HomeMy WebLinkAboutREP FC 217 05/01/2012 2010-2012REPORT OF THE
COMMITTEE ON FINANCE
DATE: May 1, 2012 Re: Comm. 604/13111 197
PLACE: Council Chambers
Kailua-Kona, Hawaii
TIME: 8:01 a.m.
Council Chair and Members
Hawai `i County Council
Hilo, Hawai `i 96720
Your Committee on Finance, to which was referred Bill No. 197, reports as follows:
Bill No. 197, transmitted by Mayor William P. Kenoi via Communication 604, dated March 1, 2012,
submits for consideration the proposed Operating Budget for the County of Hawaii for the Fiscal
Year July 1, 2012 to June 30, 2013. This balanced budget includes estimated revenues and
appropriations totaling $365,293,348 (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 9.4 percent less than the budget in
effect when Mayor Kenoi's administration took office in 2008. This proposed balanced budget does
not require any increase in property taxes.
The Mayor's budget message discusses highlights of the operating revenues and expenditure
proposals. It attaches informational tables comparing 1) budgeted expenditures for FY 2011-12 and
proposed for FY 2012-13 for each fund; 2) a summary of projected FY 2012-13 revenues from
various sources and the change in those from the current budget; and 3) a summary of projected FY
2012-13 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. 604.1 from Finance Director Nancy Crawford, dated March 1,
2012, transmitted a booklet containing reports titled Six Month Progress Report on Program
Objectives for FY 2011-12 and Final Status Report on Program Objectives for FY 2010-11. 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
2010-11 fiscal year.
The highlights of the operating revenue proposal are as follows:
• Real Property Tax — Real property tax revenues are expected to decrease by 4.2%, or $8.8
million, due to an estimated 4.0% decline in taxable values.
FC Rept. No. 217
FC -217 Page 2 May 1, 2012
• Fuel Tax — Fuel tax revenue is expected to increase by 14.5% to $7.7 million, as fuel
consumption has increased over anticipated levels.
• Public Utilities Franchise Tax — Increased public utility revenues are expected to result in
an increase of $1.2 million, or 13.2% in franchise tax revenue.
• Revenue from Use of Money and Property — Interest earnings are expected to continue to
decrease for next fiscal year by $0.5 million, due to the low yield on investments, which is
still reflective of the current economy.
• Fund Balance Carryover — The higher projection of carryover savings is attributed to the
cumulative effect of successful cost cutting measures for the past several years and additional
spending restrictions in the current year.
The highlights of the operating expenditure proposal are as follows:
General Government
• General savings in the proposed budget were achieved through many sacrifices across all
administrative departments, from further reduction of travel, training and contracted services
to reductions in supplies and continued postponement of equipment purchases. Fuel and
utility costs continue to fluctuate, and the oil market will be monitored and budget items
adjusted if necessary prior to the May submittal. Corporation Counsel's special counsel
account was significantly reduced, as was funding for Property Management land
acquisition related services. Research and Development was able to eliminate some costs
from the current year budget for APEC-related activities. The reductions in General
Government expenditures touched all departments in this classification.
Highways and Streets
• Highways. The Department of Public Works is earmarking an additional $500,000 for work
on roads -in -limbo, increasing the budget from $1.5 million to $2.0 million. Additionally,
Highway Maintenance division is budgeting approximately $1.0 million for new and
replacement equipment for road maintenance.
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 2012-13. 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.
Culture and Recreation
• Parks and Recreation. The Lava Viewing program at Kalapana is being phased out,
resulting in a savings of $300,000. Discontinuation of the West Hawaii Golf Subsidy
program will provide a budget reduction of $500,000.
Sanitation and Waste Removal
• Solid Waste Fund. Some repairs to facilities projects will be transferred to the Capital
Projects fund, reducing operating expenses by over $800,000. Equipment lease expenses
were reduced by approximately $600,000 as some financing leases were completed. Solid
Waste and Recycling contracts for services were also reduced by a combined amount of
over $800,000.
FC - 217 Page 3 May 1, 2012
Debt Service
• Transfer to Debt Service. The County will make its final payment on bonds issued in 1993,
which will result in a reduction in the required transfer to the debt service fund for the
budgeted fiscal year. Future transfers to the debt service fund will be higher as the County
begins principal payments on bonds issued in 2010.
