The URL can be used to link to this page

Home My WebLink AboutCOM 0706.000 2014-2016 tt .• ode;�, ' William P.Kenoi : .;,f l-"!'�'/, t.: Randall M.Kurohara Mayor -"s't Acting Managing Director County of H awai`i 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 9674o (808)323-4444 • Fax(808)323-4440 J March 1, 2016 o =_:(-..) t The Honorable Dru Mamo Kanuha, Chair - And Members of the Hawai`i County Council County of Hawai`i N 25 Aupuni Street -; �- Hilo, HI 96720 c"` -- 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 ending June 30, 2017. This balanced budget includes estimated revenues and appropriations of$462,742,790 and contains the operations of eleven of the County's special funds as well as the general fund. This proposed FY 2016-17 budget is 5.46 percent larger than the FY 2015-16 budget. Even during the years of budget challenges caused by the recession, we continued to invest in County infrastructure while restricting spending and coping with increased employee health care costs and other expenses. This budget reflects those efforts to control the size and cost of government while continuing to maintain essential police, fire and other core County services. We also face a challenge in the form of$15.6 million in additional employee expenses in the year ahead. Most of these costs were the result of public worker arbitration decisions and agreements that increase salaries, wages, social security contributions and retirement obligations for our existing employees and retirees. These costs reflect the majority of the difference between last year's budget and this year's budget. Despite these additional costs, this budget does not require any increase in real property tax rates. Comm. No. 7 01D Ref. To' F CF 1 tl, \r5 5 7 Refs Date MAR 0 1 2016 County of Hawaii is an Equal Opportunity Provider and Employer. Honorable Members of the Hawaii County Council March 1. 2016 Page 2 INVESTING IN OUR COMMUNITIES Since our administration took office, we have submitted budgets that limit spending and make wise investments in our communities with the goal of making the County of Hawai`i a better place for families to live. There are a number of projects currently under construction that we look forward to completing in 2016. The new Kapi`olani Street Extension in Hilo and the Mamalahoa Bypass Extension in South Kona will bring long-awaited relief to traffic congestion, allowing our families to spend less time in traffic and more time at home together. We continue to improve our existing roadways like Ka`iminani Drive in Kona and Komohana Street in Hilo. Our mass transit system will soon have a new baseyard and maintenance facility to keep our buses running safely and efficiently. We continue to invest in parks, gyms, and playgrounds across the island where coaches can teach our youth respect, discipline, and teamwork, and families can enjoy active lifestyles together. Brand new district parks in Palma and Waimea will expand the availability of recreational space and facilities in rapidly growing regions of our island, along with the new Alii Kai Park in Kona. Major improvements to the Hilo Municipal Golf Course and the Pana`ewa Drag Strip will allow more of our residents to enjoy these community assets. And new playgrounds in Na`alehu and Pahala are adding to the list of playgrounds built and improved islandwide. Construction continues on a wind farm at Lalamilo to power the water needs of the Kohala Coast with renewable energy, reducing our reliance on imported energy and reducing the cost of water to our residents and businesses. At the Mauna Kca Recreation Area, we continue to improve the only public rest stop along the Daniel K. Inouye Highway for our residents and visitors travelling across the island. We have already renovated existing restrooms and built a new comfort station, improved the parking lot and grounds, and constructed a playground for our younger travelers. We are now renovating the infrastructure and cabins to allow our families to once again stay at the park overnight. Through the tough economic times our County faced during the Great Recession, we preserved funding for public safety and essential core County government services. We protected funding for services to seniors, and preserved and expanded programs for our youth. We maintained County funding to non-profit organizations serving the people most in need. In this proposed budget, we continue this commitment to investing in our communities. Honorable Members of the Hawaii County Council March 1, 2016 Page 3 OPERATING BUDGET BY FUND The following table describes the budgeted expenditures for FY 2015-16 and the proposed budget for FY 2016-17 for each fund: OPERATING BUDGET BY FUND (Amounts in thousands) FY15-16 FY16-17 Increase Percent FUND Budget Proposed (Decrease) Change General Fund $334,480 $353,692 $19,212 5.7% Highway Fund 36,811 37,635 824 2.2% Sewer Fund 12,259 11,848 (411) -3.4% Cemetery Fund 10 10 0 0.0% Bikeway Fund 223 103 (120) -53.8% Beautification Fund 489 311 (178) -364% Vehicle Disposal Fund 4,478 5,338 860 19.2% Solid Waste Fund 28,054 30,977 2,923 10.4% Golf Course Fund 1,347 1,347 0 0.0% Geothermal Royalty Fund 