HomeMy WebLinkAboutREP FC 092 04/17/2007 2006-2008 REPORT OF THE
COMMITTEE ON FINANCE
DATE: April 17, 2007 Re: Comm. No. 193Bi11 No. 60
PLACE: Council Chambers
TIME: 10:12 a.m.
Council Chair and Members
Hawaii County Council
Hilo, Hawaii 96720
Your Committee on Finance, to which was referred Bill No. 60, reports as follows:
Bill No. 60, transmitted by Mayor Harry Kim via Communication No. 193, dated Mazch 1, 2007,
transmitting for consideration the proposed Operating Budget for the County of Hawaii for the
Fiscal Yeaz July 1, 2007 to June 30, 2008. This balanced budget includes estimated revenues
and appropriations of $359,100,000 and includes the operations of eleven of the County's special
funds as well as the General Fund. This budget is 9.9 percent more than the current year's
budget. It reflects a 15 percent increase in real property tax revenues due to an increase in
property values. There are no changes in the property tax rates.
The Mayor's budget message discusses several major expenditures proposed as well as Service
Highlights. It attaches informational tables comparing 1) budgeted expenditures for FY 2006-07
and proposed for FY 2007-08 for each fund; 2) a summary of projected FY 2007-08 revenues
from vazious sources and the change in those from the current budget; and 3) a summary of
projected FY 2007-08 expenditures and the change in those from the current budget. Also lists
significant changes to operating expenditures in several categories.
Also submitted is the Operating Budget Proposal (Pazt 1, Volume II), which describes the
departments and their programs, program objectives, highlights, program measures,
expenditures, and positions.
Additionally, Communication No. 193.1 from Finance Director William Takaba, dated
Mazch 1, 2007, transmitted a booklet containing reports titled Six Month Progress Report on
Program Objectives for FY2006-07 and Final Status Report on Program Objectives for
FY2005-06. These reports provide information to the Council to assist in the evaluation of
program accomplishments during the first six months of the current fiscal yeaz and for the
previous 2005-06 fiscal yeaz.
Budget Overview
The budget for FY 2007-08 is $32,401,000, or 9.9%, more than the current year's budget.
This budget reflects a 16.0% increase in real property tax revenues due to an increase in property
values and no changes in our tax rates. The real property assessed valuations used are still
preliminary figures and the values certified in April may vary from those assumed here. The
final budget presented to the Council in May will be based on the final numbers.
_.e_._
Comm. 193
Bill No. 60
Page -2-
Major Expenditures. The following major expenditures are included in this budget proposal:
• Public Access, Open Space, and Natural Resources Preservation Fund, $4,349,000.
An initiative that the voters passed in November, 2006 amended the Hawaii County
Code by requiring that 2% of all Hawaii County real property tax collected annually be
placed in the Public Access, Open Space, and Natural Resources Preservation Fund. The
amount budgeted represents the projected 2% requirement (includes penalties and
interests).
• Provision for Collective Bargaining, $6,250,000. The collective bazgalning contracts of
our public employee unions (HGEA, UPW, SHOPO, Firefighters) end on June 30, 2007.
Funds aze being budgeted to address possible pay and other increase.
• Reserves. Funds to prepaze for unexpected future emergencies or budget shortfalls aze
being requested in the following reserve accounts:
¦ Budget Stabilization Fund, $4,000,000
• Disaster/Emergency Fund, $2,000,000
• Self-Insurance Fund, $1,000,000
• GASB 45 -Other Post Employee Benefits, $8,000,000. $8,000,000 is being budgeted
for accrued retiree health Gaze benefits. The County currently funds retiree health
benefits on a "pay-as-you-go" basis, which has resulted in a lazge unfunded liability for
future benefits. Recent regulations (GASB 45) require that the full liability for post
employment health care benefits be reflected in financial statements. An actuarial study,
to be completed this fiscal yeaz, is currently under way to determine the liability. Upon
completion, the Employer-Union Health Benefits Trust Fund that manages the funds will
begin assessing charges to the County. $4,000,000 was budgeted for the current year
(FY 2006-07).