Health Fund
• Health Benefits. This item represents the purchase of health coverage for active and retired
employees. It 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 $29.8 million to provide coverage to active employees and retirees, which
will continue the current level of health coverage for all.
Miscellaneous
• Provision for Payroll Lag. This item from the current year budget was a one-time provision
to reflect the adjustment of pay days to fall on the day after a pay period ends, rather than on
the last day of the pay period. The elimination of this item results in an increase to
miscellaneous expenditures of approximately $6.0 million.
Provision for Compensation Adjustment. For the FY 2011-12 budget there was an
expectation that County employees represented by HGEA would be taking a one -day per
month furlough, however there was no final agreement, so a provisional account was
established to reflect the expected savings. For the FY 2012-13 budget the savings are
reflected in each department's salaries and wages accounts. The elimination of this item
results in an increase to miscellaneous expenditures of approximately $3.0 million.
Transfer to Self -Insurance. Due to current fiscal challenges and the fact that the balance in
the fund is now at $1.2 million, no transfer is included in the proposed budget from the
general fund to the county's self-insurance fund, resulting in a $1.0 million reduction in this
item. However, the administration is concerned about the possibility of new potential claims
against the county and will re-evaluate the status when preparing the amended budget
submittal for May to determine if a transfer is needed to cover potential or existing claims
against the county.
Solid Waste Fund — This budget reduces the general fund subsidy of the solid waste fund by
$2.3 million. Total transfers from the general fund to the Solid Waste Fund to subsidize the
solid waste management in the County of Hawaii will be $15.9 million in the year ahead.
FC Rept. No. 217
FC - 217 Page 4 May 1, 2012
A summary of estimated FY 2012-13 revenues and expenditures are shown below:
REVENUES
Miscellaneous Revenues
Interest Earnings
Rents
Disp of Fixed Assets
517,820 100,000 (417,820) (80.69)
190,545 186,080 (4,465) (2.34)
31,000 31,000 - -
FC Rept. No. 217
FY 2011-12
FY 2012-13
FY 13 -FY 12
FY 13 -FY 12
Account Description
Budget
Estimate
$ Variance
% Variance
General Fund Revenues
Taxes
Real Property Taxes
207,300,000
198,500,000
(8,800,000)
(4.25)
Public Svc Co Tax
9,100,000
9,520,000
420,000
4.62
TTL Taxes
216,400,000
208,020,000
(8,380,000)
(3.87)
Licenses & Permits
Bus. Lic & Permits
2,996,743
3,032,102
35,359
1.18
Non -Bus. Lic & Permits
3,018,689
2,879,200
(139,489)
(4.62)
TTL Lics & Permits
6,015,432
5,911,302
(104,130)
(1.73)
Intergovernmental Rev.
Federal Grants
3,994,146
2,883,774
(1,110,372)
(27.80)
19,050
2.83
Federal Grants
672,000
691,050
1,939,420
478,000
(1,461,420)
(75.35)
Federal Grants
35,193,257
34,583,807
(609,450)
(1.73)
State Grants
State Grants
3,164,692
3,003,642
(161,050)
(5.09)
Federal Grants
1,587,000
3,512,060
1,925,060
121.30
TTL hntergovernmental Rev
46,550,515
45,152,333
(1,398,182)
(3.00)
Charges for Services
General Government
4,948,025
5,372,021
423,996
8.57
Public Safety
94,000
112,123
18,123
19.28
Highways & Streets
919,050
824,000
(95,050)
(10.34)
Parks & Recreation
1,061,400
1,159,400
98,000
9.23
TTL Charges for Services
7,022,475
7,467,544
445,069
6.34
TTL Fines & Forfeitures
1,388,500
1,388,600
100
0.01
Miscellaneous Revenues
Interest Earnings
Rents
Disp of Fixed Assets
517,820 100,000 (417,820) (80.69)
190,545 186,080 (4,465) (2.34)
