues would be higher than your budget anticipates. MR. KANEALI`I-KLEINFELDER: Correct. So it wouldn't be unbalanced. You know, we can't submit a budget that has greater revenue than expenses. Am I saying it backwards? MR. HENRICKS: No, it's okay. The Charter just says that the revenues must exceed the expenditures. It just can't be the other way around where the expenditures would exceed the projected revenues. MR. KANEALI`I-KLEINFELDER: Okay. You have to, at the minimum break even. MR. HENRICKS: So it's not a zero-sum budget. MR. KANEALI`I-KLEINFELDER: Yeah. Okay. So it's a very interestingI say this because I want to summarize for the public. It's a little convoluted but it's straight forward if you've been through these enough times, but at the same time, it's just good to summarize. Like Merrick Nishimoto used to say, "Let's just summarize." It's good because it just kind of helps everybody, "Okay, this is where we're at." So at this time, no property tax decrease submitted by the Council. What Tim's bringing forth today really helps kind of set us on an interesting page here because we're not saying yes or no to the Mayor. There's not even a piece of legislation in front of us that says anything about decreases, but the budget is based on that. So it's a little confusing, yeah? Like the public too, "Oh, this is the budget." Well actually, it's not because we haven't passed the resolution to decrease tax rates, maybe we agree, maybe we don't agree. MR. RICHARDS: Chair, may I respond? Page 30 Hawaii County Council-40 May 19,2022 CHR. DAVID: Yes. MR. RICHARDS: And this was the point because this was only to figure out to have a public talk story about this so we can say, "Here's the revenues, here's the proposed expenditures, here's our proposed revenues, how do we talk about this and put this in context?" That's why I always go back and look at our history and see where we've been and how this folds in. Deanna, I'm very mindful, and I appreciate what you're saying because a lot of this stuff comes from all the conversations we have about the budgeting and the budgeting needs, and what we need for our roads, our first responders, but then we also have to be mindful that revenue comes out of an economy that's working, and that's why I pose the question about the GE. So our job, as legislators, is to balance this and come up with something that is some level of fairness that is equitable going across and looking at a myriad of variables. MR. KANEALI`I-KLEINFELDER: Thank you. Deanna, when we look at this $7.5 million decrease in revenue if we go with the Mayor's proposed tax rate decreases, and Mr. Richards has eloquently pointed out that it's not just we decrease tax rates on this and it's even. It's really dependent on how many parcels are in that tax class and what that greater effect is on our revenue stream. It's very important to understand that as we look at decreases to our revenues. Mr. Richards, thank you for bringing this up today, appreciate it, and I thank you, Mr. Clerk, for kind of summarizing that process that's in front of us right now. It's good for the public to understand what we're actually doing. MR. HENRICKS: I appreciate that opportunity to provide any information. Just to kind of cap that off, these procedures and protocols are all spelled out in our County Charter, so it's the law of the land so to speak. It was voted in by the populous and it's in Section 10-2 of our County Charter. MR. KANEALI`I-KLEINFELDER: Thank you. Chair, I yield. CHR. DAVID: Thank you, Mr. Kaneali`i-Kleinfelder. Ms. Lee Loy. MS. LEE LOY: Thank you. Thank you, Mr. Richards for putting this up. I think it's been incredibly beneficial to take a lot of, or create a lot more clarity. I also appreciate that you'll be sharing this spreadsheet with the rest of us or the sheets, but I wanted to walk into that area of your spreadsheet where you talked about the values and the increases within the various classes. I say that because yesterday, two Council Members asked for some of this information when we were talking on a different piece of legislation and the percentages that those particular classes went up. I just wanted you to highlight that for them and then they can make their own decisions on other legislation that we have pending, but I just wanted for you Page 31 Hawaii County Council-40 May 19,2022 to point that area out for them as it relates to how the classes have increased by percentages. MR. RICHARDS: Chair, okay to respond? CHR. DAVID: Yes. MR. RICHARDS: Thank you, Ms. Lee Loy. Okay, so I've zoomed into the area. What we're talking about is the relative increase. Again, as we mentioned before, up here, the value increase for our county has gone up to $43 billion from the $37 billion, roughly speaking about an 18 percent increase. By class—as I said before, the increase for the total county has gone up about 18.5 percent, but by class, if you look at the Affordable Rental, and this is right next door to it, it's gone up about 19.7 percent; Residential about 20 percent. This is in the gray area, Apartments gone up 15.5 percent; Commercial