HomeMy WebLinkAboutREP FC 053 04/19/2011 2010-2012 REPORT OF THE
COMMITTEE ON FINANCE
DATE: April 19, 2011 Re: Comm. 111 /Bill 29
PLACE: Council Chambers
West Hawai`i Civic Center
TIME: 2:00 p.m.
Council Chair and Members
Hawaii County Council
Hilo, Hawai`i 96720
Your Committee on Finance, to which was referred Bill No. 29, reports as follows:
Bill No. 29, transmitted by Mayor William P. Kenoi via Communication 111, dated March 1,
2011, submits for consideration the proposed Operating Budget for the County of Hawai`i for the
Fiscal Year July 1, 2011 to June 30, 2012. This balanced budget includes estimated revenues
and appropriations totaling $366,128,328 (Part I- Volume I), and includes the operations of
eleven of the County's special funds as well as the General Fund. This budget is 9.2 percent less
than the budget in effect when Mayor Kenoi's administration took office in 2008.
The Mayor's budget message discusses highlights of the operating revenues and expenditure
proposals. It attaches informational tables comparing 1) budgeted expenditures for FY 2010 -11
and proposed for FY 2011 -12 for each fund; 2) a summary of projected FY 2011 -12 revenues
from various sources and the change in those from the current budget; and 3) a summary of
projected FY 2011 -12 expenditures and the change in those from the current budget. Also listed
are significant changes to operating expenditures in several categories.
Also submitted is the Operating Budget Proposal (Part I, Volume II), which describes the
departments and their programs, program objectives, highlights, program measures,
expenditures, and positions.
Additionally, Communication No. 111.1 from Finance Director Nancy Crawford, dated March 1,
2011, transmitted a booklet containing reports titled Six Month Progress Report on Program
Objectives for FY 2010 -11 and Final Status Report on Program Objectives for FY 2009 -10.
These reports provide information to the Council to assist in the evaluation of program
accomplishments during the first six months of the current fiscal year and for the previous
2009 -10 fiscal year.
The highlights of the operating revenue proposal are as follows:
• Real Property Tax — Real property tax revenues are expected to decrease by 4.5 %, or $9.7
million, due to an estimated 4.0% decline in taxable values.
FC Rept. No. 53
FC -53 Page 2 April 19, 2011
• Fuel Tax — Fuel tax revenue is expected to decrease by 11.3% or $0.9 million, due to a
projected reduction in fuel consumption.
• Revenue from Use of Money and Property — Interest earnings are expected to continue to
decrease for next fiscal year by $0.8 million, due to the low yield on investments, which is
still reflective of the current economy.
• Intergovernmental Revenues — The $3.3 million, or 5.3% increase in intergovernmental
revenues includes an EMS grant increase and Wireless E -911 grant revenue increase.
• Bus Fares — A new fare plan would charge a fee of $1 per ride for the bus system. However,
our proposal includes special discounts to reduce fares for elderly bus riders, students and
persons with disabilities. The new fare is expected to raise $740,000 to help balance the
general fund budget.
• Fund Balance Carryover — A lower projection of carryover savings is attributed to leaner
FY 2010 -11 departmental budgets.
The highlights of the operating expenditure proposal are as follows:
General Government
• Information Technology — The majority of the county telephone charges are now included
within this department's budget.
• Public Works — Increase in estimates for fuel expenses contributed to a net increase in
budget.
Public Safety
• Fire — The department expects a $1.4 million increase in their EMS contract with the State
of Hawai`i.
• Police — The Wireless E -911 grant funds available for use increased by $1.2 million over the
current year.
Highways and Streets
• Mass Transit — The estimated increase in fuel cost is due to fuel price increases and
expansion services.
• Highway Fund — This budget includes the use of $3.2 million of the Highway Fund excess
fund balance to help finance operations of the Mass Transit Agency. This reduces General
Fund expenditures, and represents an increase in the use of Highway Fund revenues to
finance the Mass Transit network.
• Highways — The Department of Public Works is earmarking an additional $500,000 for
work on roads -in- limbo.
Health, Education and Welfare
• Social Services — Despite declining revenues and reductions in spending, the county's
budget for non - profit agencies will remain at $1.5 million in 2011 -12. We have protected
this funding despite three years of budget cuts because of our commitment to the non - profit
organizations that support the most vulnerable in our community.
