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HomeMy WebLinkAboutCOM 0711.000 2008-2010 ;�tV Of .. c ° .•'jS ` •.t `. William T. Talcaba Managing Director to dliam P. Kenui ; Alu Walter K. N1. Lau •A1SI - Depwy 3 Iooagsng Director • OF County of Hawaii Office of the Mayor 25 Aupuni Street. Suite 2603 • Hilo. Hawaii 96720 • (808) 961 -8211 • Fax (808) 961 -6553 KONA: 75 -5722 Nanama Place, Suite 102 • Kailua -Kona. Hawaii 96740 (808) 327 -3602 • Fax (808) 326 -5663 r.D CJ March 1, 2010 C7 0 o M 03 • zrz The honorable Chairman J Yoshimoto and rTh fTl t i Members of the Hawaii County Council I- lawai'i County Council 25 Aupuni Street Hilo, Hawaii 96720 x - o Aloha, Chairman Yoshimoto and Council Members: As required by the Hawai`i County Charter, submitted with this message is the proposed operating budget for the County of Hawai`i for the fiscal year ending June 30, 201 1. This balanced budget includes estimated revenues and appropriations of $375,367,419 and includes the operations of eleven of the County's special funds as well as the general fund. The difficult economic conditions in Hawai`i and on the Mainland have led to an unprecedented decline in County revenues. Continued projected declines in real property values as well as steep drops in County collections for charges for services, investment income, license and permit fees, fuel taxes and other revenues require that we make hard choices as we prepare for the year ahead. "this balanced budget represents a thorough review of County activities, and continues my administration's efforts to reduce the cost of government as we refocus on core County services. Last year, we unfunded 55 vacant positions, which was the largest number of positions ever to be unfunded in a single County budget. This proposed FY 2010 -11 budget will abolish or unfund 1 1 1 additional positions. This budget also includes furloughs of two days a month for County workers, which amounts to a loss of more than one month's pay for those employees during the next fiscal year. These unprecedented furloughs reflect the severity of the financial challenges that now confront our entire community, and represent a shared sacrifice on the part of our public workers. This FY 201 0 -11 budget is $11,678,784 less than the current year's budget. Spending under this budget is almost $28 million less than the budget in effect when I took office in 2008. To achieve this balanced budget, we have continued to scrutinize overtime, travel and training, contract services, equipment purchases and other expense items. Comm: Pro.. it � ‘ ask �� Ref. To: county Orl lawai•i is an Equal Opportunity Provider and Employer. L Ref. DatZ1AR 0 1 2010 • The Honorable Chairman J Yoshimoto and Members of the Hawai`i County Council Page 2 March 1, 2010 To fully grasp the impact of these deep budget cuts, it is important to remember that departments were instructed to reduce their budgets by 5% last fiscal year, and then to cut another 10% in the current budget year. Now, for the new budget year that begins July 1, departments were instructed to reduce expenditures even more, by up to 20 %. Operations have been reviewed to identify additional efficiencies that can help maintain services in the face of reduced resources. Departments have aggressively pursued grant funding and have succeeded in increasing total revenue from grants for the upcoming budget year. In particular, I would like to take this opportunity to extend special thanks to Hawaii County Council Chair J Yoshimoto and the Hawaii County Council for cutting Council spending by $718,591, or more than 19% for the coming year. The steps we took last year and this year are reshaping County government. The percentage of County spending devoted today to activities such as General Government and Culture and • • Recreation has decreased significantly, while the share of the County budget devoted to core functions such as Public Safety, Highways & Streets and Health, Education & Welfare has increased. This is part of a continuing strategy to shift County resources to the essential services that are most important to our residents. As part of that effort, this budget continues the County's free island -wide bus service, and maintains County spending of $1.5 million per year in support of non - profit organizations that deliver social services. The Department of Parks and Recreation faced a particularly difficult challenge this year because it was required to reduce spending, and at the same time was required to meet our directives to • protect programs essential to the well -being and enrichment for our seniors, children and the most vulnerable in our community. Faced with high demands and scarce resources, the department made the most difficult decision of this budget process. Funding for the Hawaii County Band and the West Hawai`i Band has been eliminated from the FY 2010-11 budget. The members and director of the two bands, all part -time employees except for the director, have been notified that theirjohs will be ending. • Also impacting our employees was the decision to implement a furlough plan to reduce costs while retaining employees in their positions. The budget, as submitted, includes the implementation of two furlough days per month for employees other than those in UPW • Bargaining Unit 1, SFIOPO Bargaining Unit 12 and Firefighters Bargaining Unit 11. The furlough plan includes elected officials, appointees and excluded managerial employees. Police and Fire employees in the identified bargaining units are currently covered by contracts that do not include furloughs. Negotiations are ongoing with UPW. The furloughs will result in a 9.23% pay reduction for affected employees. County oil lawaf i is an Equal Opportunity Provider and Employer. The Honorable Chairman J Yoshimoto and Members of the I- lawai`i County Council Page 3 March I, 2010 • As real property values have continued to decline, the County's primary source of revenue is poised to drop by more than 11%. After the FY 2009 -10 decrease in property tax revenue of $15,094,000 (6.55 %), an additional loss of this magnitude would leave the County unable to sustain basic operations and 'services. For this reason, we are proposing revenue - neutral rate adjustments that will adjust tax rates to ensure that the County collects the same amount of property tax in FY 2010-11 as it did in FY 2009 -10. The tax on individual parcels will most likely vary from current taxes. 