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Home My WebLink AboutCOM 0124.025 2004-2006 MtY os M Harry Kim l~ William Takaba Mayan Dlreclor • Nancy E. Crawford ij•,, „ Depurv Director ~'oi •N'~ County of Hawaii Finance Department _ , 25 Aupunf Strect, Room 118 Hilo, Hawaii 96720 , (808)961-8234 Fax (808)961-8248 Memorandum To: Virginia Isbell, Chair , and Members of the Committee o ce From: William Takaba, Director of Fin Date: March 24, 2005 Re: Operating and Capital Budgets and Program Review We received a copy of memorandum dated March 21, 2005 to you from Rodney Oshiro and Susan Caseria. The following are responses to questions related to the Department of Finance and the Miscellaneous accounts: Finance Department 1. The sale of real property decreased from $1.5M in FY05 to $350K in FY06. How many more properties does the County own and what is its value? Response: The County still owns sixteen parcels in the Hamakua area which were acquired in lieu of property taxes from Hamakua Sugar. Two of the parcels in the Paauilo area are currently being sub-divided to their underlying grants, which will result in ten properties to be sold. There are three remaining properties in the Paauilo area, currently being surveyed, which will also be sold. A volunteer fire station and highway baseyard are expected to be located on a portion of one parcel in the area. The remaining ten parcels are in the Kapulena area beyond Honokaa. They have not been surveyed and additional work needs to be done before they are ready for sale. The total assessed value of the sixteen Hamakua parcels is $9,802,900. We anticipate selling a number of properties in the next few months, but it is difficult to know if they will sell before June 30, 2005. The remainder properties will require time to prepare for sale and it is unknown if they will be sold during FY 2005-06. Comm. No, f Z~• Zf Ref. To•~raserNt FG. Ref. Uate Honorable Virginia Isbell and Members of the Committee on Finance Page 2 March 24, 2005 2. Does the department expect FY 2004-OS real property sales to exceed the projected budget of $1.SM? Response: We expect to be very close to the projected budget. If some of the Hamakua properties can be sold prior to fiscal year end, we will exceed the budget figure. 3. What is the status of FRESH system? Response: We are currently live on the core financial module (general ledger, accounts payable, purchasing), the budget module, the cashiering module and the human resources module. We are in various stages of converting and implementing payroll, fixed assets, project accounting, and utility billing. The Planning department is also currently implementing the parcel and permdtting module. Several other modules will be starting implementation in the next month. It is anticipated that most modules will be in use by fiscal year end. The most challenging module to-date has been the payroll module. It has required a number of modifications to meet our unique needs. As we proceed with our conversion to the new FRESH system, many of our business practices have been modified or completely replaced. It has become obvious that the Accounts division needs to have an employee dedicated to FRESH support from the fiscal side of operations. Support to end users, trouble shooting, training and communication with our software vendor continue to grow in importance and time requirements as we implement additional modules. 4. RPT -Have real property tax delinquencies increased over last year and by how much? Response: At 6/30/03, receivables for delinquent taxes were $9,664,608. At 6/30/04 they were $7,772,085, a decrease of $1,892,523 (20%). 5. RPT - Is the County collecting delinquencies? Response: Yes. Since 2001, we have been successful in collecting real property taxes from our largest delinquent accounts. The real property tax division also continues to hold foreclosure auctions two times a year. It is also pursuing collection from foreign property owners governed by Hague Convention requirements. 6. RPT -Are there any major loopholes or outdated exemptions in the law that should be closed or eliminated? Response: Most of the major loopholes or outdated exemptions were taken care of with the passage of Bills No. 49 (agriculture), No. 320 (additional exemption, Honorable Virginia Isbell and Members of the Committee on Finance Page 3 March 24, 2005 deadlines to file for home exemption, allowance of home occupation for home exemption, definition of principal home), No. 175 (3% growth cap), and No. 176 (5-year non-speculative dedication). Bill No. 169 that clarified section 19-77, HCC, relating to charitable organization exemptions was deferred. This Bill needs to be passed to recognize that organizations governed by section 501(c)(3) of the Internal Revenue Code should be exempt from paying real property tax, except for the minimum tax. Bill No. 170, a "housekeeping" measure, removes Water Tank exemptions from the valuation section of the County Code and more appropriately places it in the exemption section. VJe recommend that Council take action on this Bill. Other measures that need evaluation are: • Limiting disability exemptions to a principal home only; • Credit Union exemptions; and • Limiting real property tax payments to a percent of gross household income (circuit breaker). These were discussed with the Council in November 2003. 7. Risk Management -Some functions from other departments will be transferred to this new division. Does this new division overlap or duplicate responsibilities in other departments? Response: The new Risk Management division will coordinate activities in other departments and focus on responsibilities that have received minimal attention in the past. Duties related to researching insurance products may transfer to the Risk Manager, freeing up the Purchasing Agent to focus on other procurement priorities. Establishing a system for maintaining loss statistics may involve collecting that data from a number of departments. It is not expected that any activities will be duplicated. Coordinating the efforts of different departments will help in identifying and eliminating any duplication that may currently be taking place. 8. Treasury - Is there a continuing problem with reconciliation? Response: Reconciling all bank statements in a timely manner is an ongoing challenge. The division's sole accountant continues to receive new responsibilities, such as the addition of a new Improvement District. As a result, the Treasurer must reconcile monthly bank statements. A request for an Accountant I position is included in this budget proposal to assist with additional duties. Honorable Virginia Isbell and Members of [he Committee on Finance Page 4 March 24, 2005 Miscellaneous 1. Debt Service -Why does debt service reflect an increasing trend through FY 2005-06,then decreases in FY 2006-07? Response: The FY 2005-06 budget includes the final payment for the 1999B refunding bond. Because of this payoff, debt service will drop in FY 2006-07. 2. Debt Service -What is the debt service ratio for FY 2003-04 and how does it compare to previous years? Response: 2004 9.9% 1999 9.7% 2003 9.9% 1998 8.9% 2002 9.6% 1997 8.9% 2001 10.4% 1996 8.1 2000 10.5% 1995 8.3% 3. Are there plans to float additional Government Obligation Bonds in FY 2005- 06? How much and what for? Response: Although $800,000 was set aside for debt service during FY 2005-06, the Administration has not discussed specific projects and/or amounts. 4. Government Mandates -Can the Finance Committee be briefly brought up to date on what types of government mandates are required (gang cesspools, workers' compensation, ADA, etc.) Also what is the County's share and what is granted from the state and federal governments' share? Response: (We will leave this question for affected departments to answer.) 5. Fund Balance -How does the projected FY 2004-OS Fund Balance compare with the FY 2003-04 Fund Balance? Response: The Fund Balance for FY 2003-04 was $10,385,457; for FY 2004-OS we have projected needing $3,500,000 to balance our budget. This amount is conservative and may be revised when the amended budget is submitted toward the end ot'the fiscal year when information is available to make a more reliable projection. Thank you for the opportunity to review and respond to the these questions prior to our budget meetings. Should you need anything further, please let me know. cc: Dixie Kaetsu, Managing Director Rodney Oshiro/Susan Caseria