FC -53 Page 3 April 19, 2011
Debt Service
• Deferred Debt Payments — This budget will shift a portion of funding for principal
payments of debt service from fiscal year 2011 -12 to fiscal year 2012 -13 to create a
one -time savings of $3 million in fiscal year 2011 -12. This shifting of the transfer by
several months will not incur any additional interest or other costs to the county.
Health Fund
• Health Benefits — In recent years, the County of Hawai`i has made two separate payments
related to public worker health care. The first payment is used to directly purchase health
coverage for active and retired employees. This payment is a binding obligation on the part
of each of the counties and the state, and will continue uninterrupted next year and into the
future to ensure that all public workers and retirees receive all of the health benefits to which
they are entitled. This proposed budget includes $28.8 million to provide coverage to active
employees and retirees, which will continue the current level of health coverage for all.
The County of Hawai`i has also made a second health - related payment for the past three
years that is designed to pre -fund future obligations the county has incurred to fund
retirement health care in the future. This payment, generally known as the Government
Accounting Standards Board (GASB) Statement No. 45 payment, is a voluntary payment that
some government entities in Hawai`i have elected to pay at this time. The State of Hawai`i
has declined to make GASB 45 payments, while each of the four counties has made at least
partial GASB 45 payments. For the pas three years, the County of Hawaii has made full
payment under GASB 45, making payments of $13.61 million in fiscal 2008; of $14.95
million in fiscal 2009; and $15.7 million in fiscal year 2010.
This budget defers the scheduled fiscal year 2011 -12 GASB 45 payment, for a savings of
$20A million. This deferral of payment will in no way affect present or future health
benefits of our employees or retirees, and our plan is to resume the GASB 45 payments as the
county's financial position improves.
Miscellaneous
• Payroll Lag — This budget for the first time implements a "payroll lag" for the County of
Hawai`i, a step that has already been adopted by the state and each of the other counties.
This plan will save the county $6 million in fiscal year 2011 -12.
The county currently makes salary payments to public workers on the 15 and at the end of
each month. Delaying each payment by a day or several days allows the county to push one
payment from fiscal year 2011 -12 into fiscal year 2012 -13 for a one -time savings.
Other Adjustments
• PONC Payments — Fiscal year 2011 -12 marks the resumption of transfers equal to 2 percent
of county real property revenues from the general fund to the Public Access, Open Space
and Natural Resources Preservation Fund (PONC). Resuming the PONC transfers to fund
the continuing acquisition of open space and coastal areas will result in a shift of
$4.1 million out of the general fund and into the PONC fund in the year ahead.
FC Rept. No. 53
FC -53 Page 4 April 19, 2011
• Self - Insurance — Also included in this proposed budget is a transfer of $1 million from the
general fund to the county's self - insurance fund to cover potential or existing claims against
the county. The county did not transfer monies to replenish the fund in this fiscal year or
last year, and the self - insurance fund has now been nearly depleted.
• Solid Waste Fund — This budget increases the general fund subsidy of the solid waste fund
by $4 million, a step necessary to adequately finance the continuing recycling and green
waste programs as well as operation of landfills and solid waste transfer and recycling
stations across the county. Total transfers from the general fund to the Solid Waste Fund to
subsidize the solid waste management in the County of Hawai`i will total $17.5 million in
the year ahead.
A summary of estimated FY 2011 -12 revenues and expenditures are shown below:
REVENUES
FY 2010 -11 FY 2011 -12 FY 12 -FY 11 $ FY 12 -FY 11
Account Description Budget Estimate Variance % Variance
General Fund Revenues
Taxes
Real Property Taxes 217,006,691 207,300,000 (9,706,691) (4.47)
Public Svc Co Tax 8,730,000 9,000,000 270,000 3.09
TTL Taxes 225,736,691 216,300,000 (9,436,691) (4.18)
Licenses & Permits
Bus. Lic & Permits 2,904,384 2,960,675 56,291 1.94
Non -Bus. Lic & Permits 3,406,089 3,018,689 (387,400) (11.37)
TTL Lics & Permits 6,310,473 5,979,364 (331,109) (5.25)
Intergovernmental Rev.