• West Hawaii Golf, $1,000,000. Due to the success of the West Hawaii Golf Program,
funding is being proposed to continue the program at a higher amount.
• Increase in Flood Control Program, $437,071. Due to a new federal mandate that took
effect in October, 2006, the inspection requirements for the County to maintain flood
canals have increased. The additional funding needed for required inspections are
included in this budget.
FC REPORT NO. 92
Comm. 193
Bill No. 60
Page -3-
New Projects. The following new projects are also being established to improve
operational efficiently and services to the public:
• Transfer of Beach Lifeguards. This budget includes funding for the transfer of
Beach Lifeguards from the Pazks and Recreation Department to the Fire Department.
The work that beach lifeguards perform is similar to the seazch and rescue functions
of the Fire Department. When the transfer is made, operations and training should be
better coordinated and ultimately, more efficient.
• Consolidation of Motor Vehicle Registration, Driver Licensing, and PMVI. Also
proposed is the consolidation of the motor vehicle registration section of the Finance
Department with the driver licensing, commercial driver licensing (CDL), and
periodic motor vehicle inspection (PMVI) sections of the Police Depaztment to the
creation of a separate Vehicle Registration and Licensing (VRL) division within the
Finance Department. The purposes of this consolidation aze:
¦ To improve services to the public by eventually offering regional one-stop
VRL service centers in Hilo, Kona, Waimea, Pahoa, and Kau;
¦ To promote efficiency of operations by cross-training staff to carry out more
functions;
¦ To enable the Police Department to focus on its core functions of ftghting and
preventing crime; and
• To enable the Treasury division to concentrate on investments, banking, and
municipal financing.
This budget includes funding for expanded services and rent for a new facility in
Waimea. If approved, regional VRL service centers will be opened in Hilo, at the former Real
Property Tax office on Piilani Street (1/08); in Kona, at the new West Hawaii Civic Center
(upon completion); in Pahoa, at the planned new Police station (upon completion); and in
Waimea and Kau, at sites to be selected.
• Roll-On, Roll-Off Trailers for Solid Waste. The Solid Waste division will purchase
two roll-off trucks and six 40-cubic yard roll-off trailers to establish a pilot program
to separate, collect, and transport green waste and white goods from a number of
transfer stations. When full, the roll-off containers will be taken to the scrap metal
yazd, or green waste facility. The containers will also be stationed at the Hilo tip
floor to transport sepazated items, including wood, pallets, cazdboazd, green waste,
and scrap metal, to the appropriate disposal site.
The roll-on bins and trucks provide the flexibility to serve the public and divert more
of the waste stream from the landfills. The roll-on trailers and tractor trucks aze an
integral pazt of the equipment needed to haul items away from the transfer stations for
proper disposal.
FC REPORT NO. 92
Comm. 193
Bill No. 60
Page -4-
Service Highlights
This budget adds supplemental funding for the following major areas of need:
Parks and Recreation
• Establishes additional Plumber, Electrician, and Mechanic positions, and increases to
full-time, 6 Pazk Cazetaker positions to improve the maintenance of parks.
• Adds funds to repair Aunty Sally's Luau Hale.
• Continues municipal golf rates in West Hawaii
Public Safety
• Creates 15 part-time Police Cadet positions to allow for the implementation of a Police
Cadet Program.
• Transfers Beach Lifeguazds from the Parks & Recreation Department to the Fire
Department.
• Funds new protective equipment and rescue apparatus for Fire Department personnel.
• Increases funding for the flood control program.
• Continues funding to update Floor Insurance Rate Maps (FIRM).
Community-based Planning
• Provides funds to do additional work in developing community development plans for
Kona, Puna, and North/South Kohala. Additional work includes sub-consultant services,
facility rentals, hiring of recorders for the steering committee and working group
meetings.
