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HomeMy WebLinkAboutCOM 0216.002 2008-2010DENNIS "FRESH" ONISHI Council Member Council District 4 Mailing Address: (Former County Building 25 Anpuni Street Hilo, Hawaii 96720 Hawai `i County Council County of Hawai `i Phone: (808) 96/-857/ Fax: 18as~ 96t-89n Email donishiaco.hawaii. hi. us Business Address: 333 Kilauea Avenue, Second Floor Ben Franklin Building Hilo, Hawaii 96720 N [-"+ O fly •~ May 18, 2009 ~,~r. ~ .~- TO: J Yoshimoto, Council Chair ~ °o And Members of the Hawaii County Council ~ ... ~ __; #l ~,;~ ~EM~ =1';; `"' FROM: Dennis "Fresh" Onishi _ `~-~ 2009-10 Budget Ad Hoc Committee, Secretary ~' ~. cri RE: Ad Hoc Committee Meetings Relating to Fiscal 2009 - 2010 Budget. Pursuant to Communication 216, discussed at the April 8, 2009 Council Meeting, the Ad Hoc Committee relating to the 2009-2010 Fiscal Year Budget met on four separate occasions. At this time, the committee has no recommendations relating to the 2009-2010 Fiscal Year Budget. The first meeting was held on April 13, 2009 in the Hilo Council Chambers. Council members attending were Pete Hoffmann, Chair of the Committee, Donald Ikeda, and Dennis "Fresh" Onishi. To cover the estimated $31 million deficit, the following were suggested: • Cut $900,000 Contingency Funds • Cut $500,000 West Hawaii Golf Subsidy • Cut $10 million Fund Balance • Cut $4.5 million 2% Open Sapce Fund • Unfunded 40 positions from the Administration • GASB Fund -not Fund for 2009-10 • Unfund more vacant positions • Increase the real property tax for time share • Increase the Vehicle Weight Tax - to fund Mass Transit and the Elderly Activities Division. • Increase the Gas Tax • Cut Union Benefits Comm. h:o. oZ.lb.2 Ref. To: "" ~e4C`"~{ Ref. Date MAY 2 p 2ppg Sewing the Lnterests of the People of Our Island Hawai i County is art 8qua( Oppor[unity Provider and Employer Pagc 2 The following changes to the proposed Budget were suggested: • Not sell the HSmakua Lands • No lay off of employees • No tax increases • No furlough It was decided that no action would be taken on any of the proposals until the Administration submits the Second Draft. Also, a second meeting will be scheduled for April 14 or 15 with the Administration to go over the lsc draft. The second meeting of the Ad Hoc Committee relating to the 2009-2010 Fiscal Year Budget was held on April 15, 2009 in the Hilo Council Chambers. Council members attending were Pete Hoffmann, Chair of the Committee, Donald Ikeda, Dominic Yagong and Dennis "Fresh" Onishi. Also present were Bill Takaba, Managing Director, Nancy Crawford, Finance Director, Deanna Sako, Deputy Director, Gary Takamura, Budget Administrator, Steve Offenbaker, Council Legislative Assistant, and Kathy Kosaka, Council Legislative Assistant. TAT • Update on the TAT: With a start date of January 1, 2010, the TAT may be reduced by half (to $9 million), with the Counties given the authority to levy a retail sales tax. • Mr. Takaba said, if we lose the TAT, we may wish to look at raising the property tax rate on resort properties as those funds will come directly to the County with the State having no authority to grab. • Mr. Yagong said, the additional $9 million shortfall changes the ballgame - if that happens, then everything is on the table, including the Hamakua lands and 2%. • Mr. Takaba said they are meeting next week and unless there is some definitive news on the TAT, the Mayor's Budget will for the most part remain the same. Fundine of Vacant Positions • After removing the always unfunded positions (training and temporary) and those Federal or State funded, there remains 297 open positions. Removed those non-General Fund positions (Highway, traffic, wastewater, liquor -funded with their own fees) - 256 positions remain open. Eliminated Public Health and Safety positions (police, fire, dispatch, lifeguards, solid waste, & wastewater) and Legislative branch- 119 positions open. Unfunded 42 positions - 77 positions remain open and funded as of February 27c~'. • Mr. Hoffmann suggested unfunding positions for the period of time the Director anticipates it being vacant. Ms. Crawford explained that some of that has already been done. The position on the funded list may in actuality be only funded, for example, for six months. Mr. Yagong asked if public health & safety really are currently jeopardized (with the current vacancies)? If we are going to have a hiring freeze, and that means not to hire anyone (and he prefers this over laying off existing workers or furloughs & pay cuts) why fund the position? Mr. Takaba made the point that the Department Heads are not opposed to unfunding positions, they are ready to do whatever is necessary, but it will be the Administration & Page 3 Council's decision. What standards are we looking for in terms of level of service? It is a matter of priorities. In addition, there are some operational positions vacant which