31,000 31,000 - -
FC Rept. No. 217
FC - 217
Page 5
May 1, 2012
Contrib/Dons FR Prvt Src
481,000
506,000
25,000
5.20
18,586,950
22,611,351
Reimbursements & Transfers
4,024,401
21.65
Sundry & Misc
248,100
249,000
900
0.36
TTL Miscellaneous Revenues
20,055,415
23,683,431
3,628,016
18.09
TTL General Fund Revenues
297,432,337
291,623,210
(5,809,127)
(1.95)
Other Fund Revenues
Highway Fund
29,267,490
32,773,050
3,505,560
11.98
9,085,418
9,321,149
235,731
2.59
Sewer Fund
Cemetery Fund
10,000
10,000
-
-
Bikeway Fund
171,000
171,000
-
-
Beautification Fund
153,600
157,920
4,320
2.81
Vehicle Disposal Fund
2,598,817
2,587,372
(11,445)
(0.44)
28,255,192
25,406,461
(2,848,731)
(10.08)
Solid Waste Fund
Golf Course Fund
1,120,313
1,139,672
19,359
1.73
Geothermal Rel & Comm Rev
Fd
575,000
600,000
25,000
4.35
Housing Fund
17,205,108
17,889,155
684,047
3.98
Kulaimano Elderly Hsg Fund
356,437
315,312
(41,125)
(11.54)
Ouli Ekahi Hsg Fund
326,410
278,375
(48,035)
(14.72)
Geothermal Asset Fund
50,000
50,000
-
-
TTL Other Funds
89,174,785
90,699,466
1,524,681
1.71
TTL Funds
386,607,122
382,322,676
(4,284,446)
(1.11)
Less: Interfund Transfers
19,312,758
17,029,328
(2,283,430)
(11.82)
Estimated (e)
Net Revenues (All Funds)
367,294,364
365,293,348
(2,001,016)
(0.54)
FC Rept. No. 217
FC - 217 Page 6 May 1, 2012
EXPENDITURES
FY 2011-12
FY 2012-13
FY 13 -FY 12 $
FY 13 -FY 12
Account Description
Budget
Estimate
Variance
% Variance
General Fund
Expenditures
Legislative
3,105,022
3,262,185
157,163
5.06
Elections
796,322
888,674
92,352
11.60
Legislative Auditor
869,106
826,484
(42,622)
(4.90)
Executive
1,320,792
1,276,657
(44,135)
(3.34)
Information Tech
1,557,801
1,611,339
53,538
3.44
Finance
10,569,674
9,856,310
(713,364)
(6.75)
Law/Corp Counsel
2,758,601
2,528,761
(229,840)
(8.33)
Planning
2,940,711
2,847,535
(93,176)
(3.17)
HumanResources
1,850,542
1,708,626
(141,916)
(7.67)
Research &
Development
3,289,423
2,901,878
(387,545)
(11.78)
Building
5,189,320
4,904,624
(284,696)
(5.49)
Public Works Admin
1,347,336
1,215,174
(132,162)
(9.81)
Automotive
5,699,626
5,743,679
44,053
0.77
Engineering
1,289,972
1,237,009
(52,963)
(4.11)
Police
53,823,695
53,957,055
133,360
0.25
Fire
36,709,960
37,382,687
672,727
1.83
Protective Inspection
2,094,167
1,961,771
(132,396)
(6.32)
Flood Control
437,440
309,000
(128,440)
(29.36)
Animal Control
1,982,500
1,982,500
-
-
Civil Defense
1,672,198
1,231,059
(441,139)
(26.38)
Liquor Control
1,469,143
1,469,102
(41)
(0.00)
Prosecuting Attorney
7,758,281
7,740,623
(17,658)
(0.23)
Mass Transit
3,955,499
3,340,812
(614,687)
(15.54)
FC
Rept. No. 217
FC - 217 Page 7 May 1, 2012
County
Physicians/Health
Aging/Health &
Welfare
Cemeteries
Schools
Non -Profit Grants in
Aid
Elderly Activities
Parks & Recreation
Environmental Mgmt
Transfers to Other
Funds
Transfer to Debt Svc
Pensions & Contribs
Miscellaneous
Block Grants
Home Grants
Housing Grants
Housing Grants
TTL General Fund
Expenditures
Other Fund
Expenditures
Highway Fund
Sewer Fund
Cemetery Fund
Bikeway Fund
Beautification Fund
Vehicle Disposal Fund
133,825
2,874,020
376,547
58,500
1,500,000
3,570,004
17,343,118
1,049,783
27,436,155
41,215,147
52,524,000
(3,135,893)
297,432,337
29,267,490
9,085,418
10,000
171,000
153,600
2,598,817
133,825
2,323,947
348,944
58,500
1,500,000
3,353,637
16,301,409
1,003,847
21,599,328
35,250,229
55,316,000
4,250,000
291,623,210
32,773,050
9,321,149
10,000
171,000
157,920
2,587,372
(550,073)
(27,603)
(216,367)
(1,041,709)
(45,936)
(5,836,827)
(5,964,918)
2,792,000
7,385,893
(5,809,127)
(6.06)
(6.01)
(4.38)
(21.27)
(14.47)
5.32
(235.53)
(1.95)
3,505,560
11.98
235,731
2.59
4,320
2.81
(11,445)
(0.44)
FC Rept. No.