has gone up almost 29 percent; Industrial has gone up about 29 percent; Agriculture 20 percent; Conservation 9.5 percent; Hotel and Resort has gone up 46 percent, almost 50 percent. I'm sure part of that is all the work they did when they were shut down, but part of it was just the re-evaluation, and then Homeowners about 10 percent. MR. KANEALI`I-KLEINFELDER: Mr. Richards, sorry, point of information, Chair. CHR. DAVID: Yes, go ahead. MR. KANEALI`I-KLEINFELDER: Timeframe on these changes? This is just in one year? MR. RICHARDS: One year, one year increase. MR. KANEALI`I-KLEINFELDER: Okay, thank you. MR. RICHARDS: I think for—our public also has to understand the number of properties that are in each of the areas, and I just hid them all so it's going to be hard for me to find them. The number of properties we have in each of the categories plays a big role of what the total contribution will be to the overall budget. So as a point, we just talked about by class, the increase, Affordable Rental has gone up about 20 percent, but percentage of the total tax revenue is less than one percent. Residential has gone up 20 percent but the overall contribution to the real property tax is about 36 percent, 38 percent if you include the estimated $12 million on the two-tiered tax. This is where, as we set these rates, that's where we see the amplification of the rate change that we make, up or down. The smaller the percentage the contribution it makes to our real property, the smaller the rate change matters to Page 32 Hawaii County Council-40 May 19,2022 the overall budget. This is the balancing act that we have to look at. That's why if we look just at the rates, we may or may not have an emotional feeling about what rate we are setting, depending upon that category, but the relative to percentage—and this is one that everybody sitting on Council knows this, when we're talking about Agriculture, it contributes 14 percent to our overall tax revenue. It is one of the lower rates, however, it's because agriculture is so big, it still has an impact and if we want agriculture to flourish, if we want the economy of agriculture to flourish, we have to be mindful that we have to set the stage with good public policy going forward that supports and allows that. I think we need to be as mindful of the economies that we as legislators can stimulate and support, because that's where the tax revenues, the big ones, will come from, from that economy itself not just from the tax rate. So that's why, again, I didn't know any other way to get this conversation started, other than doing this and kicking it around. My expectation is that we don't have any answers coming out of this today, this is just planting seeds and food for thought. Case in point here, we look at Hotel and Resort, they are huge employers of our county but the overall contribution to our overall tax revenue is only four percent. It's not that we're under taxing them, not at all, but relatively speaking, it's a small portion of our real property. So the impact on them, you know, I mentioned they spent$30 million keeping their people on their health care, yet their contribution to our tax structure is $17 million. They went above and beyond as far as supporting the people, our constituents. We need to be thinking about this. So again, Chair, I offer this as a food for thought process because as we're setting these rates, being very mindful that we've got some parameters that we better be paying attention to. I listened very carefully to Deanna because she does a very good job at helping us keep things the way they are, especially with this federal funding that we have. Because of the Department of Finance's actions, we're not in jeopardy of any of that funding being clogged back because she was so particular about that. So to me, this is a way to have the conversation, talk story about it, and start setting rates. MS. LEE LOY: Thank you, Mr. Richards. I just wanted to focus in on those percentages by class because we know Affordable and Homeowner also has that three percent cap. So although that class may have gone up by that percentage, there was a shield for them that they actually didn't really feel that entire increase. Is that what your spreadsheet is showing? MR. RICHARDS: What we're looking at in the spreadsheet, this is an overall and it's not looking at individual numbers, this is looking at the summary. You can see the same conversation between the overall value increase of the county is 18.46 percent, but if you go down into the categories you can see anything from nine percent up to 46 percent. I think the same thing would happen in our Page 33 Hawaii County Council-40 May 19,2022 Residential, is that you'll have some that just barely appreciated over time, but then they did appreciate substantially, but collectively you're putting it all together. MS. LEE LOY: Thank you Mr. Richards, for this information. I know I find that helpful. Chair, I yield. CHR. DAVID: Thank you, Ms. Lee Loy. Mr. Kaneali`i-Kleinfelder. MS. VILLEGAS: Chair? I have a question when there's an