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 you in May will he based on the final numbers and will include a specific rate proposal. OPERATING BUDGET BY FUND The following table describes the budgeted expenditures for FY 2009 -10 and the proposed budget for FY 2010-11 for each fund. OPERATING BUDGET BY FUND (Amounts in thousands) • FY 09 -10 FY 10 -11 Increase Percent FUND Budget Proposed (Decrease) Increase (Decrease) General Fund $296,391 $289,050 ($7,341) (2.5 %) • I- lighway Fund 27,599 27,474 (125) (0.5 %) Sewer Fund 9,995 9,643 (352) (3.5 %) Cemetery Fund 10 10 0 0.0% Bikeway Fund 171 171 0 0.0% Beautification Fund 225 240 15 6.7% Vehicle Disposal Fund 4,004 2,968 (1,036) (25.9 %) Solid Waste Fund 31,153 26,393 (4,760) (15.3 %) ( Course Fund 1,202 1,129 (73) (6.1 %) Geothermal Royalty 550 550 0 0.0% Fund Housing Fund 15,696 17,689 1,993 12.7 °% Geothermal Asset Fund 50 50 0 0.0% 5387.046 5375,367 (511,679) (3.0 %) • Count of 1- lawari is an E opportunit Provider and Employer. The Honorable Chairman .1 Yoshimoto and Members of the 1- lawai`i County Council Page 4 March 1, 2010 • REVENUES BY SOURCE The following table presents a summary of projected FY 2010-11 revenues from various sources and the changes from the current budget: REVENUES BY SOURCE (Amounts in thousands) Increase (Decrease) Percent From Percent Of FY 2009- Increase Source Amount Total 10 (Decrease) Amount Real Property Tax $217,150 57.8% $0 0.0% Public Service Company Tax 8,730 2.3% 100 1.2% Fuel Fax 7,24.3 1.9% (778) (9.7 %) Public Utilities Franchise Tax 11,095 3.0% 1,879 20.4% Licenses and Permits 15,351 4.1% (2,094) (12.0 %) Revenues /Use of Money & Property 1,912 .5% (1,319) (40.8 %) Intergovernmental Revenues 62,205 16.6% 3,334 5.7% Charges for Services 20,918 5.6% (4,035) (16.2 %) Other Revenues 7,859 2.1% (8,276) (51.3 %) Fund Balance Carryover 22,904 6.1 % (490) (2.1 %) • $375.367 100_0% ($11,679) (3.0 %) REVENUE CHANCES The major changes in projected revenues are as follows: Real Property Tax. Net real property tax values are projected to decrease by 9.62 %. However, real property tax revenue is the same as the FY 2009 -10 budget, based on a revenue - neutral rate proposal Fuel Tax. Fuel taxes are expected to decrease by 9.7 %, or $788,000 due to reduced fuel consumption. This decrease is on top of a similar decrease in the current fiscal year. Licenses and Permits. The 12.0% drop in this revenue category is due to decreases in liquor licenses ($238,000), construction - related permits (5730,000) and vehicle /trailer weight taxes (5995.000). County of dlarvaE i is an Equal Opportunity Provider and Employer. The Honorable Chairman J Yoshimoto and Members of the Hawaii County Council Page 5 March 1,2010 Revenue from Use of Money and Property. Interest earnings are expected to decrease by $1 .3 million due to the low yield on investments, which is reflective of the current economy. Intergovernmental Revenues. The $3.3 million, or 5.7% increase in intergovernmental revenues includes funding increases in housing voucher assistance and emergency medical services. Charges for Services. Revenues from this source are expected to decrease by $4 million due to reductions in automotive charges to special revenue- funded departments, sewer fees and landfill charges. Other Revenues. The elimination of the current year budget item in the amount of $8.2 million for land sales is the primary factor in Ole $8.3 million reduction in other revenues. Fund Balance Carryover. Carryover savings are based on current projections of fund balance. EXPENDITURES BY FUNCTION The following table presents a summary of projected FY 2010-11 expenditures from various sources and the changes from the current budget: EXPENDITURES BY FUNCTION (Amounts in thousands) Increase (Decrease) • Percent From Percent or FY 2009- Increase Expenditures Amount Total 10 (Decrease) Amount General Government $ 40,935 10.9% ($6,985) (14.6 %) Public Safety 111,931 29.8% (2,640) (2.3 %) I lighways & Streets 19,928 5.3% 1,925 10.7% Health, Education. & Welfare 24,912 6.6% 1.613 6.9% Culture and Recreation 17,663 4.7% (1,545) (8.0 %) Sanitation & Waste Removal 35,482 9.5% (6,183) (14.8 %) Debt Service 41,048 10.9% 437 1.1% Pension & Retirement 31,363 8.4% (997) (3.1 %) Health Fund 42,016 112% 3,419 8.9% Miscellaneous 10,089 2.7% (723) (6.7 %) $375,367 100.0% ($11,679) (3.0 %) County or Hawn i is nn Equal Opportunity Provider and Employer. The Honorable Chairman ,I Yoshinioto and Members of the I- lawai`i County Council Page 6 March I, 2010 EXPENDITURE CHANGES In addition to the cuts made by the departments, the unfunding of additional vacant positions and the inclusion of furlough adjustments, mayor changes in projected expenditures are as follows: General Government • • Finance. The budget for