217
FC - 217 Page 8 May 1, 2012
Solid Waste Fund
28,255,192
25,406,461
(2,848,731)
(10.08)
Golf Course Fund
1,120,313
1,139,672
19,359
1.73
Geothermal Rel &
Comm Rev Fund
575,000
600,000
25,000
4.35
Housing Fund
17,205,108
17,889,155
684,047
3.98
Kulaimano Elderly Hsg
Fund
356,437
315,312
(41,125)
(11.54)
Ouli Ekahi Hsg Fund
326,410
278,375
(48,035)
(14.72)
Geothermal Asset Fund
50,000
50,000
-
-
TTL Other Fund
Expenditures
89,174,785
90,699,466
1,524,681
1.71
Total Funds
386,607,122
382,322,676
(4,284,446)
(1.11)
Less: Inter -Fund
Transfers
19,312,758
17,029,328
4,336,660
(11.82)
Estimated (e)
-
Net Expenditures
367,294,364
365,293,348
(2,001,016)
(0.54)
Your Committee originally reviewed the Operating Budget in conjunction with departmental
program reviews on April 18 through April 20, 2012. Pursuant to Section 10-4, Hawaii County
Charter, the Council also conducted a public hearing on the proposed FY 2012-13
Operating and Capital Budgets in Kona on May 1, 2012, which was videoconferenced to the
Hilo, Pahoa, and Waimea Council offices.
During the budget review, Mayor William P. Kenoi reviewed his proposed budget for the
Council. He reminded Members that this is the fourth consecutive year of efforts to reduce size
and cost of government in a strategic and responsible manner that maintains critical
infrastructure and public services. Mayor Kenoi commented that despite reduction in
government, it is a priority maintaining core County services such as public safety system, civil
defense, fire, and police on keeping our community safe. In addition, protecting services such as
Parks and Recreation, Mass Transit and Office of Aging offers to the community. Furthermore,
the continuing decrease in tax collections and cost increases in areas such as employee health
care, retirement costs and unpredictable fluctuations in utilities and fuel; may cost more to
deliver same services next year.
Mr. Tim Rees opposes the proposed budget because of illegalities specifically to vehicle disposal
and beautification funds. Furthermore, he explains his concerns and over four years working on
this matter. Pursuant to Mr. Rees's testimony , he cited HRS Chapter 286, section 51, and
FC Rept. No. 217
FC - 217 Page 9 May 1, 2012
subsection (b), 2nd paragraph as related to vehicle disposal and beautification fees, Finance Chair
Brenda Ford requested Deputy Corporation Counsel Kathy Garson research and provide
information at the next Council meeting. Ms. Ford also requested that Deanna Sako, Deputy
Director of Finance provide information related to vehicle disposal and beautification funds for
2012-13 at the next Council meeting.
Upon review of the Mayor's amended budget submittal on May 3, 2012, the Council may
propose amendments as necessary.
Your Committee on Finance is in accordance with the purpose and intent of Bill 197, and
recommends its passage on first reading.
dkr
Respectfully submitted,
COMMITTEE ON FINANCE
BRENDA FORD, CHAIR
FC REPORT NO. 217
ADOPTED: MAY 14 2012
FC Rept. No. 217
AYES
NOES
A&E
EX
BLAS
X
FORD
X
HOFFMANN
X
IKEDA
X
ONISHI
X
PILAGO
X
SMART
X
YAGONG
X
YOSHIMOTO
X
Respectfully submitted,
COMMITTEE ON FINANCE
BRENDA FORD, CHAIR
FC REPORT NO. 217
ADOPTED: MAY 14 2012
FC Rept. No. 217