The URL can be used to link to this page

Home My WebLink AboutCOM 0140.009 2002-2004 OJHVV Os N~~9 AARON S.Y. CHL'NG 1i Phone: 808 961-8396 Cmmdlmembcr ~T~ i ~ PAX: (808) 969-3291 1TE QF~HpQ~j COUN'T'Y COUNCIL Counh~ of I~~awaii Hawaii County Bui/ding 25Aupuni Street Hilo, Haeuaii 96720 March 20. 2003 Honorable Harry Kim Mayor, County of Hawaii 25 Aupuni Street Hilo, Hawaii 96720 Dear Mayor Kim, t am writing to request that you furnish the Council's Finance Committee with a brief summary of your budget direction for Bill 59, the FY 2003-04 Operating Budget. I ask that you reply in writing prior to the Finance Committee meeting on April ISr~'. At this time, a "line-by- line" revision is not required. Rather, I would ask you to simply survey your departments quickly for their input regarding proposed budget adjustments, including feasible budget cuts. Our nation is now at war. While we wish for a quick, decisive and merciful conclusion to this conflict, fiscal prudence dictates that we reasonably adjust some of our revenue projections and spending plans. In the present moment, both the administration and the Council are challenged to demonstrate resilience and clarity with respect to our fiscal priorities. A dramatic 10.49% increase in estimated real property tax revenues (pending certification) greatly eases the budget crunch experienced only one year ago. In large measure, this welcome development underscores your "status quo spending plan" transmittal of February 28, 2003, which proposed a $13 million increase above last year's operating budget. However, a variety of concerns -including the submittal of supplemental budget requests from the Police Department, Fire Department and Prosecuting Attorney's Offtce -beg for a collaborative and disciplined resolution of spending priorities in the coming tscal year. I invite you to help us illuminate those priorities. As necessary, I would like to know the administration's view on where selective cuts could be made in the amended budget. In making this request, I cite see eral outstanding concerns, as follows: 1. T.A.T. Revenues. It is certain that the war in Iraq will trigger a slowdown in visitor arrivals and, consequently, reduce our T.A.T. revenue projection, presently $15,781,000. Last week, the Council of Revenues reduced its visitor growth projections downward. I am concerned that even this latest estimate may he - to borrow a phrase from Federal Reserve Chairman Alan Greenspan - "irrationally exuberant." The unknown duration of the war, its subsequent Comm. No. ~ Ref. To: i~ Ref. Date ~Jp, ~ 2 n 2003 peacekeeping costs, and prolonged homeland security anxieties pose the threat of economic recession. While we redouble our efforts to sustain tourism, I think it's advisable to immediately prepare a more cautionary estimate of T.A.T. revenue based upon a likely slowdown in visitor spending. Our T.A.T. revenue scenario is further complicated by the uncertainty surrounding H.B. 1554, now proceeding in the legislature. On March 19, H.B. 1554 was amended to allow the City & County of Honolulu to impose a sales tax (not a G.E.T. surcharge) not to exceed 1 with the Senate Ways and Means Committee yet to decide the apportionment of T.A.T. revenues among the Neighbor Island counties, as well as an implementation date. If this bill is adopted and meets with the governor's approval, it may increase the share of T.A.T. revenues disbursed to the outer islands. However, the fate of this bill and its implementation remains uncertain. To date, the administration and several council members have submitted written testimony to the Legislature in support of this measure. As this bill nears final form, the administration and the Council should closely monitor its implications for our overall revcnue picture. 2. Indebtedness and Fund Balance. Yesterday, the Council unanimously approved a hefty $36 million bond float. The projects to be funded are worthwhile. Moreover, the prompt sale of these bonds will enable the County tc~ take advantage of unprecedented low interest rates. However, this action adds to our overall debt service and impinges upon our ability to maintain a healthy fund balance. Moreover, the Council is interested in establishing a higher disaster fund balance by ordinance. 3. Status of ERS Suit Circuit Court Judge Gary W. B. Chang dismissed SHOPO's suit seeking lost earnings in the Employees Retirement System on March 18. However, this case will be appealed, so its outcome remains uncertain. As such, I would appreciate your counsel as to the appropriate amount to be budgeted for our ERS contribution in the coming year. 4. Supplemental Budget Requests. During our March budget hearings, the Council received supplemental budget requests from the Prosecuting Attorney's Office, Fire Department ($4. I M) and Police Department. Each of these departments makes enormous contributions to public safety, a core function of county government [ am particularly concerned with the state of our undermanned Fire Department. To thoughtfully consider these supplemental requests, based on merit and availability of funds, I ask your administration to provide us with guidance. Clearly, not all supplemental requests can be accommodated. What do you propose as priority spending for each of these departments? I welcome your input. 5. Additional Considerations. Finally, based upon discussion during the Council's March 13- 19budget hearings, I would like to know your position on the following: • Fees for building permits, biennial dog licenses, Panaewa Rainforest Zoo adult admissions, fundraisers at county gyms, Panaewa Equestrian Center boarding fees, Summer Fun programs, graduated increases in golf course greens fees, etc. • Fuel tax increase • Investigation regarding collections from AT&'f and Verizon of public service company tax • Sales of Hamakua lands • Consolidation of DARE and HI-PAL programs • Use of General Funds to retire the Muni Golf Course debt • Disposition of SHOPO's requested increase in vehicle allowance • County's position regarding its projected $t.2M, admittedly a "guesstimate," for collective bargaining agreement pay raises • Submittal of an estimated budget amount for an impact fees study • Proposal for reallocation of unspent earmarked Mass Transit investigations fund balance • Proposal to allow promotional advertising on county buses • Recalculation of fuel costs based upon rising prices • Consolidation of all microwave communications and facilities under Data Systems • Implementation of a Department of Civil Service "return to duty" program In summation, I concur with your major spending initiatives-the "War on Ice" efforts and long-awaited computer upgrades. However, I am concerned that our work to adopt a balanced budget requires a rigorous re-examination of spending, to include a survey of practical budget cuts in the days ahead. I look forward to your advisory response to these questions by April I5`h. Thank you. Sincerely, Aaron S. Y. Chung j° Chair, Finance Committee AC/rf