HomeMy WebLinkAboutCOM 0140.010 2002-2004
Harry Kim "4 Dixie Kaetsu
Mayor ~ Managing Director
~:•o;~;,.+` Peter Hendricks
Deputy Managing Director
~ouutp of ~aboai`i
25 Aupuni Street, Room 2l5 • Hilo, Hawaii 96720-0252 • (808) 961-8211 • Faz (808) 961-6553
KONA: 75-5706 Kuakini Highway, Sui[e 103 • Kailua-Kona, Hawaii 96740
(808) 329-5226 • Fax (808) 326-5663
April 15, 2003
The Honorable Aaron Chung, Chair
Finance Committee
Hawaii County Council
25 Aupuni Street
Hilo, Hawaii 96720
Dear Chairman Chung:
Thank you for your letter of Mazch 20, 2003, requesting information about the proposed
budget for fiscal year 2003-04. I appreciate your concern about the County's fiscal -
projections now that the nation is at waz, and am happy to try to provide you with the
information you request.
Below I will try to address the specific concerns you raise.
T.A.T. Revenues: If the latest Council on Revenues projection is accurate, Hawaii County
will receive $47,000 less in Transient Accommodations Tax revenues than is included in the
budget presented to you in February. However, this projection was made before war was
declared. It appears at this time that the war may be of limited duration, and its impact
therefore may not be as severe as if it were prolonged. However, the current SARS scare and
the ongoing economic problems in Japan continue to have a negative impact on eastbound
visitors. A revised estimate of T.A.T. revenues will be included with our amended budget in
May.
We are closely monitoring H.B. 1554. Supporting testimony has been submitted by the
administration. Our position is that we do not support any provision that will reduce the
County's share of T.A.T. revenues. We continue to be in close contact with our legislators on
this issue as the bill goes to conference committee.
Indebtedness and Fund Balance: We are very aware of the fact that the County's general
fund balance has been declining over the past years. This is one of the reasons we proposed
an increase in real property tax rates last year. In spite of the increased debt service
attributable to the newly authorized bonds, we hope this trend has been reversed with greater
tax revenues and an overall healthy economy in the County.
Comm. No.
Ref. To:~~~
Ref. Date 1 2~~3
April 15, 2003
The Honorable Aaron Chung
Page 2
Status of ERS Suit: The County's share of the Employees Retirement System payment has
already been established and approved by the ERS trustees for FY 2003-04 and FY 2004-05.
These amounts are included in our proposed budget. While the case will be appealed, we do
not feel it is necessary at this time to include any provision for payment in our current budget
plans.
Supplemental Budget Requests: You ask what we propose as priority spending in the
Prosecuting Attorney's OfJ-ice, Fire Department and Police Department. Our priorities in
spending aze reflected by what is included in the budget that was presented to you. There is
no argument that these departments make "enormous contributions to public safety, a core
function of county government." However, public safety is not the sole core function that
must be addressed. Any funds to increase the amounts already allocated to these departments
will Gave to be taken from other departments. While these three departments presented
important supplemental requests that were not funded, so did all other departments. I assure
you that public safety agencies aze already receiving the lion's share of the departmental
increases that have been included in the proposed budget.
Additional Considerations: You requested my position on the following:
• Fees for various permits, licenses, etc. -Departments are evaluating the fees chazged
and will be proposing adjustments as appropriate.
• Fuel tax increase - A proposal to increase the fuel tax will be presented to the Council
by the Department of Public Works.
• Public Service Company tax - AT&T Wireless appears to be overpaying the PSC tax to
Hawaii County. We have contacted them twice to discuss the payments, with no
change resulting. We continue to accept payment. Additionally, we have estimated
what we think is a more appropriate tax amount and record that as revenue. We have
not recorded the full amount as revenue, so if they make a refund request we will not
incur a financial impact. Verizon Hawaii made a major reduction in PSC tax payments
beginning July 2002. Their payments are down by over $50,000 per month, resulting in
approximately $600,000 shortfall in estimated revenues from PSC tax this fiscal year.