opportunity. CHR. DAVID: Sure. Ms. Villegas, you can go ahead. MS. VILLEGAS: Thank you. This is getting really confusing. I appreciate the opportunity for the conversation, but I suppose I'd like a bit of clarification. So none of the Council Members brought forward a resolution to make amendments to the tax rates, which are reflected in the budget being brought forward today, correct? CHR. DAVID: Yes. MS. VILLEGAS: And was today the only opportunity to do that? CHR. DAVID: Ms. Villegas, Clerk Henricks is going to explain that process. MS. VILLEGAS: Okay, thank you. MR. HENRICKS: So addition to the provisions of Section 10-5, which governs the budget process, we also look at Section 19-90 of the Hawaii County Code, which provides for setting of tax rates. The Council has until June 20 to set the tax rates. MS. VILLEGAS: Okay, we do have another reading. That was my prior understanding, so I was getting very concerned and a bit confused here. So we do have opportunity to present changes to the tax rates reflected in the Mayor's budget that's being brought forward today? MR. HENRICKS: Yes, and not to confuse matters even more, but the Council could adopt a—send a budget to the mayor and then adopt the tax rates after that. It doesn't necessarily have to happen at the same time. So again, you have June 20 is the cutoff point for the Council to adopt tax rates for the upcoming fiscal year. Page 34 Hawaii County Council-40 May 19,2022 MS. VILLEGAS: Okay, great. Thank you for confirmation on that. That provides a pathway to any changes that may be visioned by myself and also by my colleagues. I appreciate that, I yield. CHR. DAVID: Thank you, Ms. Villegas. Mr. Kaneali`i-Kleinfelder, go ahead. MR. KANEALI`I-KLEINFELDER: Thank you, Chair. Mr. Richards, let's put this to the test. Okay, Homeowners' class, how many parcels are in the Homeowner class? MR. RICHARDS: Okay, hang on, I hid that one. Let's see if I can find that one quickly. MR. KANEALI`I-KLEINFELDER: I like the parallels that you're making between the amount of parcels in the class and the effect of a small or a large, or any kind of an increase or decrease on that class and what it leads to fiscally. That's a very interesting correlation that many people don't understand. MR. RICHARDS: Okay, so for here you can see, I was able to bring it up, Affordable Rental, there's 1,400 parcels. MR. KANEALI`I-KLEINFELDER: Homeowners' class. MR. RICHARDS: Homeowners class, there's 40,000, almost 41,000. MR. KANEALI`I-KLEINFELDER: Okay, let's go—is it 40,000 or 41,000? MR. RICHARDS: 41,000. MR. KANEALI`I-KLEINFELDER: Let's go 41,000. Okay, so this five cents reduction on Homeowners and I would say if a homeowner sold this year and bought a new home and then transferred their homeowner exemption, in that sale process, their new property would be reclassified at the current market value. So not everyone was able to hold that homeowners' exemption, and a lot of our folks living here made the move this year. That happened. So let's say, Homeowners class, 41,000 parcels, a change of five cents, what you got? MR. RICHARDS: Homeowner, five cents, so it's at$6.15 right now. MR. KANEALI`I-KLEINFELDER: Correct. MR. RICHARDS: We put it to $6.10, it would drop half million. MR. KANEALI`I-KLEINFELDER: $500,000. Exactly? Page 35 Hawaii County Council-40 May 19,2022 MR. RICHARDS: $533,279. Mayor's proposal is one nickel down like you had said. MR. KANEALI`I-KLEINFELDER: So that comes out to $13.50 per parcel. So $13 per parcel, if I divide it evenly amongst everybody, that would be the savings presented by a five-cent decrease to the property tax. Am I doing something wrong? Does that line up, Mr. Richards? MR. RICHARDS: I have not worked out the numbers that way, but$13 yeah. MR. KANEALI`I-KLEINFELDER: $13 per parcel. MR. RICHARDS: Correct. MR. KANEALI`I-KLEINFELDER: Okay, let's do another one. Let's say the proposed decrease to, let's look at Hotels and Resorts. How many parcels? MR. RICHARDS: One hundred and nine. MR. KANEALI`I-KLEINFELDER: One hundred and nine parcels, and a decrease from $11.55 currently to $11.10, so $.45 decrease. MR. RICHARDS: $681,380 a drop of about four percent for real property tax. MR. KANEALI`I-KLEINFELDER: $6,251. MR. RICHARDS: $681,380. MR. KANEALI`I-KLEINFELDER: Sorry, I did the math, so what I got was $6,251 per parcel savings. MR. RICHARDS: Oh okay, I see what you're saying. MR. KANEALI`I-KLEINFELDER: Okay. That is helpful and I think that highlights some good information for people to base decisions off of. That's all I can say. Thank you for that because without your spreadsheet and the ability to look at this like that and do instantaneous changes, and without Real Property having these numbers available and ready for us, that is incredibly helpful. Thank you. CHR. DAVID: Thank you, Mr. Kaneali`i-Kleinfelder. Mr. Richards, go ahead. MR. RICHARDS: I just wanted to say again, Chair, I do want to thank you for having this being able to have this conversation because as Ms. Lee Loy says, good information leads to good conversations and thereby good decisions. So Page 36 Hawaii County