Environmental Management
• Implements roll-on, roll-off trailer project to enhance recycling program.
• Creates a Recycling Specialist position in Kona.
• Provides funds to hire a Welder and Laborers, and purchase new equipment for the solid
waste division.
• Creates an Environmental Engineer position.
• Adds funds for waste reduction facility RFP consultants, if necessary.
FC REPORT NO. 92
Communication No. 193
Bill No. 60
Page -5-
Economic Development
• Provides additional fends for tourism promotion.
Services to the Public
• Creates a Vehicle Registration and Licensing division within the Departrnent of Finance
to offer registration and licensing services at regional one-stop centers.
Administrative Needs
• Creates an Agricultural Land Specialist position in the Real Property Tax division to do
onsite agricultural use verifications and serve as a resource in agriculture to the division.
• Increases staffing at the office of the Corporation Counsel to meet litigation and
counseling needs.
Operating Budget:
The following table describes the budgeted expenditures for FY 2006-07 and the proposed
budget for FY 2007-08 for each fund.
OPERATING BUDGET BY FUND
(Amounts in thousands)
FY 06-07 FY 07-08 Increase Percent
FUND Budget Proposed (Decrease) Change
General Fund $246,032 $274,830 $28,798 11.7%
Highway Fund 26,597 25,808 (789) (3.0%)
Sewer Fund 8,062 10,047 1,985 24.6%
Cemetery Fund 10 10 0 0.0%
Bikeway Fund 171 171 0 0.0%
Beautification Fund 225 225 0 0.0%
Vehicle Disposal Fund 2,787 2,759 (28) (1.0%)
Solid Waste Fund 27,467 30,389 2,922 10.6%
Golf Course Fund 1,101 1,114 13 1.2%
Geothermal Royalty Fund 150 300 150 100.0%
Housing Fund 14,047 13,397 (650) (4.6%)
Geothermal Asset Fund 50 50 0 0.0%
$326699 $359,700 $32407 9.9%
FC REPORT NO. 92
Communication No. 193
Bill No. 60
Page -6-
The following table presents a summazy of projected FY 2007-08 revenues from various sources
and the changes from the current budget:
REVENUES BY SOURCE
(Amounts in thousands)
Increase
(Decrease)
Percent From Percent
Of FY 2006-07 Increase
Source Amount Total Amount (Decrease)
Real Property Tax $213,100 59.3% $29,405 16.0%
Public Service Company Tax 7,050 2.0% (250) (3.4%)
Fuel Tax 8,185 2.3% 290 3.7%
Public Utilities Franchise Tax 7,595 2.1% 95 1.3%
Licenses and Permits 17,087 4.7% 1,417 9.0%
Revenues and Use of Money & Property 4,547 1.3% 22 0.5%
Intergovernmental Revenues 57,075 15.9% 1,365 2.5%
Charges for Services 24,743 6.9% 2,254 10.0%
Other Revenues 7,654 2.1% 1,140 17.5%
Fund Balance Carryover 12,064 3.4% (3,337) (21.7%)
$359,100 100.0% $32,401 9.9%
Significant changes to operating revenues are as follows:
• Real Property Tax -Taxable real property values will increase by 16.0% due to increase in
taxable values.
• Licenses and Permits -Revenue sources with projected increases include construction
related permits, vehicle and trailer weight taxes, and geothermal royalties.
• Charges for Services -Solid Waste tipping fee revenues increasing by $1.5 million.
• Other Revenues -Debt service reimbursement from the Department of Water Supply
increasing by $869,000.
• Fund Balance Carryover -General Fund Carryover decreasing due to having reduced its
projected carryover savings by $2.3 million.
