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Home My WebLink AboutCOM 0091.000 2016-2018 • MjY OF/� cte. .�'' 0, Wil Okabe •� '/ ,�%Cr Managing Director !�,'.�� Harry Kim -+ - 1 • Mayor .' '' r = ;'--;‘ Barbara J.Kossow +f: ..r+;••,. Deputy Managing Director (gaunt. ftfit e of filo Altagor 25 Aupuni Street,Suite 2603 • Hilo,Hawai`i 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 March 1, 2017 COUNTY CLERK COUNTY OF HAWAII RECEIVED Valerie Poindexter, Council Chair and Time i is cons,/ By LMA.! Members of the Hawai`i County Council Date mAp i t 7I DA County of Hawaii 25 Aupuni Street Hilo, HI 96720 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, 2018. This balanced budget includes estimated revenues and appropriations of$473,998,961, and includes the operations of eleven of the County's special funds as well as the General Fund. This proposed FY 2017-18 budget is $11,020,333 or 2.38 percent larger than the FY 2016-17 budget. Even during the years of budget challenges caused by the recession,the County 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 government services. We face a challenge posed by$11.7 million in additional employee benefit expenses in the coming year. Most of these costs were the result of increases in health benefits,post-employment benefits, Social Security contributions and retirement obligations for our existing employees and retirees. These costs reflect the lion's share of the difference between last year's budget and this year's budget. Despite those additional costs, this budget does not require any increase in real property tax rates. < EIR 0 _ COMM c 1 Ref.To: f L Ref.Dahl MR R 1 "IV County of Hawaii is an Equal Opportunity Provider and Employer. Honorable Members of the Hawai`i County Council March 1, 2017 Page 2 OPERATING BUDGET BY FUND The following table describes the budgeted expenditures for FY 2016-17 and the proposed budget for FY 2017-18 for each fund: OPERATING BUDGET BY FUND (Amounts in thousands) 4Y16-17 FY17-18 Increase Percent FUND Budget Proposed (Decrease) Change General Fund $355,038 $367,623 $12,585 3.5% Highway Fund 35,917 34,698 (1,219) -3.4% Sewer Fund 11,849 13,541 1,692 14.3% Cemetery Fund 10 10 0 0.0% Bikeway Fund 103 71 (32) -31.1% Beautification Fund 311 355 44 14.1% Vehicle Disposal Fund 5,338 3,204 (2,134) -40.0% Solid Waste Fund 31,380 31,631 251 0.8% Golf Course Fund 1,347 1,339 (8) -0.6% Geothermal Royalty Fund 1,700 1,000 (700) -41.2% Housing Fund 19,936 20,477 541 2.7% Geothermal Asset Fund 50 50 0 0.0% $462,979 $473,999 $11,020 2.4% REVENUES BY SOURCE The following table presents a summary of projected FY 2017-18 revenues from various sources and the changes from the current budget: REVENUES BY SOURCE • (Amounts in thousands) Increase (Decrease) Percent From Percent FY17-18 of FY16-17 Increase Source Amount Total Amount (Decrease) Real Property.Tax $282,096 59.5% $15,596 5.9% Public Service Company Tax 10,340 2.2% 0 0.0% Fuel Tax 7,950 1.7% 150 1.9% Public Utilities Franchise Tax 7,800 1.6% (1,300) -14.3% Licenses and Permits 23,526 5.0% 466 2.0% Revenue from Use of Money&Property 1,293 0.3% (229) -15.0% Intergovernmental Revenue 69,494 14.7% 2,027 3.0% Charges for Service 25,240 5.3% 379 1.5% Other Revenues 9,550 2.0% (98) -1.0% Fund Balance Carryover 36,710 7.7% (5,971) -14.0% $473,999 100.0% $11,020 2.4% Honorable Members of the Hawai`i County Council March 1, 2017 Page 3 REVENUE CHANGES The major changes in projected revenues are as follows: Real Property Tax. Real property tax revenues are expected to increase by 5.9%, or $15.6 million, due to new construction and an increase in taxable values. Public Utilities Franchise Tax. Decreased public utility revenues are expected to result in a decrease of$1.3 million, a reduction of 14.3% in franchise tax revenue. Intergovernmental Revenue. Increases in grant revenues of about $2.0 million reflect those grants we are aware of at this time. Fund Balance Carryover. This budget reflects $6.0 million less in carryover savings from the current year operations of all funds. EXPENDITURES BY FUNCTION The following table presents a summary of projected FY 2017-18 expenditures from various sources and the changes from the current budget: EXPENDITURES BY FUNCTION (Amounts in thousands) Increase (Decrease) Percent From Percent FY17-18 of FY16-17 Increase Function Amount Total Amount (Decrease) • General Government $47,294 10.0% ($2,757) -5.5% Public Safety 135,981 28.7% (3,232) -2.3% Highways & Streets 25,620 . 