Payments were reduced to all counties. Maui County wrote to Verizon and requested
an accounting of the tax calculation and payment, but has received no response. We are
requesting our Corporation Counsel to draft a letter to Verizon to follow up on this
matter.
• Sales of Hamakua lands: We are proceeding with sales of Hamakua lands. Three
properties are currently in escrow and a fourth property is in the County negotiation
process. Some of the funds from sales will be used to cover costs to sell the remaining
properties. An estimates sales schedule is attached.
April 15, 2003
The Honorable Aaron Chung
Page 3
• Consolidation of DARE and HI-PAL programs -These are very different programs,
and consolidation would not necessarily result in a cost savings. For your information,
the two programs do work together.
• Use of general funds to retire the municipal golf course debt -This is very appropriate.
No other special revenue funded activities are charged for their share of debt service.
This includes sewer fund, solid waste fund, and highway fund projects. It is
inconsistent and unfair that this single activity should be distinguished in this manner.
• Disposition of SHOPO's requested increase in vehicle allowance -This issue is
presently on the table for negotiation. The disposition will be determined through the
collective bargaining process.
• County's position regarding the $1.2 million estimate for collective bargaining pay
increases - In the past, the County has not included amounts in its budget for projected
pay increases before these had been agreed upon between the employer and unions.
Departments were left to absorb these costs as best they could through vacant positions
and any other means. This has been a true hardship in the past for most departments.
The police and fire unions are in binding arbitration, and we know that their settlements
alone may exceed the allowance we have set aside. However, departments will still be
expected to cover what costs they can in their regular funding and this $1.2M will be
available to cover what cannot be paid through savings in other areas.
• Submittal of an estimated budget amount for an impact fees study - We have not
included such an item in the budget as presented. Estimated cost would be around
$200,000. If the Council has the will to follow through with an impact fee ordinance
after an impact fee study is completed, then it would be money well spent.
• Proposal for reallocation of unspent earmarked Mass Transit investigations fund
balance - We oppose reallocation of these funds to any purpose other than taxicab
investigations. When the annual license fee for taxicabs was increased from $10 to
$120, taxi owners were promised that the increased fee would go to investigation of
violations and enforcement of the many taxicab regulations. If the balance is increasing
and there is no additional need for investigations, the fees should be reassessed. No
change should be considered without the involvement of the taxi operators in Hawaii
County.
• Proposal to allow promotional advertising on county buses -This is being actively
pursued. Corporation Counsel is reviewing rules to allow this.
• Recalculation of fuel costs based upon rising prices - We expect our fuel and electricity
costs to rise by about 10%, or $200,000 if consumption remains the same. This
increase will be considered in our May proposal to you.
April 15, 2003
The Honorable Aaron Chung
Page 4
• Consolidation of all microwave communications and facilities under Data Systems -
While Data Systems would be interested in acquiring a small piece of the microwave
network for county communications, to assign all of the police microwave
communications facilities, personnel and emergency control to Data Systems would not
be in the best interest of the Police Department or the public. Technical expertise,
control and personnel should belong to the Police Department, as Data Systems does
not have the technical background, knowledge and expertise to manage a digital
microwave system.
• Implementation of a Department of Civil Service "return to duty" program -The
Department of Civil Service is working on development of a return to duty program.
Generally speaking, you ask where we feel selective cuts could be made in our budget, and
consideration of including more of the police, fire and prosecutor's supplemental requests in
the budget. Let me repeat that the budget as presented to you includes our priorities. Public
safety supplemental requests were considered along with all other departments, and decisions
made as best we could on the priorities county-wide. If the Council as the policy-making
body of the County feels it appropriate to implement cuts in some programs to fund others,
that is within your authority. You must scrutinize the budget presented and make your
proposals based on what you feel should be the County's priorities. We would be happy to
comment on any proposed changes if you so request.
oha,
I~ ,
Harry Ki~
MAYOR
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