Council-40 May 19,2022 that's what the intent of this exercise was. We have to be mindful of what we're doing with our rates because we have to be also mindful of the needs of this county. We are coming out of it and we are recovering, but we're not recovered. So we have to be sensitive to that. Thank you, Chair. CHR. DAVID: Thank you, Mr. Richards. Go ahead, Ms. Lee Loy. MS. LEE LOY: Ms. David, thank you so much. Sometimes information is good. I think what Mr. Kaneali`i-Kleinfelder and Mr. Richards kind of exercise went through was incredibly helpful, but I really want to fill out that category because $13 savings to a homeowner on their bill did not also include the three percent cap on their market value. So they're saving in two areas of their real property tax bill because of that three percent shield. I think that's also something that would be good to kind of fill into some of this conversation. But that's definitely something I think myself and our colleagues can go talk to Deanna about, to really, truly understand the nickels, yes Deanna, you'd like for them to change by nickels, but also some of the shields that some of these categories may have as far as big jumps in the value of their properties. Thank you, Chair, I yield. CHR. DAVID: Thank you, Ms. Lee Loy. Anyone else? Alright, seeing none, Mr. Richards, I really appreciate, I mean no thanks to me, I think you've made your point and I think it was an exercise that have really opened our eyes in looking at rates and how they are not black and white. Everyone that I kind of understand thinks of it as black and white, so your explanation and your spreadsheet just really puts things in perspective, and I think it would allow us to make some good decisions regarding any potential rate increases or decreases. So given that, Bill 126, Draft 2, any more discussion? MR. HENRICKS: Madam Chair,just before calling the vote, assuming that we move forward in this process and us further assuming that there may be one or more Council Members who may propose rates, we would need to call another public hearing and publish another notification of that public hearing. I wanted to get the Council's, since we're all together in an open meeting now, what the preferred range of rates that we would advertise for the public. The Code allows for the rates or range of rates to be noticed. What the range of rates does is it provides some room for the Council to go up or down in the process of deliberations and not have the need to call for another public hearing to adopt those rates In the past, we've used a dollar up or down. You know, with Finance here as well as Corporation Counsel, I just want to get a feel forbecause, you know, a range is nice, but I would think at some point if the range is too wide, then it may not be considered to be, in a true spirit of a public hearing because you're not really telling the public. It's such a you know, if it was $3 then it would go like either $3 or $9, if you're at a $6 rate. So I just wanted to get some consensus from the Page 37 Hawaii County Council-40 May 19,2022 Council on a figure that it was comfortable with, that we could use moving forward for those notices, assuming that we'd go down that route. CHR. DAVID: Thank you, Clerk Henricks. Mr. Richards or Ms. Lee Loy, which—go ahead, Mr. Richards. Either one. MS. LEE LOY: Yeah, I actually wanted to have Ms. SakoI think Clerk Henricks really couched it nicely and just recalling from my time on the Council, my very first budget was that range and then we stayed until really late kind of tinkering with the nickels. That would have been in 2016-2017. What was that range that we set for the public hearing? MS. SAKO: I want to say that was maybe plus or minus a dollar or something like that. However, as Mr. Richards keeps pointing out, we have to be mindful that we cannot go down probably a dollar in every classification because then we'd be below the minimum, we need to have to keep our federal funding. So that, I did not calculate because it's really going to depend on the combination. I mean it's possible to go down a dollar in some classifications, especially the smaller parcel count ones but then, you know, less than others. So it's hard to give an across the board—we could calculate it if you wanted,just reduce at the same amount on each one, like if you did .25 cents for every category, you'd still be safe but it's not going to be right. I don't want to mislead the public either that they're going to think it's going down more than it legally can. MS. LEE LOY: Deanna, let me take this conversation offline, maybe look at some of the ranges, you know,just based on that because again, I think the exercise here was completely oversimplified to some degree too. MS. SAKO: Yeah, there are a lot of factors that got netted out in there. Yeah, so I pointed out the biggest one but there's definitely other impacts as well. MS. LEE LOY: I just want to be, again, mindful to the public and manage that expectation because when we're saying we're saving certain property owners thousands of dollars, that's not exactly