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Home My WebLink AboutCOM 0150.000 2012-2014 °i:" Ham' Walter K.M.Lau .••.,i Managing Director William P. Kenoi �''�!, ,ft Mayor -----Amor Randall M.Kurohara •'•aw w; .� Deputy Managing Director ter•. w:=�o.•� . County of Hawaii Office of the Mayor 25 Aupuni Street,Suite 2603 • Hilo,Hawaii 96720 • (808)961-8211 • Fax(808)961-6553 KONA: 74-5044 Ane Keohokalole Hwy.,Bldg.C • Kailua-Kona,Hawaii 96740 (808)323-4444 • Fax(808)323-4440 February 28, 2013 `-- 1-a Honorable Members of the Hawaii County Council e County of Hawai`i 25 Aupuni Street Hilo, HI 96720 l.:J Aloha Council Members: As required by the Hawaii County Charter, submitted with this message is the proposed operating budget for the County of Hawaii for the fiscal year (FY) ending June 30, 2014. This balanced budget includes estimated revenues and appropriations of $370,778,473 and includes the operations of eleven of the County's special funds as well as the general fund. This FY 2013-2014 budget is $32,426,525 or 8.0 percent less than the budget in effect when this administration took office in 2008. It marks the fifth consecutive year of our efforts to control the cost of government in a strategic and responsible manner that maintains critical infrastructure and public services. This proposed balanced budget does not require any increase in property taxes. County of Hawaii Operating Budget $410,000,000 $400,000,000 $390,000,000 0 $380,000,000 $370,000,000 $360,000,000 IIII $350,000,000 0 . ■ $340,000,000 2008-09 2009-10 2010-11 2011-12 2012-13 2013-14 Comm. No. 150 County of Hawai`i is an Equal Opportunity Provider and Employer. Ref.To: � Ref. Date FEb 8 z.1, �"3 , II39 > Honorable Members of the Hawai`i County Council February 28, 2013 Page 2 Collecting Less Taxes For the fifth straight year, the County of Hawaii will collect less in property taxes than it did when this administration began in 2008. Tax collections in FY 2008-09 were $225.9 million and are expected to total $200.6 million during FY 2013-2014. This continuing lag in tax collections has been coupled with years of cost increases in areas such as employee health care and retirement costs and unpredictable fluctuations in utilities and fuel. In short, it will cost us more to deliver the same services next year, and there will be approximately the same amount of money available to provide these services. Real Property Tax Revenue $230,000,000 $220,000,000 $210,000,000 $200,000,000 $190,000,000 $180,000,000 2008-09 2009-10 2010-11 2011-12 2012-13 2013-14 Actual Actual Actual Actual Budget Budget Limiting the Size and Cost of Government This budget represents the fifth year of our continuing effort to control and reduce spending wherever possible. Overtime spending has been reduced by 36 percent during this period, for a reduction of$5.1 million since FY 2007-2008. Overtime Total $15,000,000 $10,000,000 $5,000,000 2007-08 2008-09 2009-10 2010-11 2011-12 2012-13 2013-14 Actual Actual Actual Actual Actual Budget Budget Honorable Members of the Hawai`i County Council February 28, 2013 Page 3 This budget discontinues funding for recycling centers based at County solid waste transfer stations, and reduces county funding for soil and water conservation districts. It restricts out-of- state travel, cancels or delays vehicle purchases and the replacement of aging computers and software, and employee training has been deferred or eliminated. Passenger Vehicle Purchases 100 OW /IP 4110. 50 0 2007-08 2008-09 2009-10 2010-11 2011-12 2012-13 2013-14 Actual Actual Actual Actual Actual Budget Budget Two hundred thirty-six vacant positions have been unfunded during the first four years of this administration. Unfunding positions has made it more difficult to provide County services, but we intend to again hold as many positions unfilled and unfunded as possible to provide for the largest possible savings. The total employee count for the County of Hawaii was reduced from 2,787 on November 30, 2008 to 2,582 as of February 28, 2013. Employee Count 2850 2800 2750 2700 2650 2600 2550 2500 2450 tis\°� 3ti\°� 3ti\°� °\°� ti`s\y° 3ti\1° 3ti\y° 3°\y°ti�\yy 3ti\yy 3ti\yy 3°\�1 ti�\yQ�ti\yam 3ti\��3°\��ti�\1� This budget includes increased expenditures for salaries and wages of about $4.2 million because furloughs are not anticipated to continue next fiscal year. There were also increases in non- discretionary expenses such as debt service, retirement system contributions and the new transfer to the Public Access, Open Space and Natural Resources Preservation Maintenance Fund. These increased costs had to be offset with further spending cuts in order to stay within available revenue to generate a balanced budget. Honorable Members of the Hawai`i County Council February 28, 2013 Page 4 OPERATING BUDGET BY FUND The following table describes the budgeted expenditures for FY 2012-13 and the proposed budget for FY 2013-14 for each fund. OPERATING BUDGET BY FUND (Amounts in thousands) FY12-13 FY13-14 Increase Percent FUND Budget Proposed (Decrease) Change General Fund $274,410 $280,806 $6,396 2.3% Highway Fund 32,773 32,943 170 0.5% Sewer Fund 9,321 8,163 (1,158) -12.4% Cemetery Fund 10 10 0 0.0% Bikeway Fund 171 171 0 0.0% Beautification Fund 158 182 24 15.2% Vehicle Disposal Fund 2,587 2,475 (112) -4.3% Solid Waste Fund 25,400 24,972 (428) -1.7% Golf Course Fund 1,140 1,171 31 2.7% Geothermal Royalty Fund 600 1,700 1,100 183.3% Housing Fund 18,503 17,885 (618) -3.3% Geothermal Asset Fund 50 300 250 500.0% $365,123 $370,778 $5,655 1.5% REVENUES BY SOURCE The following table presents a summary of projected FY 2013-14 