HomeMy WebLinkAboutCOM 0377.000 2004-2006 MYY os N,
Harry Kim ~ William Takaba
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.L/„ I m Dur~ [ur
- Nancy E. Crawford
•i • Depun'Dlrcr tor'
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County of Hawaii
Finance Department
25 Aupum Strcfl. Room 118 • IIIIu. Ilu~~wi 9b72U , „
IHON19G1-8211 Puv IHON19o l-N2d8
July 20, 2005
Stacy K. Higa, Chairperson and
Members of the Hawaii County Council
Hawaii County Council
25 Aupuni Street
Hilo, Hawaii 96720
Re: Capital Budget
Enclosed is a bill for an ordinance appropriating the fourth increment of the fuel tax
increase established by Resolution Nos. 192-97 and 241-98. Projected revenues are
being allocated utilizing the same distribution method as Increment 3 (based on each
district's percent of miles of local streets) except that distribution allocations under "Local
Road Improvements" have been adjusted to account for the cost difference in the unit price
of hot mix asphalt concrete between East and West Hawaii districts. The specific projects
are listed on Exhibit A of the bill.
If there are any questions, please do not hesitate to call the Department of Public Works.
'~`mI~' .`7 ~ aba I
Wil iarh a
Director of Finance
APPROVED:
Harry Kim
V Mayor
Enc.
cc: Public Works Comm. No. '7
Ref. To;
jj~, I ~ 1~7 ~ Hawai'i County is an Equal Opportunity Provides and Employer JUL ~05
Res, Uate
Form B-52
7/18/91
DEPARTMENT OF FINANCE
REQUEST FOR COUNCIL ACTION
DEPARTMENT: PUBLIC WORKS DATE: July 11, 2005
STAFF CONTACT: Galen Kuba PHONE: x8327
A. REQUEST:
Allocation of fourth increment of fuel tax revenues established by Resolution 192-97 and 241-98. See
attached Exhibit A, "Fuel Tax Program Revenue Appropriation Increment 4 2004-2006."
B. BACKGROUND AND JUSTIFICATION (USE ADDITIONAL SHEETS AS NEEDED):
The distribution method used is the same as Increment 3 except that District allocations under "Local Road
Improvements" has been adjusted to account for the cost difference in the unit price of hot mix asphalt
concrete between East and West Hawaii Districts.
Projected fuel tax revenues is $6.7 million.
SIGNED: C . ~;e«-~ DATE: ?//310'
Department Head
WEST HAWAII ASPHALT CONCRETE
COST ADJUSTMENT ANALYSIS
RATIONALE:
Because of the high unit cost of asphalt concrete (AC) in certain West Hawaii districts, a Cost
Adjustment Formula (CAF) has been developed to equalize the purchasing power of AC among all
districts. The CAF determines the amount of money to be transferred from districts that are able to buy
AC at East Hawai `i rates to those districts that must purchase AC at the higher West Hawai `i rate. The
CAF determines a baseline quantity of AC purchased if all districts were able to buy AC at the lower
East Hawaii unit cost. A comparison is made between the baseline quantity of AC purchased and the
actual amount of AC purchased using East and West Hawaii rates after East Hawaii funds are
transferred to West Hawai `i. This comparison is expressed as ratio; with equity in purchasing power
being achieved when the East Hawaii ratio equals the West Hawaii ratio as shown in the formulabelow.
East Hawaii AC purchases after fund transfer _ West Hawaii AC purchases with fund transfer
East Hawaii baseline AC purchases West Hawaii baseline AC purchases
COST AD.TUSTMENT FORMULA (CAF):
The CAF uses the following variables:
$ w = Unadjusted amount of money to be spent using West Hawaii unit cost for AC only.
$ e = Unadjusted amount of money to be spent using East Hawai `i unit cost for AC only.
CW = West Hawaii unit cost for AC.
CF = East Hawai `i unit cost for AC.
X = Amount of money to be transferred from East Hawaii districts to West Hawaii districts.
The variables are used to establish the following:
$ e ~CE = East Hawai `i baseline AC purchase.
$W ~C~ = West Hawaii baseline AC purchase.
e - X )~CF = East Hawai `i AC purchases after fund transfers.
($W + X )~CW = West Hawaii AC purchase with fund transfers.
Pax nai~Gimc~c z wed Page 1 of 2
Substituting the above into the following formula:
East Hawaii AC purchases after fund transfer _ West Hawaii AC purchases with fund transfer
East Hawaii baseline AC purchases West Hawaii baseline AC purchases
Results in:
~~~e $W ~CF ~ ~ f. CF $W CW ~
~~g - X~~yy CW-~~ty + X//~@pE Cg ~
@~W~H/~~CW - X~~W CW~=l~W~B~CE + X~`pg Cg~ ~
Solving for X results in the Cost Adjustment Formula (CAF):
~gr~g~CW - CF~~
X ~$e~e~+~$wCty~
Substituting the following values into the CAF:
$w = $ 488,784 (See attached Table 1, Total Column H)
$ ~ _ $2,526,216 (See attached Table 1, Total COlumn E)
CW = $75.00/ton Mix 4 (Contractual Ptice)
C~, _ $41.80/ton Mix 4 (Contractual Price)
Results in:
X _ 488,784 x 2,526,216 x (75.00 - 41.80) _ $288 177
(41.80 x 2,526,216) + (75.00 x 488,784)
Therefore:
West Hawaii Adjusted Allotment = $ 488,784 + $288,177 = 776 961
East Hawaii Adjusted Allotment = $2,526,216 - $288,177 = 2 238 039
Attached Table 2 redistributes the Adjusted Allotments back into the respective districts.
Ptx Adjustment 2wpd page 2 Of 2
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