are critical to the County (for example the Controller). Negotiations with the Unions. Without a contract in place, the County cannot amend and institute furloughs. Because it is a statewide contract, there is not a whole lot the Mayor can do. • There is a Council Member proposing furloughs for all non-union employees. Taxes • Mr. Hoffmann asked for an idea of the amount gained if the property tax were increased $.50 across the board. Mr. Takamura calculated the amount to be approximately $14.3 million. • For the most part, homeowner's tax has gone up across the board even with the dropping property values, because their capped value remains significantly below the market. • Move timeshare up from a Class 2 (apartment) to Class 7 (resort). o Real property tax may not be able to differentiate between what is time share and what is not -Depending on where they're located, many timeshares may already be classified as resort. • Vehicle weight tax increase, excluding commercial vehicles. o With the funds going to mass transit and to the Elderly services • Increase Fuel tax o State is proposing a $.10 increase o May lead to increase in bus ridership • Proposing an increase to Driver's License Fee o Will bring approximately $380,000 • Mr. Hoffmann asked if there is some leeway on the contribution to our debt services. If we were to postpone payment to take care of the current budget shortfall, when we do pay it off in 2-3 years, it will be with cheaper dollars. o Ms. Sako explained that while we may be paying it with cheaper dollars, we will also be paying double or triple the amount. For example, instead of paying $15 million next year, we may be paying $45 million plus the original $ ] 5 million three years down, the penalties are so steep. o In addition, our audit and bond rating will be shot and our bond rating directly impacts our interest rate. Mr. Hoffmann asked if the debt service projected included unissued bonds already appropriated under general obligation? And if so, do we have to issue them? o Debt Service includes only those we expect to issue in the upcoming fiscal year. o We have minimized all we can. To do so would mean we physically stop work on projects (ie. Kona Civic Center, Waikoloa Workforce Housing) when the money runs out. Mr. Yagong noted that any savings realized would work opposite to what the projects bring to the community. Hamakua Lands Mr. Yagong asked, what happens if the Hamakua Lands do not sell? And the 2008 authorization to sell the land excludes 700 prime acres. Is it worth putting these lands in to balance the budget? Page 4 This option was included after the departments cut their budgets ] 0%. The Administration has explored all potential revenue sources. When the economy goes bad, people depend more on Government, the demand for services increases. Unlike Business where demand decreases with the bad economy. o Mr. Yagong said, what a business does in a bad economy is reduce its expenses in two places, inventory and workforce. Mr. Hoffmann asked, is not selling Hamakua Lands more important than job cuts? Than furloughs? Than pay cuts? And suggested a priority listing of things we do not want to do Miscellaneous • Administration plans to remove the Budget Stabilization ($2 million) as revenue source and increase the fund balance by the same amount. • Foreclosure in two years instead of three will require additional staff (due to higher volume) and is now the right time to tighten up and start throwing people out of their homes? • User Fees will likely increase. The third meeting of the Ad Hoc Committee relating to the 2009-2010 Fiscal Year Budget was held on May 5, 2009 in the Hilo Co~mcil Chambers. Council members attending in Hilo were Donald Ikeda, and Dennis "Fresh" Onishi. Pete Hoffmann, Chair of the Committee attended via telephone from Waimea. Also present was Kathy Kosaka, Council Legislative Assistant. Mr. Onishi suggested, since the budget is balanced, to keep it as is. He has one amendment - to partially restore the Contingency Fund in the amount of $50,000 for each council member. This will be added to the Fund Balance. • Pete advised, this may come across very negatively, especially with suspending the 2% fund. It may be wiser to wait until mid year, right now, it will be difficult to support. Hamakua Lands • Mr. Hoffmann said, he and Mr. Yagong recommend taking the $8.2 million out of the revenue stream and offset by unfunding the vacant positions for the portion of the year in which they will be vacant. o Hold on to the land and lease instead of selling. o It may well be that the situation will continue to be bad and next year we will have to sell the land, but not now for a supposed "budget shortfall" that doesn't exist. o There's no reason to keep positions Funded if they're vacant and they're not going to be filled for a certain period of time. o Overtime funded accounts in departments other than police, fire