5.4% 166 0.7% Health, Education and Welfare 28,782 6.1% 1,058 3.8% Culture and Recreation 22,154 4.7% (23) -0.1% Sanitation and Waste Removal 44,815 9.4% (347) -0.8% Debt Service 48,630 10.2% 4,772 10.9% Pension&Retirement 53,255 11.2% 5,817 12.3% Health Fund 51,053 10.8% 5,901 13.1% Miscellaneous 16,415 3.5% (335) -2.0% • $473,999. 100.0% $11,020 2.4% Honorable Members of the Hawai`i County Council March 1, 2017 Page 4 EXPENDITURE CHANGES Savings were achieved throughout the budget as the result of cuts made by the departments, reductions in travel, and the decision to delay hiring and equipment purchases. Negotiations for all eight bargaining units are continuing at this time. No provision for pay raises has been included in the budget, as the amount is not yet known. Other major changes in projected expenditures are as follows: General Government • Legislative. The Contingency Relief account was reduced by $810,000. • Geothermal Relocation and Community Benefit Fund. The fund was reduced by $700,000,to reflect the expected expenditures for the upcoming year. • The majority of the other changes are explained by the savings noted above. Public Safety • Police. The police department has a reduction of approximately $303,000, due primarily to the reduction in overtime. • Fire. The fire department has a reduction of approximately $2.1 million, due primarily to the reduction in overtime. • The majority of the other changes are explained by the savings noted above. Health,Education and Welfare • Aging. Additional grant funding of about $540,000 is expected and appropriated for various programs. • Housing Fund. Additional grant funding of$500,000 is expected and appropriated for additional voucher rental subsidies. Debt Service • Transfer to Debt Service. Debt service is expected to increase by $4.8 million due to a planned bond issue later this year. Pension & Retirement • • Retirement Benefits. Contributions to the employee retirement system will increase by approximately $5.8 million, or 12.3%, as the result of rate increases expected to be established by the State Legislature. Health Fund • Health Benefits. Contributions to the Employer Union Trust Fund will increase by $5.9 million, or 13.1%, due primarily to the increase in other post-retirement benefits required by state law. Honorable Members of the Hawai`i County Council March 1, 2017 Page 5 Conclusion This proposed budget represents a collaborative effort by our departments to address the needs of our growing population in a way that is both responsive and fiscally responsible. Careful planning and conservative budgeting has positioned us to make planned investments in our communities, while maintaining core services and meeting our obligations to our employees. The continued increase in property values, low unemployment rates, and steady hotel occupancy levels indicate continued economic stability. We remain optimistic that the County's economic outlook will continue to improve, and believe that our efforts to promote renewable energy, agriculture,tourism, and higher education are an investment in the future of our island. The recent boost in our bond rating is assurance that the independent rating agencies share this same view of our County's potential. We continue to manage our resources in a fiscally responsible manner,to support our youth, our communities, and to protect public safety, and ask for your support in these efforts. We look forward to working closely with the County Council in the months ahead,to address our community's new and ongoing demands for public services, while also maintaining a balanced and responsible budget. Alo .., Harry Kim Mayor Attachment