all that accurate because of their market values or assessed values, along with the asset itself that is on that property. MS. SAKO: Yeah, and we haven't even gotten to the impact of minimum tax. MS. LEE LOY: : Yes, and those parcels at minimum tax, which isn't on our spreadsheet. If it's okay with you, Deanna, I'll reach out to you and see what's a comfortable range, and then we can have you kind of run the spreadsheet with all the other pieces that help us make that good decision. MS. SAKO: Yeah, I'll be happy to talk to you guys about it. Page 38 Hawaii County Council-40 May 19,2022 MS. LEE LOY: Great. Thank you, Chair, I yield. Thanks Clerk Henricks for that. CHR. DAVID: Thank you, Ms. Lee Loy. Mr. Richards, go ahead. MR. RICHARDS: Thanks Chair. I just wanted to make a quick comment. I think it's a good idea, have Deanna have lots of input on this. I was going to say whatever we've done in—and to the Clerk's point, if you give such a wide range, we're really not telling anybody anything, but whatever we've done in the past, I think since we've done it in the past then we have the precedents of being done in the past and maybe that's someplace we can start from. I don't know what it is, I don't remember. I think we need latitude because the proposal that will be coming before us, we think, plus whatever numbers that Deanna can come up with, I think that's reasonable. CHR. DAVID: Mr. Kaneali`i-Kleinfelder. Thank you, Mr. Richards. MR. KANEALI`I-KLEINFELDER: I don't like the idea of a dollar amount, but I do like the idea of a percentage, like say plus or minus 10 percent. To me, that makes more sense. That give us flexibility not withinI mean our highest tax right now is $13.60, it would be $1.36 at the most you can go up or down, but our smallest class is taxed at$6.15 so that would be .61 cents. So the idea of a percentage of change is more appropriate in my mind than a dollar amount. I don't know how the Council feels about that. MR. HENRICKS: If I may? CHR. DAVID: Yes, go ahead. MR. HENRICKS: That might be possible. I'm also thinking, normally, the range of rates just apply to all classifications or categories down the line, as opposed to different ranges for different ones. I don't know if that's what you're suggesting. I don't think we've ever done a percentage range as opposed to a cents or dollar range. It may be possible, we'll look into that. But what I'm hearing right now, at least from the people who have spoken, is the comfort level would be working with Finance Department to determine this, and then Chair would give ultimate approval as to what that range would be since we won't have time to get back together and for the body to agree on. Is that what I'm reading? MR. KANEALI`I-KLEINFELDER: Sorry, if I could ask a question? CHR. DAVID: Yes. Page 39 Hawaii County Council-40 May 19,2022 MR. KANEALI`I-KLEINFELDER: Deanna, have you ever done a percentage has there been a public hearing regarding tax rates that was just percentage based, or was it always a certain dollar amount? MS. SAKO: I think why it's possible to come up with rates based on a percentage reduction, the notifications have always been a range of actual rates because we charge the rate. So even though we might say we want Homeowners to go down 10 percent, the public notice would actually say the tax rate less 10 percent and then whatever that was, $5.50 or whatever it came out to. MR. KANEALI`I-KLEINFELDER: It's saying it but stating it in a way that it clarifies the percentage of each class. MS. SAKO: It's stating it to comply with the laws, yeah. MR. KANEALI`I-KLEINFELDER: Okay. Well then, that would be my input. Thank you, Deanna. CHR. DAVID: Thank you, Mr. Kaneali`i-Kleinfelder. Mr. Richards, your light is on. MR. RICHARDS: I was just going to echo that I think if we got the range and then you get the final approval, I'm comfortable with that. CHR. DAVID: Okay. Clerk Henricks. MR. HENRICKS: Just one last scheduling. If anybody on the Council would like to have a resolution on for the June 2, you know, clearly, we just have to make sure we can post in time for that. We would also like to have the public hearing on the 31" in anticipation of the June 2 meeting, so we would need to know those proposed rates and range of ratesI wish I could give but it takes a little longer to go through the publication process than it does to post an agenda. There are some time constraints to coming up with a proposal prior to, if that was the will of the Council, to come up with a proposal that would be on the agenda in distinct, resolution format. If you're interested, let me know and I'll pin down the—we're all aware of the agenda publication, but I'll pin down the newspaper publication, so we'll all be aware of what that is. MR. INABA: Chair? CHR. DAVID: Go ahead, Mr. Inaba. MR. INABA: For the record, Clerk, I do want to let you know that I'll be submitting a resolution with specific dollar amounts in amending the tax rates but Page 40 Hawaii County Council-40 May 19,2022 trying to keep it very close to what we have for the overall budget so that we're not having to make