Federal Grants 4,302,607 3,969,866 (332,741) (7.73)
Federal Grants 688,000 672,000 (16,000) (2.33)
Federal Grants 2,243,920 1,939,420 (304,500) (13.57)
State Grants 35,305,591 37,507,205 2,201,614 6.24
State Grants 1,869,792 3,167,074 1,297,282 69.38
Federal Grants 1,645,800 1,587,000 (58,800) (3.57)
TTL Intergovernmental Rev 46,055,710 48,842,565 2,786,855 6.05
Charges for Services
General Government 4,006,626 4,782,001 775,375 19.35
Public Safety 159,878 94,000 (65,878) (41.21)
Highways & Streets 293,000 1,091,450 798,450 272.51
FC Rept. No. 53
FC -53 Page 5 April 19, 2011
(REVENUES - CONT.)
Parks & Recreation 1,021,255 1,061,400 40,145 3.93
TTL Charges for Services 5,480,759 7,028,851 1,548,092 28.25
TTL Fines & Forfeitures 1,796,100 1,388,500 (407,600) (22.69)
Miscellaneous Revenues
Interest Earnings 1,250,000 517,820 (732,180) (58.57)
Rents 120,907 190,545 69,638 57.60
Disp of Fixed Assets 31,000 31,000 - -
Contrib/Dons FR Prvt Src 531,572 481,000 (50,572) (9.51)
Reimbursements & Transfers 18,418,859 14,850,950 (3,567,909) (19.37)
Sundry & Misc 229,000 224,100 (4,900) (2.14)
TTL Miscellaneous Revenues 20,581,338 16,295,415 (4,285,923) (20.82)
TTL General Fund Revenues 305,961,071 295,834,695 (10,126,376) (3.31)
Other Fund Revenues
Highway Fund 25,912,139 29,653,365 3,741,226 14.44
Sewer Fund 9,460,837 9,138,127 (322,710) (3.41)
Cemetery Fund 10,000 10,000 - -
Bikeway Fund 171,000 171,000 - -
Beautification Fund 240,000 153,600 (86,400) (36.00)
Vehicle Disposal Fund 2,968,163 2,606,513 (361,650) (12.18)
Solid Waste Fund 26,742,599 27,611,274 868,675 3.25
Golf Course Fund 1,129,482 1,137,069 7,587 0.67
Geothermal Rel & Comm 25,000 4.55
Rev Fd 550,000 575,000
Housing Fund 16,975,023 17,366,973 391,950 2.31
Kulaimano Elderly Hsg Fund 377,212 356,437 (20,775) (5.51)
Ouli Ekahi Hsg Fund 336,890 326,410 (10,480) (3.11)
Geothermal Asset Fund 50,000 50,000 - -
TTL Other Funds 84,923,345 89,1 55,768 4,232,423 4.98
TTL Funds 390,884,416 384,990,463 (5,893,953) (1.51)
Less: Interfund Transfers 14,976,098 18,861,793 3,885,695 25.95
Estimated (e)
Net Revenues (All Funds) 375,908,318 366,128,670 (9,779,648) (2.60)
FC Rept. No. 53
FC -53 Page 6 April 19, 2011
EXPENDITURES
FY 2010 -11 FY 2011 -12 FY 12 -FY 11 $ FY 12 -FY 11
Account Description Budget Estimate Variance % Variance
General Fund
Expenditures
Legislative 2,993,271 3,075,892 82,621 2.76
Elections 1,097,695 850,532 (247,163) (22.52)
Legislative Auditor 723,757 931,954 208,197 28.77
Executive 1,429,563 1,393,811 (35,752) (2.50)
Information Tech 1,319,383 1,539,127 219,744 16.66
Finance 10,693,045 10,566,398 (126,647) (1.18)
Law /Corp Counsel 2,651,059 2,758,601 107,542 4.06
Planning 2,878,548 2,943,995 65,447 2.27
HumanResources 1,757,889 1,817,280 59,391 3.38
Research & 2,969,525 2,664,923 (304,602) (10.26)
Development
Building 5,023,211 5,146,720 123,509 2.46
Public Works Admin 1,448,440 1,296,820 (151,620) (10.47)
Automotive 4,339,317 5,285,166 945,849 21.80
Engineering 1,503,209 1,545,312 42,103 2.80
Police 52,968,752 53,841,638 872,886 1.65
Fire 37,049,032 37,852,650 803,618 2.17
Protective Inspection 2,025,087 2,101,935 76,848 3.79
Flood Control 537,440 437,440 (100,000) (18.61)
Animal Control 1,860,000 1,982,500 122,500 6.59
Civil Defense 1,598,437 1,662,198 63,761 3.99
Liquor Control 1,381,184 1,433,075 51,891 3.76
Prosecuting Attorney 7,916,022 7,560,393 (355,629) (4.49)
Mass Transit 5,753,999 3,955,499 (1,798,500) (31.26)
County 133,825 133,825 - -
Physicians/Health
Aging/Health & 2,440,940 2,470,043 29,103 1.19
Welfare
Cemeteries 283,021 376,547 93,526 33.05
Schools 58,500 58,500 - -
Non- Profit Grants in 1,500,000 1,500,000 - -
Aid
Elderly Activities 3,425,258 3,570,004 144,746 4.23
Parks & Recreation 16,518,583 16,915,164 396,581 2.40
FC Rept. No. 53
FC -53 Page 7 April 19, 2011
(EXPENDITURES - CONT.)