building rents has decreased by $649,000 due primarily to the reopening of the I- lawai`i County Building, which allowed the county to vacate leased office space. • Planning. The department's budget has decreased with the absence of funding for new community development plans. • Public Works. Reductions in estimates for fuel expense,, janitorial services, electricity, insurance and facil repairs contributed to a net decrease in budget. Public Safety • Prosecuting Attorney. The Prosecuting Attorney's budget reflects a reduction in grant funding of $799,000. • Flood Control. The decrease in rood control funding is due to transferring drywell cleaning costs to the Highway Fund. • Animal Control. Current contract negotiations with the service provider for animal control are expected to result in reduced costs. Highways and Streets • Mass Transit. The Transit office is projecting a $910,000 increase in grant- funded expenditures. • Highways. The Department of Public Works is earmarking $1 million for work on roads - in limbo. I- 1ealth, Education and Welfare • Housing. An increase in grant funding results in a $2.2 million increase in voucher rental subsidy payments. county of limvtn is nn Equal Opportunity Provider and Hmpinyer. • The Honorable Chairman J Yoshimoto and Members of the Hawaii County Council P age 7 March I, 2010 • • Social Services. Despite declining revenues and shrinking budget, the County's budget • for distributing funds to non - profit agencies will he retained at $1.5 million in the FY 2010 -1I budget. Culture and Recreation • Bands. The 1- lawai`i County and West Hawaii bands have been removed from this budget proposal. Sanitation and Waste Disposal • Solid Waste Division. The Solid Waste budget has decreased with the reductions in contract services, cover material costs and recycling expenditures. • Vehicle Disposal. The Vehicle Disposal budget will decline from approximately $4 million to about $3 million, a reduction of about 25 percent. 1- Icalth Fund • Health Benefits. Health costs, including post - employment benefits, are expected to increase with the continuing increase in premium rates. The health insurance rates for next fiscal year have not yet been set by the Employer Union Trust Fund, so increases to this budget item are possible. • POSITION CHANCES The administration has continued to analyze vacant positions and to fill only those that are immediately required for effective operations. The budget reflects the deletion or unfunding of 1 1 1 positions in FY 2010-11. Additional vacant positions remain funded, as they are deemed essential to basic County operations. • Four temporary positions were deleted from the Fireworks Enforcement section of the Fire Department budget. With the establishment of the Fireworks Auditor as required under state law, these positions are no longer needed. • Efforts are ongoing to reduce staffing through attrition, and with this budget an additional 62 vacant positions have been unfunded, for a savings of $2,350,671. • As discussed above. 34 staffed Hawaii County Band positions and 11 staffed West I- Iawai`i Band positions have been vacated as the result of layoffs and have been unfunded. saving $347,027. County of I -Iuwai i is an Mimi! Opportunity Provider amt Employer. The Honorable Chairman .1 Yoshimoto and Members of the I- lawai`1 County Council Page 8 March 1.2010 CONCLUSION This budget is $1 I .7 million less than the current year's budget, but that number does not begin to reflect the painful effects of the budget cuts proposed here on our community at large, and our employees and their families. That number also does not reflect the continuing challenges we face in this difficult economic climate as state and county governments across the nation struggle to balance their budgets. Some members of the state Legislature advocate seizing the Counties' share of the hotel room tax, a step that would strip another $18 million in revenue out of this County budget, leaving us no choice but to increase property taxes. My administration will continue to advocate for fair treatment at the Legislature, and will oppose any effort to unfairly shift the tax burden to County of Hawaii residents. Demand for County services such as police protection, lire protection and other County services is always growing, and many County agencies are experiencing increased demands as the effects of a weak economy are felt by more and more people. 11 is essential that County government provide stability and security in meeting the basic public safety, sanitation, transportation and other service needs of our citizens. We will meet our responsibility to ensure that adequate resources are available to continue and expand services as needed, and to maintain a strong and Financially sound County government. This difficult budget process presents our administration with a continuing mandate to overhaul County government. We must invest our scarce resources in programs and projects that our residents must have, while shifting resources away from those programs that we can no longer afford. In the months ahead you will hear more about steps my administration will take to improve County government efficiency and adapt our government to today's challenging economic environment. We all understand the lingering national and local economic difficulties will continue to put pressure on County government resources, and my administration's strict review and reprioritization of County spending will enable us to deal with those challenges. Aloha, _ William P: Keno; MAYOR Gnnl or lia' iii is all Equal Opportunity Provider and Employer.