a lot of amendments to the operating budget that the mayor proposed. So, I'll be corresponding with you offline. Thank you. CHR. DAVID: Thank you, Mr. Inaba. MR. HENRICKS: I appreciate that. I started thinking too, maybe that's why the County Code says range of rates because there might be more than one resolution that's submitted. There's nothing that says there can only be one resolution so that might be the range of rates, is if you have multiple resolutions, then there's your range is partly determined by the differences in the proposals but even could be expanded beyond that. So, that could be part of it. CHR. DAVID: Thank you. Anyone else? Alright, seeing no other discussion, Clerk Henricks, can we do a roll call? Vote on Bill 126 The motion to pass Bill 126, as amended to Draft 2, on first Draft 2): reading was carried by the following roll call vote: (Approved) Ayes: Council Members Inaba, Kaneali`i-Kleinfelder, Lee Loy, Richards, Villegas, and Chair David—6. Noes: Council Member Kierkiewicz— 1. Absent: Council Members Chung and Kimball —2. Excused: None. (Note: Mr. Inaba voted "kanalua"then "aye.") CHR. DAVID: Can we go to Bill 127, please? MR. HENRICKS: Madam Chair, would you like for me to read in the draft one, draft two and then reserve reading the communications in as they come up so that the membership can make their motions in that point in time? CHR. DAVID: Yes. Perfect. Go ahead. Page 41 Hawaii County Council-40 May 19,2022 Bill 127: RELATES TO PUBLIC IMPROVEMENTS AND FINANCING THEREOF FOR THE FISCAL YEAR JULY 1, 2022, TO JUNE 30, 2023 From Mayor Mitchell D. Roth, dated March 1, 2022, transmitting the proposed Capital Budget for FY 2022-2023 and the Capital Improvements Program for the next six years from Fiscal Year 2022-2023 to 2027-2028, which includes 85 projects requiring a total appropriation of$365,225,000 of which $257,275,000 are intended to be funded in whole or part by bonds, $56,999,000 to be funded by Federal Grants, $48,750,000 to be funded by the State Revolving Loan Fund or State Capital Improvement Projects, and $2,201,000 to be funded by General Excise Tax. Reference: Comm. 663 Intr. by: Mr. Kaneali`i-Kleinfelder(B/R) Approve: FC-137 Public Hearing: May 17, 2022 and Comm. 663.2: From Mayor Mitchell D. Roth, dated May 5, 2022, transmitting Bill 127, Draft 2, which adds 5 projects for a total of 90 projects, which is a $7,624,000 increase in appropriations over the first draft. ; and Bill 127: RELATES TO PUBLIC IMPROVEMENTS AND FINANCING THEREOF (Draft 2) FOR THE FISCAL YEAR JULY 1, 2022, TO JUNE 30, 2023 Draft 2 requires a total appropriation of$372,849,000, of which approximately $261,675,000 are intended to be funded in whole or part by bonds, $48,750,000 are to be funded by the State Revolving Loan Fund or State Capital Improvement Projects, $59,479,000 are to be funded by Federal Funds, and $2,945,000 are to be funded by Community Benefit Assessments and General Excise Tax. Intr. by: Mr. Kaneali`i-Kleinfelder(B/R) Motion to Approve: Mr. Kaneali`i-Kleinfelder moved to pass Bill 127 on first reading and adopt Finance Committee Report No. 137. Seconded by Ms. Lee Loy. CHR. DAVID: Any discussion? Mr. Inaba, go ahead. MR. INABA: We do have some amendments to the bill. I don't know if—before we get into that though, I just wanted to make sure that there wasn't any further discussion from the Council,just on the bill as it stands. CHR. DAVID: We're going to take that at draft two, after we vote on draft two. Thank you. Any discussion on draft one? Seeing none,just a reminder we have Page 42 Hawaii County Council-40 May 19,2022 to amend draft one with the mayor's proposed draft two first. So, we have a motion, all those in favor of MR. HENRICKS: We need a motion to amend draft one with draft two. Vote on Motion Mr. Kaneali`i-Kleinfelder moved to amend Bill 127 with to Amend: the contents of Comm. 663.2. Seconded by Ms. Lee Loy (Approved) and carried by the following voice vote: Ayes: Council Members Inaba, Kaneali`i-Kleinfelder, Kierkiewicz, Kimball, Lee Loy, Richards, Villegas, and Chair David—8. Noes: None. Absent: Council Member Chung— 1. Excused: None. CHR. DAVID: So now we're back to the main motion as amended, Bill 127, as amended. Council Members. MR. HENRICKS: If there are no discussion on the main motion, I can proceed to read in the amendments. CHR. DAVID: Sure, go ahead. ; and Comm. 663.3: From Council Member Holeka Goro Inaba, dated May 6, 2022, transmitting a (Memo No. 1) proposed amendment to reappropriate the Parks and Recreation Department's Kohanaiki Coastal Park Improvements project in the amount of$1.5 million. Motion to Amend: Mr. Inaba moved to amend Bill 127, Draft 2, with the contents of Comm. 663.3. Seconded by Ms. Lee Loy. CHR. DAVID: Go ahead, Mr. Inaba. MR. INABA: Thank you. Colleagues, this is a reappropriation. It's been a project, a wish and a hope for the Kohanaiki Park and it is for additional amenities, primarily an additional restroom facility near the entrance to the park when you meet the makai roads. So asking for your support in keeping this in the CIP (Capital