Environmental Mgmt 908,012 965,807 57,795 6.37
Transfers to Other 15,176,098 24,207,793 9,031,695 59.51
Funds
Transfer to Debt Svc 40,829,829 41,215,147 385,318 0.94
Pensions & Contribs 68,372,717 52,524,000 (15,848,717) (23.18)
Miscellaneous 4,396,423 (745,994) (5,142,417) (116.97)
Block Grants
Home Grants
Housing Grants
Housing Grants
TTL General Fund 305,961,071 295,834,695 (10,126,376) (3.31)
Expenditures
Other Fund
Expenditures
Highway Fund 25,912,139 29,653,365 3,741,226 14.44
Sewer Fund 9,460,837 9,138,127 (322,710) (3.41)
Cemetery Fund 10,000 10,000 - -
Bikeway Fund 171,000 171,000 - -
Beautification Fund 240,000 153,600 (86,400) (36.00)
Vehicle Disposal Fund 2,968,163 2,606,513 (361,650) (12.18)
Solid Waste Fund 26,742,599 27,611,274 868,675 3.25
Golf Course Fund 1,129,482 1,137,069 7,587 0.67
Geothermal Rel & 550,000 575,000 25,000 4.55
Comm Rev Fund
Housing Fund 16,975,023 17,366,973 391,950 2.31
Kulaimano Elderly Hsg 377,212 356,437 (20,775) (5.51)
Fund
Ouli Ekahi Hsg Fund 336,890 326,410 (10,480) (3.11)
Geothermal Asset Fund 50,000 50,000 - -
TTL Other Fund 84,923,345 89,155,768 4,232,423 4.98
Expenditures
Total Funds 390,884,416 384,990,463 (5,893,953) (1.51)
Less: Inter -Fund
Transfers 14,976,098 18,861,793 3,885,695 25.95
Estimated (e)
Net Expenditures 375,908,318 366,128,670 (9,779,648) (2.60)
FC Rept. No. 53
FC -53 Page 8 April 19, 2011
Your Committee originally reviewed the Operating Budget in conjunction with departmental
program reviews on March 28 through March 30, 2011. . Pursuant to Section 10 -4, Hawai`i
County Charter, the Council also conducted a public hearing on the proposed FY 2011 -12
Operating and Capital Budgets in Hilo on March 21, 2011, which was videoconferenced to the
Kona and Waimea Council offices.
During the budget review, Mayor William P. Kenoi reviewed his proposed budget for the
Council. He reminded Members that the departments reduced their budget, cut funding for an
additional 100 vacancies, and furloughs will end on June 30 for all county employees. Although,
the executive staff in the Office of the Mayor will continue to take employee furloughs in the
coming fiscal year to reduce the size of the executive budget.
Upon review of the Mayor's amended budget submittal on May 5, 2011, the Council may
propose amendments as necessary.
Your Committee on Finance is in accordance with the purpose and intent of Bill 29 and
recommends it pass first reading.
dkr
AYES NOES A &E EX Respectfully submitted,
BLAS X
FORD X COMMITTEE ON FINANCE
HOFFMANN X
IKEDA X
ONISHI X �l �z � -7 f �,
PILAGO X 7
SMART X BRENDA FORD, CHAIR
YAGONG X FC REPORT NO. 53
YOSHIMOTO X ADOPTED: MAY 18 Mt