and civil defense may be cut across the board by a certain percentage. Cutting only a portion of the overtime will save almost $3 million. o Totaling the unfunding of vacant positions and overtime savings will add to at least the amount of money we need to cover the HSmakua Lands Page 5 • Mr. Ikeda expressed concern because overtime is used when we are short on persomiel. Unfunding positions will lead to more overtime and if it is cut, are we going to have enough money? o He said he would support this only if the Department Heads gave the okay. • Mr. Hoffmann said the Police Chief had already indicated support, but he will go back and check. o For example, there's a recruit class coming on board January 2010 and 20 positions are budgeted. From July 1 -December 31, those 20 positions will be unfunded. o Fire and Police are aware of this, and probably most other department heads. o The savings he calculated for only certain departments is $2.5 - $2.7 million. o Total savings of $5.7 million Mr. Hoffmann noted the Administration reduced property taxes based on people challenging their assessments, not on the collectable capabilities. Mr. Hoffmann asked to consider the possibility of taking some of the GASB45 money ($63 million), a small amount ($1-2 million) now; and with the value of the dollar (2009) worth somewhat less due to inflation 7-10 years down the road, we can pay it back without penalties somewhere down the road. It may be smarter to take a few million dollars from the $63 million fund now, rather than fund the entire and see the value of those dollars decrease before they're used. o Mr. Onishi noted that in the last meeting, Finance said the penalty will be greater in the long run. o Mr. Hoffmann said the penalty will not be as great as the inflation rate or the loss in value of our purchasing power of that dollar. The fourth meeting of the Ad Hoc Committee relating to the 2009-2010 Fiscal Year Budget was held via telephone on May 13, 2009 in the Hilo Conference Room and Waimea Office. Council members attending in Hilo were Donald Ikeda, and Dennis "Fresh" Onishi. Pete Hoffmann, Chair of the Committee and Dominic Yagong attended via telephone from Waimea. Also present was Kathy Kosaka, Council Legislative Assistant. EIamakua Lands • Mr. Yagong provided a current line by line report of all the funded vacant positions. The total is 211 positions and $9.2 million. • Mr. Yagong said there are 100's of people willing to lease the Hamakua lands (including the BioFuel people, UH and 140 people on the Hamakua Ag Co-op) but the previous Yamashiro and Harry Kim administrations have not been supportive of that. • Mr. Hoffmann agreed that the County has never been open to leasing the lands. • Mr. Yagong expressed his concern of an $8.2 million shortfall if the land does not sell. • Mr. Hoffmann said he only thing the County can do six months into the fiscal year is to cut jobs. He said he spoke to Ms. Crawford & Ms. Sako. o Some of the salaries from the vacant positions are being used by people in lower paying positions who are doing the work of the higher positions. And Ms. Crawford advised they must go to each different department to find out what is there. Therefore all those vacant positions may be unfunded for the period of time the department head thinks they will remain vacant. Page 6 • Mr. Ikeda said he spoke to Administration and the Directors o Mr. Takaba and Ms. Crawford said necessary positions that were on hold because of the TAT scare are now being filled.. o Police Chief Kubojiri & Fire Chief Oliveira needs full funding because when recruiting, they must guarantee the job and they cannot offer unless fully fimded. o The Mayor said the best 1,000 acres of the Hamakua land has been saved for the County to be used for a volunteer fre, a park and a baseyard and the County will still have excess. The land they are selling is the less desirable lands. • Mr. Yagong said we must question if the departments are operating efficiently. Can we hold off on funding the supervisory positions? If they've been operating successfully with the positions empty till now, why fill them? These positions have always been there and always been funded. • Mr. Hoffmann said the Police have a recruit class beginning in ,Tanuary 2010. We should take the funds allocated for those positions for the six months while the positions sit vacant. Chief Oliveira has already done that with a couple of his positions. • Mr. Onishi noted, the Governor is proposing to eliminate the medical for anyone retiring after June 30`h. If this happens, there may be an exodus of retiring employees. • Mr. Hoffmann and Mr. Yagong noted that these positions are already fully funded. Also, it is highly unlikely that such legislation would survive. • Mr. Hoffmann did a breakdown of overtime by account numbers for the General Fund for most of the departments (excluding Police, Fire, Civil Defense). DO/kk