Improvement Projects) budget. Mahalo. CHR. DAVID: Thank you, Mr. Inaba. Anyone else? Seeing none, all those in favor of amending Bill 127, Draft 2 with the contents of Communication 663.2, please say "aye." Page 43 Hawaii County Council-40 May 19,2022 Vote on Motion The motion to amend Bill 127, Draft 2, with the contents of to Amend: Comm. 663.3 was carried by the following voice vote: (Approved) Ayes: Council Members Inaba, Kierkiewicz, Kimball, Lee Loy, Richards, Villegas, and Chair David—7. Noes: None. Absent: Council Member Chung and Kaneali`i-Kleinfelder—2. Excused: None. and Comm. 663.4: From Council Member Holeka Goro Inaba, dated May 9, 2022, transmitting a (Memo No. 2) proposed amendment to reappropriate the Parks and Recreation Department's Kona Urban Trails Expansion project in the amount of$195,000. Motion to Amend: Mr. Inaba moved to amend Bill 127, Draft 2, with the contents of Comm. 663.4. Seconded by Ms. Lee Loy. CHR. DAVID: Go ahead, Mr. Inaba. MR. INABA: Again, another reappropriation, this one for $195,000 helping to understand open space and our trail expansion here in Kona, asking for your support. Mahalo. Vote on Motion The motion to amend Bill 127, Draft 2, with the contents of to Amend: Comm. 663.4 was carried by the following voice vote: (Approved) Ayes: Council Members Inaba, Kaneali`i-Kleinfelder, Kierkiewicz, Kimball, Lee Loy, Richards, Villegas, and Chair David—8. Noes: None. Absent: Council Member Chung— 1. Excused: None. and Comm. 663.5: From Council Member Holeka Goro Inaba, dated May 9, 2022, transmitting a (Memo No. 3) proposed amendment to reappropriate the Parks and Recreation Department's Kealakehe Regional Park Master Plan project in the amount of$1.5 million. Motion to Amend: Mr. Inaba moved to amend Bill 127, Draft 2, with the contents of Comm. 663.5. Seconded by Ms. Lee Loy. CHR. DAVID: Go ahead, Mr. Inaba. Page 44 Hawaii County Council-40 May 19,2022 MR. INABA: Okay, last reappropriation. This one primarily is going to be used for the EA (Environmental Assessment) for the project. Right now, still working on redoing the Master Plan and working with community and constituents regarding what that Master Plan looks like. Once we have that, we can move forward with the EA. So again, asking for your support. Mahalo. CHR. DAVID: Thank you. Anyone else? Seeing none, all those in favor of amending Bill 127, Draft 2 with the contents of Communication 663.5, please say aye. Vote on Motion The motion to amend Bill 127, Draft 2, with the contents of to Amend: Comm. 663.5 was carried by the following voice vote: (Approved) Ayes: Council Members Inaba, Kaneali`i-Kleinfelder, Kierkiewicz, Kimball, Lee Loy, Richards, Villegas, and Chair David—8. Noes: None. Absent: Council Member Chung— 1. Excused: None. and Comm. 663.6: From Council Member Holeka Goro Inaba, dated May 9, 2022, transmitting a (Memo No. 4) proposed amendment to add the Public Works Department's Hina Lani Street Rehabilitation project in the amount of$4.4 million. Motion to Amend: Mr. Inaba moved to amend Bill 127, Draft 2, with the contents of Comm. 663.6. Seconded by Mr. Richards. CHR. DAVID: Go ahead, Mr. Inaba. MR. INABA: Mahalo. This is adding a new project. The $4.4 million being added here is the county match for the STIP (Statewide Transportation Improvement Program) funds required to complete this $22 million rehabilitation of Hina Lina. We'll see later another one on the west side from Mr. Richards as well, so asking for your support in getting these projects done for these major throughways her on the west side. Mahalo. CHR. DAVID: Thank you, Mr. Inaba. Anyone else? Mr. Kaneali`i-Kleinfelder, go ahead. MR. KANEALI`I-KLEINFELDER: This road services a huge part of the community and I think this is very appropriate. From Costco toa lot of us use this road to access the county building as a connector between the two highways, so thank you for putting this forward, Mr. Inaba. Page 45 Hawaii County Council-40 May 19,2022 CHR. DAVID: Thank you, Mr. Kaneali`i-Kleinfelder. Anyone else? Seeing none, all those in favor of amending Bill 127, Draft 2 with the contents of Communication 663.6,please say "aye." Vote on Motion The motion to amend Bill 127, Draft 2, with the contents of to Amend: Comm. 663.6 was carried by the following voice vote: (Approved) Ayes: Council Members Inaba, Kaneali`i-Kleinfelder, Kierkiewicz, Kimball, Lee Loy, Richards, Villegas, and Chair David—8. Noes: None. Absent: Council Member Chung— 1. Excused: None. and Comm. 663.7: From Council Member Herbert M. "Tim"Richards, III, dated May 10, 2022, (Memo No. 5) transmitting a proposed amendment to add the Parks and Recreation Department's Spencer Kalani Schutte District Park Improvements and Expansion (formerly known as Waimea District Park)project in the amount of$5 million. Motion to Amend: Mr. Richards moved to amend Bill 127, Draft 2, with the contents of Comm. 663.7. Seconded by Ms. Lee Loy. CHR. DAVID: Go ahead, Mr. Richards. MR. RICHARDS: Yeah, thanks. This is the Kalani Schutte park which is in my district. Kalani Schutte was a well-known, well-respected Council Member