Loading...
HomeMy WebLinkAboutCOM 0755.025 2016-2018Harry Kim Mayor County of Hawai `i Finance Department 25 Aupuni Street, Suite 2103 • Hilo, Hawaii 96720 (808) 961-8234 • Fax (808) 961-8569 Deanna S. Sako Director Nancy Crawford Deputy Director June 6, 2018. Valerie Poindexter, Council Chair and .. ©—<. Members of the Hawai'i County Council rn Hawai'i County Council '' 25 Aupuni Street Hilo, Hawai'i 96720 -00 Re: Bill 110, Draft 2 Operating Budget for Fiscal Year 2019 Please see attached copies of the presentation "Bill 110, Draft 2 Operating Budget for Fiscal Year 2019" for discussion on Bill No. 110 relating to establishing an Operating Budget for the County of Hawai'i for the fiscal year July 1, 2018 to June 30, 2019. If there are any questions please do not hesitate to contact me at 961-8971. Thank you. Deanna Sako Director dbmrm No.15-S , 1,�' R E. T U.,y `14 :; Hawaii County is an Equal Opportunity Employer and Provider BILL 110, DRAFT 2 OPERATING BUDGET FOR FISCAL YEAR 2019 COUNTY OF HAWAII JUNE 612018 RECAP OF RECENT EVENTS General Fund Revenues • March 1 Draft 1 of FY 2019 budget submitted $417.6 million • May 3 Lava event begins • May 4 Draft 2 of FY 2019 budget submitted • June 6 Special Council Meeting REVENUE SHORTFALL *Current projection as of 6-6-18 $419.4 million $414.4 million $5 million z May 21, 2018 Zone A - Leilani Estates & Lani Zone B - Kapoho Beach Lots, V, Zone C - Kapalana Sea View Es Beach Palisades, Black Zone D - Nanawale Estates, Kal Farms, Nanawale Farm A June 5, 2018 Zone A - Leilani Estates & Lanipuna Gardens Zone B - Kapoho Beach Lots, Vacationland Zone C - Kapalana Sea View Estates, Puna Beach Palisades, Black Sand Beach,, Zone D - Nanawale Estates, Kapoho Papaya Farms, Nanawale Farm Ranch rp—M-MMON-4m )Kapoho BACKING UP -- Since fiscal year 2010, department budgets limited to uncontrollable increases • In fiscal year 2018, departments submitted 5% cuts • Budgeting process for fiscal year 2019 began in September 2017, departments were asked to submit a status quo operating budget and a 3% reduced scenario • 3% reductions applied and additional department cuts made to balance the March 1 draft budget • Through fiscal year 2018, services maintained • In fiscal year 2019 services impacted, i.e. closure of transfer stations on additional federal holidays 5 FY 2006 - 2019 General Fund Budget Expenditures 180,000,000 160,000,000 140,000,000 120,000,000 S&W 100,000,000 i 80,000,000 Operating 60,000,000 40,000,000 Benefits 20,000,000 I Equipment 0 FY06 FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY1S FY16 FY17 FY18 FY19 FY20 FY21 May 4 est est S&W -Benefits -Debt Service -Equipment -Other exp 6 UNCONTROLLABLE COSTS Statewide collective bargaining ERS rates set by the State - No county representation on ERS board • Health premiums (EUTF) set by State - No county representation on EUTF board • Mandated other post employment benefits (OPEB/GASB 45) payments • HRS mandates participation in ERS, EUTF and OPEB ►, ACT 17 (SB 936) ERS Contribution Rates Employer Contribution Rates by Fiscal Years 7/1/2016 - 6/30/2017 General Employees 17.00% 7/1/2017 - 6/30/2018 18.00% 7/1/2018 - 6/30/2019 19.00% ..................... 1. 7/1/2019 - 6/30/2020 22.00% 7/1/2020 - 6/30/2021 24.00% Police & Firefighters 25.00% 28.00% 31.00% 36.00% 41.00% 11 FISCAL IMPACT OF ERUPTION EVENTS: • $2.6 million in costs for May 2018 • Estimated $2 million in costs to County per month • Unknown duration of lava event • Ultimate total cost impact for fiscal year 2019 and beyond is unknown • Costs incurred by non -County entities unknown • Impact on real property tax revenue - $4.5 to $5 million reduction as of June 6th • Long term real property tax revenue impact unknown 9 ANTICIPATED IMPACT TO FY 2019 BUDGET • Estimated decrease in real property tax revenue due to $5 million loss of property • Increased operating expenses related to lava event - FEMA expected to cover most event related overtime and other costs - Required County match 25% (anticipating State unknown assistance to help with match) ANTICIPATED FY 2019 SHORTFALL $5 million 10 EXTERNAL SOURCES OF FISCAL ASSISTANCE STATE FUNDS: • Mayor submitted $50 million request to Governor • Funds would be used to offset disaster related expenses • Will not address the decline in real property tax revenues FEDERAL FUNDS: • FEMA award process is lengthy and awards are not guaranteed - possible long-term option at best • County still awaiting $5 million in receivables from FEMA for prior disaster 11 OPTIONS #1 Adopt draft 2 of Mayor's budget (and deal with shortfall nextyear) #2 Cut expenses by $5 million #3 Increase revenues - raise real property tax rates #4 Increase revenues - adopt GET.2S% surcharge 12 OPTION 1 ADOPT DRAFT 2 OF MAYOR'S BUDGET PROS CONS • Budget picture may become •Council would not be addressing clearer in the future growing budget shortfall in FY 2018-19 budget • Revenue increase options will not be available during the next fiscal year • Representing a known wrong revenue amount in a budget is irresponsible • Increase in fees would take time to implement 13 OPTION 2 CUT EXPENDITURES $5 MILLION PROS • Option does not involve raising taxes • Reduces cost to reflect decreases in revenue CONS • Cutting $5 million would not leave sufficient funds to continue current services • Pro rams and services would need to be cut -significant widespread impact • Cuts would have to be determined today • Realistic cuts of only $1 million identified • Shortsighted, doesn't address future economic impacts 14 OPTION 3 INCREASE REVENUE - INCREASE RPT TAX RATES PROS CONS • Would offset declining real •Resolution must be approved by property tax values June 20, 2018 • Revenue neutral rate Requires a public hearing increases possibly on June 18 and Council action at next meeting on June 19 15 OPTION 4 INCREASE REVENUE - GET SURCHARGE .25% PROS CONS • Would provide $10 million •Ordinance must be approved revenues for transportation by June 30, 2018 related costs in FY 2019 • Requires a public hearing • Could free up $4.9 million before final approval general fund operating costs related to transportation •Use of funds restricted to transportation related costs • Diversifies revenue 16 IMPACT OF THE SURCHARGE: 0 0 It's different for everyone depending on spending If you typically spend: - $50 on groceries at the store, your bill will increase by approximately 13 cents -instead of $52.08 you will pay $52.21 - Fora $100 purchase, your bill will increase 26 cents from $104.17 to $104.43 wrwi, 17 UFS, Fv;m,7CI �