revenues from various sources and the changes from the current budget: REVENUES BY SOURCE (Amounts in thousands) Increase (Decrease) Percent From Percent FY13-14 of FY12-13 Increase Source Amount Total Amount (Decrease) Real Property Tax $200,650 54.1% $2,350 1.2% Public Service Company Tax 10,145 2.7% 767 8.2% Fuel Tax 7,250 2.0% (410) -5.4% Public Utilities Franchise Tax 11,567 3.1% 1,007 9.5% Licenses and Permits 16,965 4.6% 1,106 7.0% Revenue from Use of Money& Property 849 0.2% 174 25.8% Intergovernmental Revenue 61,762 16.7% (812) -1.3% Charges for Service 21,991 5.9% 321 1.5% Other Revenues 7,413 2.0% (902) -10.8% Fund Balance Carryover 32,186 8.7% 2,054 6.8% $370,778 100.0% $5,655 1.5% Honorable Members of the Hawai`i County Council February 28, 2013 Page 5 REVENUE CHANGES The major changes in projected revenues are as follows: Real Property Tax. Real property tax revenues are expected to increase by 1.2%, or $2.4 million, due to an estimated 1.0% rise in taxable values and a slight increase in interest payments. Public Utilities Franchise Tax. Increased public utility revenues are expected to result in an increase of$1.0 million, or 9.5% in franchise tax revenue. Licenses and Permits. Increases in building permit revenue ($400,000), liquor license fees ($350,000) and vehicle weight tax revenue ($200,000) have contributed to an increase of $1.1 million, or 7.0% in this revenue source. 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. EXPENDITURES BY FUNCTION The following table presents a summary of projected FY 2013-14 expenditures from various sources and the changes from the current budget: EXPENDITURES BY FUNCTION (Amounts in thousands) Increase (Decrease) Percent From Percent FY13-14 of FY12-13 Increase Function Amount Total Amount (Decrease) General Government $42,888 11.6% $1,557 3.8% Public Safety 113,870 30.7% 1,127 1.0% Highways& Streets 22,447 6.1% 336 1.5% Health,Education and Welfare 25,307 6.8% (157) -0.6% Culture and Recreation 17,581 4.7% 233 1.3% Sanitation and Waste Removal 32,815 8.8% (981) -2.9% Debt Service 39,192 10.6% 3,942 11.2% Pension& Retirement 33,583 9.1% 1,431 4.5% Health Fund 29,395 7.9% (323) -1.1% Miscellaneous 13,700 3.7% (1,510) -9.9% $370,778 100.0% $5,655 1.5% Honorable Members of the Hawai`i County Council February 28, 2013 Page 6 EXPENDITURE CHANGES Major changes in projected expenditures are as follows: General Government • The Geothermal Relocation and Community Benefits Fund. Appropriations are increased by $1.3 million for anticipated property purchases under the geothermal relocation program. • Salary and wage increases in many departments are the result of the ending of the furlough program. The increase is offset by other expenditure cuts in various areas. Public Safety • Fire. The Fire Department has increases of approximately $200,000, primarily for fire protection costs. • Liquor Control. Funds are budgeted to pay $350,000 of the cost to renovate the Hilo office and remove asbestos. Additional funds will be appropriated in subsequent years to complete payment of the full cost. • Prosecuting Attorney. Additional grant funding revenue of about $400,000 is anticipated and appropriated for various programs. • Highway Fund. An increase of approximately $200,000 results from the combination of ending the furlough program and adding a new traffic safety project. Debt Service • Transfer to Debt Service. In the current fiscal year the County experienced a temporary reduction in debt service expense. With the beginning of principal payments on bonds issued in 2010, the transfer to debt service is increasing. Pension & Retirement • Retirement Benefits. Contributions to the employee retirement system will increase by approximately 4.5% as the result of rate increases established by the state Legislature. Miscellaneous • Vacation Pay. This provision which assists with covering the cost of vacation payouts for employees separating from the County is reduced by $500,000. • Miscellaneous Insurance Claims & Judgments. The appropriation to cover various smaller claims and judgments against the County is reduced by $200,000. • Wastewater Replacement Reserve Account. Funding appropriated to set aside for large equipment rehabilitation and replacement must be reduced by approximately $900,000 as the Sewer Fund fund balance and replacement reserve fund balance have been exhausted. Honorable Members of the Hawai`i County Council February 28, 2013 Page 7 Conclusion Once again, I want to express our deep appreciation for the support and dedication of our hardworking County employees. Their efforts have allowed us to control the size and cost of government while delivering essential services and safeguarding public safety in each of our communities. We will continue to work closely with our state Legislators to maintain the County of Hawai`i's share of the Transient Accommodations Tax, which is critically important to maintain our balanced budget. We also continue to work with our Congressional delegation to secure federal resources as we work to expand our transportation infrastructure and build important capital improvement projects. This proposed budget is the result of many months of cooperation and collaboration between all of our department heads and county employees. We recognize that this budget represents another year of difficult choices for our community, and we look forward to working closely with the County Council as we seek to address both new and continuing demands for public services while also maintaining a balanced and responsible budget. Aloha, r•Xl)Xi 0 r t,,...„ 4 William P. Kenoi MAYOR Attachment