that sat here many years; Police Officer, and he left his mark on our County. This is that next phase. We're talking about what's going in Papa`aloa as far as the hardened hurricane center, so this is the first step in getting that done. Thanks Chair. I ask for your support. CHR. DAVID: Thank you, Mr. Richards. Anyone else? Ms. Lee Loy, go ahead. MS. LEE LOY: I just need to speak to this,just because Mr. Schutte was my boss at one time. This is interesting that these funds are going to go to harden the facility because if you knew Mr. Schutte, he was a big guy, he was a hard guy. So this actually seems very appropriate that a facility named after him will be a shelter and a hardened facility,just like the man he was. Thank you, Chair, I yield. CHR. DAVID: Thank you, Ms. Lee Loy. Anyone else? Seeing none, all those in favor of amending Bill 127, Draft 2 with the contents of Communication 663.7, please say "aye." Page 46 Hawaii County Council-40 May 19,2022 Vote on Motion The motion to amend Bill 127, Draft 2, with the contents of to Amend: Comm. 663.7 was carried by the following voice vote: (Approved) Ayes: Council Members Inaba, Kaneali`i-Kleinfelder, Kierkiewicz, Kimball, Lee Loy, Richards, Villegas, and Chair David–8. Noes: None. Absent: Council Member Chung– 1. Excused: None. and Comm. 663.8: From Council Member Herbert M. "Tim"Richards, III, dated May 11, 2022, (Memo No. 6) transmitting a proposed amendment to add the Public Works Department's Waikoloa Road Rehabilitation project in the amount of$8.4 million. Motion to Amend: Mr. Richards moved to amend Bill 127, Draft 2, with the contents of Comm. 663.8. Seconded by Mr. Inaba. CHR. DAVID: Go ahead, Mr. Richards. MR. RICHARDS: Thank you. This is the never-ending story of Waik6loa Road. Like Mr. Inaba said, this is the county match for—it was initially estimated at about$50 million, but I think this one brings it to about$42 million, as far as resurfacing from mauka to makai, to Mamalahoa down to Queen Ka`ahumanu, and it's a very needed improvement. So thanks and I ask for everybody's support. CHR. DAVID: Thank you, Mr. Richards. Anyone else? Mr. Kaneali`i-Kleinfelder, go ahead. MR. KANEALI`I-KLEINFELDER: I have a question for somebody. There was a federal match for this at$33 million. Has that been finalized? MR. RICHARDS: My understanding in Public Works, our match needs to be secured. I have been assured that the federal money through the STIP will be there, as long as we have the county funding. So, the short answer on that one is yes. MR. KANEALI`I-KLEINFELDER: Okay. I do recognize the importance of this road. I've driven this many times and there is a certain section of that between the upper highway and Waik6loa town as you're making that bend and heading downhill where you seriously feel, like when you're in a pickup truck, that you are going to die. That's my general feeling when I'm driving on that road, so thank you for putting this forward. MR. RICHARDS: Chair, may I respond? Page 47 Hawaii County Council-40 May 19,2022 CHR. DAVID: You may. MR. RICHARDS: Yeah, I think part of the issue is the fact that this road was never built to handle the amount of traffic it does. It was never meant to be a main arterial so getting this in there is very needed. CHR. DAVID: Thank you, Mr. Richards and thank you, Mr. Kaneali`i- Kleinfelder. Alright, anyone else? Seeing none, all those in favor of amending Bill 127, Draft 2 with the contents of Communication 663.8, please say "aye." Vote on Motion The motion to amend Bill 127, Draft 2, with the contents of to Amend: Comm. 663.8 was carried by the following voice vote: (Approved) Ayes: Council Members Inaba, Kaneali`i-Kleinfelder, Kierkiewicz, Kimball, Lee Loy, Richards, Villegas, and Chair David—8. Noes: None. Absent: Council Member Chung— 1. Excused: None. MR. HENRICKS: As far as I'm aware, those are all of the amendments we have for the Capital Budget for today. CHR. DAVID: Thank you. MR. HENRICKS: We're on the main motion as amended to pass first reading. CHR. DAVID: As amended with all the communications. Okay, any discussion on that, Council Members? All those in favor of approving Bill 127, Draft 2 with the contents of the various communications we just went through, please say Ic aye. Vote on Bill 127 The motion to pass Bill 127, Draft 2, as amended to Draft 3): Draft 3, was carried by the following voice vote: (Approved) Ayes: Council Members Inaba, Kaneali`i-Kleinfelder, Kierkiewicz, Kimball, Lee Loy, Richards, Villegas, and Chair David—8. Noes: None. Absent: Council Member Chung— 1. Excused: None. CHR. DAVID: Okay, thank you. Page 48 Hawai`i County Council-40 May 19,2022 ADJOURN- There being no further business, at 11:47 a.m., Ms. Lee Loy moved to adjourn MENT: the meeting. Seconded by Mr. Kdneali`i-Kleinfelder and carried by the following voice vote: Ayes: Council Members Inaba, Kaneali`i-Kleinfelder, Kierkiewicz, Kimball, Lee Loy, Richards, Villegas, and Chair David— 8. Noes: None. Absent: Council Member Chung— 1. Excused: None. CHR. DAVID: We are now adjourned. Mahalo. AUG - 32022 Council Approval: COUNT• 'K JH/tk Page 49