1,700 1,700 0 0.0% Housing Fund 18,892 19,732 840 4.4% Geothermal Asset Fund 50 50 0 0.0% $438,793 $462,743 $23,950 5.5% REVENUES BY SOURCE The following table presents a summary of projected FY 2016-17 revenues from various sources and the changes from the current budget: REVENUES BY SOURCE (Amounts in thousands) Increase (Decrease) Percent From Percent FY16-17 of FY15-16 Increase Source Amount Total Amount (Decrease) Real Property Tax $265,000 57.3% $19,500 7.9% Public Service Company Tax 10,340 2.2% 0 0.0% Fuel Tax 7,710 1.7% 320 4.3% Public Utilities Franchise Tax 11,157 2.4% (421) -3.6% Licenses and Permits 22,561 4.9% 353 1.6% Revenue from Use of Money & Property 1,522 0.3% 49 3.3% Intergovernmental Revenue 66,757 14.4% 1,712 2.6% Charges for Service 25,002 5.4% 1,033 4.3% Other Revenues 9,848 2.1% 79 0.8% Fund Balance Carryover 42,846 9.3% 1,325 3.2% $462,743 100.0% $23,950 5.5% Honorable Members of the Hawaii County Council March 1, 2016 Page 4 REVENUE CHANGES The major changes in projected revenues are as follows: Intergovernmental Revenue. Increases in grant revenues of about $1.7 million reflect those grants we are aware of at this time. Public Utilities Franchise Tax. Decreased public utility revenues are expected to result in a decrease of$421,000, a reduction of 3.6% in franchise tax revenue. Real Property Tax. Real property tax revenues arc expected to increase by 7.9%, or $19.5 million, due to new construction and an increase in taxable values. Charges for Services. Charges for services arc expected to increase $1 million and reflect the increase in usage of various County services. Fund Balance Carryover. This budget reflects $1.3 million more in carryover savings from the current year operations of all funds. EXPENDITURES BY FUNCTION The following table presents a summary of projected FY 2016-17 expenditures from various sources and the changes from the current budget: EXPENDITURES BY FUNCTION (Amounts in thousands) Increase (Decrease) Percent From Percent FY16-17 of FY15-16 Increase Function Amount Total Amount (Decrease) General Government $49,857 10.8% (5794) -1.6% Public Safety 138,633 29.9% 4,527 3.4% Highways & Streets 26,895 5.8% (726) -2.6% Health, Education and Welfare 27,515 5.9% 855 3.2% Culture and Recreation 22,058 4.8% 252 1.2% Sanitation and Waste Removal 44,753 9.7% 3,544 8.6% Debt Service 43,858 9.5% 7,115 19.4% Pension & Retirement 47,405 10.2% 3,710 8.5% Health Fund 45,123 9.8% 5,981 15.3% Miscellaneous 16,646 3.6% (514) -3.0% $462,743 100.0% $23,950 5.5% Honorable Members of the Hawaii County Council March 1,2016 Page 5 EXPENDITURE CHANGES Increases in salary and wages are reflected in all functional areas of County government as a result of public worker arbitration decisions and agreements that increase costs for our existing employees and retirees. All salary and wages are reported in each department with the exception of the Unit 14 Ocean and Water Safety Officers, which has not yet been approved by the council and the legislature and is estimated in the provision for compensation adjustment account. Major changes in projected expenditures are as follows: Pension & Retirement • Retirement Benefits. Contributions to the employee retirement system will increase by approximately $3.7 million, or 8.5%. as the result of new salary and wage costs as well as other changes established by the state legislature. Health Fund • Health Benefits. Contributions to the state employee health system will increase by $6 million, or 15.3%, which includes an increase of$4.2 million in contribution for future post-employment health benefits. Debt Service • Transfer to Debt Service. As the result of issuing bonds for Capital Improvement Projects, as well as the refunding of prior bond issues to take advantage of historically low rates extended to the County, there is a net increase of$7.1 million in debt service costs. By taking advantage of our strong bond rating to lower the interest rates we pay, the County will save $18.2 million over the life of these bonds. Sanitation & Waste Removal • Solid Waste Fund. In addition to the salaries and wages noted above, much of the increase is due to recycling and diversion programs, which included increased costs in outreach and education, e-waste, and scrap metal. • Vehicle Disposal Fund. The increase is due to additional environmental clean up and expanded collection of abandoned vehicles islandwide. Honorable Members of the Hawai`i County Council March 1,2016 Page 6 CONCLUSION This budget represents our departments' collective, collaborative effort to address the needs of our island's growing population in a way that is both responsive to our community and fiscally responsible. Our administration's final budget reflects eight years of careful planning and conservative budgeting that has positioned our County to maintain services to our residents, meet our obligations to our employees, and continue to invest in our communities. We look forward to working closely with the County Council in the months ahead to address our responsibility to provide services to our community while also maintaining a balanced budget. Aloha, William P. Kenoi MAYOR Attachment