FC REPORT NO. 92
Communication No. 193
Bill No. 60
Page -7-
The following table presents a summary of projected FY 2007-08 expenditures from various
sources and the changes from the current budget:
EXPENDITURES BY FUNCTION
(Amounts in thousands)
Increase
(Decrease)
Percent From Percent
Of FY 2006-07 Increase
Expenditures Amount Total Amount (Decrease)
General Government $ 46,524 13.0% $ 3,816 8.9%
Public Safety 98,765 27.5% 614 0.6%
Highways & Streets 16,948 4.7% (666) (3.8%)
Health, Education, & Welfare 20,258 5.6% (349) (1.7%)
Culture and Recreation 17,922 5.0% (1,241) (6.5%)
Sanitation & Waste Removal 39,387 11.0% 3,573 10.0%
Debt Service 35,736 9.9% 6,114 20.6%
Pension & Retirement 25,070 7.0% 2,327 10.2%
Health Fund 27,365 7.6% 4,739 20.9%
Miscellaneous 31,125 8.7% 13,474 76.3%
$359,100 100.0% $32,401 9.9%
Significant changes to operating expenditure are as follows:
General Government -Expenditures are increasing by $3.8 million as a result of:
• Finance Department -Consolidating driver licensing with vehicle registration and
creating of a new division, $1.8 million.
• Building Division -Increase in operational expenses such as air conditioning
maintenance, electricity, rent, and insurance, $1.3 million.
• Automotive Division -Increase in fuel costs, $712,000.
Culture and Recreation -Expenditures aze decreasing by $1.2 million due to:
• Aquatics -Beaches -Transfer of Beach Lifeguazds to the Fire Department,
($1.Smillion).
FC REPORT NO. 92
Communication No. 193
Bill No. 60
Page -8-
Sanitation and Waste Removal -Expenditures aze increasing by $3.6 million as a result of:
• Solid Waste Division -Increased operating expenses, $1.4 million.
-Additional equipment, $671,000.
-Increased recycling efforts, $467,000.
• Wastewater Division -Increased operating expenses, $452,000.
Debt Service -Expenditures aze increasing by $6.1 million primarily due to:
• Debt Service -Current requirements plus projected $25 million new issue.
Pension and Retirement -Expenditures are increasing by $2.3 million primarily due to:
• ERS/FICA -Increase in employees and wages.
Health Fund -Expenditures are increasing by $4.7 million primazily due to:
• GASB 45 reserves -Increased estimated requirement for Other Post Employee Benefit
by $4 million.
Miscellaneous -Expenditures aze increasing by $13.5 million primarily due to:
• Provision for Collective Bargaining Increases, $6.25 million
• Increased Sever Fund Replacement Reserve Repairs, $1.6 million
• Increased Public Safety Disaster/Emergency Account, $350,000.
• Increased transfer to Budget Stabilization Fund, $3.0 million.
• Provided for transfer of 2% of real property taxes to Public Access, Open Space and
Natural Resources Preservation Fund, $4.349 million.
• Increased transfer to Disaster/Emergency Fund, $1.0 million.
Your Committee originally reviewed the Operating Budget in conjunction with departmental
program reviews on March 28 through March 31, 2007. Pursuant to Section 10-4, Hawaii
County Chazter, the Council also conducted public hearings on the proposed FY2007-08
Operating and Capital Budgets in Kona on Mazch 19, 2007, and in Hilo on March 21, 2007.
Upon review of the Mayor's amended budget submittal on May 5, 2007, the Council may
propose amendments as necessary.
FC REPORT NO. 92
Comm. 193
Bill No. 60
Page -9-
Your Committee on Finance is in accord with the purpose and intent of Bill No. 60 and
recommends that it pass first reading.
la
AYES NOES A&E EX Respectfully submitted,
FORD X
HIGA X COMMITTEE ON FINANCE
HOFFMANN X
IKEDA X
JACOBSON X
NAEOLE X U~^-+
PILAGO X DOMINIC YAG , IR
YncoNC X FC P R O 92
YOSHIMOTO X ADO ED: