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HomeMy WebLinkAboutMIN COUNCIL 2018-05-22 2016-2018 Special Hawaii County Council 39th Session Special Session Hawaii County Building 25 Aupuni Street Hilo, Hawaii May 22, 2018 INVOCATION: Reverend Shindo Nishiyama of Honpa Hongwanji Hilo Betsuin gave the morning's invocation. CALL TO The regular meeting of the Hawaii County Council was called to order at ORDER: 9:12 a.m., in the Council Chambers, Hilo, by Ms. Valerie T. Poindexter, Chair. ROLL CALL: Present: Ms. Valerie T. Poindexter, Chair Ms. Karen Eoff, Vice Chair Mr. Aaron S. Y. Chung, Member Ms. Maile Medeiros David, Member Mr. Dru Mamo Kanuha, Member Ms. Susan L. K. Lee Loy, Member Ms. Eileen O'Hara, Member Mr. Herbert M. "Tim" Richards, III, Member Ms. Jennifer Ruggles, Member (came in later) PLEDGE OF The Chair directed the Council to the next order of business, Pledge of ALLEGIANCE: Allegiance. (At this time, Mr. Kanuha led the Council in the Pledge of Allegiance.) STATEMENTS The Chair directed the Council to proceed to the next order of business, FROM THE Statements from the Public on Agenda Items. PUBLIC ON AGENDA ITEMS: The following individuals registered to speak and came forward when called by the Chair: Robert Martin: Bill 111 (Comm. 756), comment. (representing Na`alehu School Community Council) Hawaii County Council-39 May 22,2018 Darlene Javar: Bill 111 (Comm. 756), comment. (representing Na`alehu (See also Comm. 756.27). Elementary School) Jon Olson: Bill 110 (Comm. 755); and Bill 111 (Comm. 756, support. Abolghassem Abraham Sadegh: Bill 110 (Comm. 755), comment. Mele Spencer: Bill 110, Draft 2 (Comm. 755.10), comment. Tina Tuttle: Bill 111 (Comm. 756), comment. Sandra Demoruelle: Bill 111 (Comm. 756), comment. (See also Comm. 756.26). Farrah-Marie Gomes: Bill 110 (Comm. 755), comment. (representing Hawaii Island (See also Comm. 756.21). Women's Leadership Forum) John Masters: Bill 111 (Comm. 756), in opposition. Rick Porter: Bill 111 (Comm. 756), comment. Charles Tuttle: Bill 111 (Comm. 756), in opposition. See also the following presented written testimonies: Richard Creagan, MD: Bill 111 (Comm. 756), comment. (See also Comm. 756.25). Linda Morgan: Bill 111 (Comm. 756), comment. (See also Comm. 756.28). Paradise Salsa: Bill 111 (Comm. 756), comment. (See also Comm. 756.29). Aaron Stene: Bill 111 (Comm. 756), comment. (See also Comm. 756.30). Ross Birch: Bill 110, Draft 2 (Comm. 755.10), comment. (See also Comm. 755.17 and 755.18). Mendy Dant: Bill 110, Draft 2 (Comm. 755.10), comment. (See also Comm. 755.19). Page 2 Hawaii County Council-39 May 22,2018 Brooke Derby: Bill 110 (Comm. 755), comment. (See also Comm. 755.20). Dayton Nakanelua: Bill 110, Draft 2 (Comm. 755.10), comment. (See also Comm. 755.22). CHR. POINDEXTER: Are there any others wishing to testify? If not, we're going to close public testimony at this time and we're going to move into the bills. Mr. Clerk, please read in the operating budget, Bill 110. Bill 110: ESTABLISHES AN OPERATING BUDGET FOR THE COUNTY OF HAWAII FOR THE FISCAL YEAR JULY 1, 2018, TO JUNE 30, 2019 From Mayor Harry Kim, dated March 1, 2018, transmitting for consideration the proposed Operating Budget for the County of Hawaii for the Fiscal Year ending June 30, 2019. This balanced budget includes estimated revenues and appropriations of$515,710,662, and is 5.1 percent higher than last year's budget. Reference: Comm. 755 Intr. by: Ms. David (B/R) Approve: FC-109 and Comm. 755.10: From Mayor Harry Kim, dated May 4, 2018, transmitting Bill 110, Draft 2. This draft revises revenues and expenditures for accounts proposed in Draft 1 as follows: General Fund (total adjustments +$1,822,987), Highway Fund (total adjustments $0), Sewer Fund (total adjustments +$7,620), Bikeway Fund (total adjustments +$3,000), Vehicle Disposal Fund (total adjustments -$23,199), Solid Waste Fund (total adjustments +$235,137), and Housing Fund (total adjustments +$256,398). ; and Bill 110 ESTABLISHES AN OPERATING BUDGET FOR THE COUNTY OF (Draft 2): HAWAII FOR THE FISCAL YEAR JULY 1, 2018, TO JUNE 30, 2019 Proposed Operating Budget for fiscal year ending June 30, 2019, includes estimated revenues and appropriations of$518,004,985. Intr. by: Ms. David (B/R) Page 3 Hawaii County Council-39 May 22,2018 Vote on Bill 110: Ms. David moved to pass Bill 110 on first reading and (Approved) adopt Finance Committee Report No. 109. Seconded by Mr. Richards and carried by the following voice vote: Ayes: Council Member David, Eoff, Kanuha, Lee Loy, O'Hara, Richards, Ruggles, and Chair Poindexter–8. Noes: None. Absent: Council Member Chung– 1. Excused: None. CHR. POINDEXTER: Okay, so pursuant to Article 10, Section 10-2(a) of the Hawai'i County Charter, the Mayor has submitted an amended Operating Budget to the Council on May 4, 2018. Any discussion on the proposed Draft 2? Usually we'll wait to read it in. So, Ms. David, may I have a motion to amend? Motion to Amend: Ms. David moved to amend Bill 110 with the contents of Comm. 755.10. Seconded by Ms. Eoff CHR. POINDEXTER: Any discussion on that? Go ahead. MR. RICHARDS: Okay so, Chair, I know we have a PowerPoint ahead of us. CHR. POINDEXTER: Can II think we should have Deanna and Wil Okabe, I guess Deputy Managing Director is here, maybe at the table to give their overview of the Draft 2 and then we'll open it up for questions. Is that okay? MR. RICHARDS: Yeah, thank you, Chair. (Note: At this time, Deputy Managing Director Wil Okabe and Finance Director Deanna Sako came forward to address the members of the Council.) MR. OKABE: Good morning, Chair Poindexter, Vice Chair Eoff and members of the Council. When the—when we proposed this submitted budget, it was back in May, and when we proposed this particular budget, the situation, in regards to what's happening in Puna, was not even a concept. Prior to that, three weeks ago, as you all know, the Mayor did suffer his fifth heart attack. So definitely, I think before he went to the hospital, there was a Council meeting in regards to the GET (General Excise Tax). That was the same week that he went to the hospital, and right after that he came out. During that next week, it started getting cracks on the roads and then, here we are today. So, therefore, at that particular time for three weeks, we have been looking at the revenues and the expenses that's costing the County. It's a very lean budget that Page 4 Hawaii County Council-39 May 22,2018 Mayor Kim put together, and Deanna will go over a PowerPoint presentation in regards to the cost and what's happening within the County. We are addressing a lot of concerns in this County. I mean yesterday, we understand that Target is closing, and that doesn't help the economy as well. So, property taxes are going to be assessed. We have a lot of over time cost. In regards to only this last two weeks, it amounted to over $1 million. It's not a situation that I think that we need to overlook. I think that all of you are very concerned as well, and in this budget presentation, you're going to really see how important your decisions today is going to make on the success of this particular County. I mean I've been getting a lot of calls from all over the country, from other—the rest of the island trying to ask or give us support, and we really appreciate that. But, I think more importantly, we need to really address your role. Your role as a County Council is a very difficult one, and there's no question that all of you represent your constituents, in your various districts, but I believe that the County Council, coming together in this body, represents the whole island. We're one island, one team. I believe that your decisions that are going to be made in this next, whether today or the next few weeks, is going to definitely affect the whole County of Hawai'i. As we go around the island—you asked the Mayor three weeks ago or a month ago to go before every district in the island to talk about, and having public meetings in regard to the GET. That is exactly what he did. It was a very arduous task. It was a task that had a lot of evening meetings that we went through all around the island, and Deanna and the finance staff along, with some of the members in our departments were present. We really tried to give a very clear indication or information about how important the GET tax was. But, that was before this lava situation occurred. So, we are not in the same position as we were before. We are in emergency mode. It's not predictable. There is no indication or insight when this particular situation that is happening in Puna is going to end. It could be a month, three months, a year or more. So, the decisions that are made at this Council will have a grave impact on the County. I made some statements a week ago in regards to how this is not only affecting Hawai'i County, but it's also affecting the whole state of Hawai'i. As we look towards people canceling reservations and the hotel industry, cruise ships are also canceling, people, small mom and pop stores are laying off their workers. So, we're talking about major impacts, not only for our island, but for the rest of the state as well. So, we are very fortunate that the Governor was able to get a proclamation done, remove the pentane from the Geothermal area, and we're able to look at some of the wells, to close some of the wells. And we're monitoring all of this very Page 5 Hawaii County Council-39 May 22,2018 carefully. But, we also have support from the National Guard. The Governor has given authority to General Hara, who is a native of Waiakea High School and this island, to have complete command over the National Guard, and even Pohakuloa, to give us assistance. By also getting FEMA (Federal Emergency Management Agency) here, definitely helps ahead of time. So, the County is going to be addressing property taxes, we're going to be addressing how the insurance companies can get their insurance for these homes, that are--over 40 homes that are burnt down by the lava, to be able to assess them so that they can get moving with their lives. You have many of the departments here today. Parks and Recreation is doing the best that they can to give the people on this island the opportunity for shelters. We are providing three meals a day at the shelters. We have shelters available for everyone. We still have a capacity of 800 people down in the Puna area, we have the Kea`au area as well. Also, contingency plans have already been made in case this particular event goes south in other shelter areas as well. But, all of this is going to incur cost, and I appreciate all of you that what you're doing in addressing this concern, but unfortunately, the Mayor is not here today. He's at Civil Defense. You know, it's not a good time, and I appreciate what you're doing. If you have any questions for me or Deanna, Deanna has all the information in regards to the financial part, I'm just giving the overview. CHR. POINDEXTER: Thank you. Deanna, go ahead. MS. SAKO: Before we go any further, I just want to clarify it's not Target that's closing, is Kmart. Sorry, so and my phone was blowing up here. Yes, so we just wanted to clarify that. But—Deanna Sako, Director of Finance. So, we did prepare a presentation as I promised yesterday, because there is a lot of information we all need to know as we jointly decide how we're going to move forward. So, we are here today to present the Mayor's amended budget that was submitted on May 4. If we had submitted it on May 5, it probably would have looked a lot different. The major changes from 2018, the current year we're in, to 2019, and this is overall in the budget, are primarily mandated increases. We have $9.9 million in Salary and Wages (S&W), and as you all remember, we collectively bargained together with the other counties in the State as we're required by law. We have $7.4 million in post-employment medical benefits as well as our regular health benefits, and then, $4.4 million increase in retirement contributions. All of these are mandated by State law, that we participate together with the State. We did have an increase of$525,000 in real property tax sale and expenses, but as a Page 6 Hawaii County Council-39 May 22,2018 reminder, that's an offsetting revenue and an offsetting expenditure. It's not new cost, it's just how we account for them. Our debt service did go up slightly by $620,000. We did increase our claims and judgements account by $500,000. There is a large case that has been pending for years that we believe will be settled in the upcoming year, so, we need to prepare for that. And then Civil Defense grant match, $175,000, we've been very fortunate over the years that Civil Defense receives a large number of grants from Homeland Security. There has never been a match, and now, in the coming fiscal year, 2019 grant, we will be required to match that $175,000. Initially, this was something we actually added in the May budget because initially, I know they're usually about two years behind, they have three years to spend the money. So, I thought the match wouldn't be needed for like two more years, when they actually get ready to spend this money. However, the federal government would like to see the match in our budget so they'll know we're prepared to have that—pay our share. So really, not too many different things that make up the major changes. Our pie chart does show Police and Fire and everyone. The big purple section is actually our fringe benefits, which is a significant portion of our budget, 22 percent. Just the changes from March, the more significant changes, real property tax revenue did increase by 1.7 million. That was just as we finalized values and got the final appeal amount. There are no major changes, assume the same tax rates as the current fiscal year. There were some slight grant revenue increases. We were because of that increase in real property tax, we were able to restore the Council contingency funds of$270,000. We added $200,000 for albizia hazard mitigation, as the community's trying hard to determine how to get rid of those albizia trees and prevent them from spreading. The Civil Defense grant match that I mentioned, we were able to restore the additional $500,000 to non-profit grants to have it be the same as the current year. We also increased vacation pay by $255,000 because we realized that we have many police and firefighters who are at that retirement age. I believe that at the Police Department especially, they've had a lot of retirements. They have one of their largest recruit classes that's actually qualifying for retirement now. So, we know even during the current fiscal year, there was a strain on that account so we increased that as well. So, that's where we were at on May 4. Beginning on May 3rd, our lava event started and I'm going to ask Lisa to come up to kind of talk about the next slide as well. But, this particular slide has the Leilani Estates and Lanipuna Gardens in it, and then the next slide has a bigger area that Lisa's going to explain, basically, what we believe the impact on real property taxes will be on the coming year. Page 7 Hawaii County Council-39 May 22,2018 (Note: At this time, Real Property Tax Administrator Lisa Miura came forward to address the members of the Council.) MS. MIURA: Good morning, Lisa Miura, Real Property Tax Administrator. From the meeting yesterday, you guys wanted a little bit more detailed information and our best estimate about what would happen to real property taxes. I realize all of Council was here yesterday, but for those watching it on TV or from their offices and for the other Directors here, we really are doing all we can to estimate it, but it's a very fluid situation. It continues to change and surprise us every single day. It is not an easy thing for people who usually work on past values to come up with what's going to happen in the future. With that said, you did want a figure of about how much this was going to cost us, within a range, and even though we gave a range yesterday, and that was printed in the paper, you wanted us to kind of get a little bit more exact. So, if we look at the impacted area, which, if you can see in Zone A, has the orange area, which is a pretty good indicator of where the flow is right now and the damage that its already done. We are already at a loss for 2017,just from having to pro-rate taxes of approximately $30,000, and that's still growing. For 2018,just for that little orange area, it's closer to $200,000. If you consider the larger area of Leilani and Lanipuna Gardens, and just that little area around there, that was the larger number of$1.2 million we gave you yesterday. Now, what you have to remember is the only thing that we currently have in the County Code to allow us to adjust the 2017 pro-rated tax amount as well as 2018, is the areas affected by the orange areas on the map. Everything else would need to be adjusted by way of proclamation. So, what we're telling you right now is the areas that we're estimating, I don't have a proclamation yet—okay, they signed it this morning? That gives us the authority, so I need that in order for us to adjust because there's nothing in the County Code that said I can go back in and adjust 2018 tax values. With that said, the anticipated area in Zone A would most likely all go to a zero value or zero tax amount. Now, there are people that do live on the mauka side of Leilani and they do feel like their property is still a value to them. But, what we have to look at is what the open market, what an informed buyer is willing to purchase your property for. Right now, there's a lot of concern even if you're slightly informed about purchasing a property in the area. If the lava happens to stop tomorrow, which could happen, if we're really lucky, it could stop tomorrow, it doesn't mean your value comes back right away. There's typically a two-year turn around you see on that. In this area, we expect it to be a lot longer, and we can always adjust for 2019, which is on January 1, 2019. If I had to make a best estimate, I would say that the property has significantly lost value. As I stated yesterday, one of the Page 8 Hawaii County Council-39 May 22,2018 newspapers said plummet. That wasn't quite the word that we used, however, the values in the area have gone down. Now, for the area in Zone B, as of last week, we did take a look at it because of a lot of cancellations in the area, which is a high vacation rental area, their values have dropped significantly. That's what a lot of people are investing in some of the property along the coastline, therefore. So, our estimate for the taxes that we are potentially losing in 2018 takes a higher percentage in Zone B. It also takes consideration for the area in Zone C because they are greatly affected by the SO2 (Sulfur Dioxide), and now they are limited on their access routes because that one highway has been covered with lava. Now, the last area is Zone D, which technically hasn't been necessarily directly affected. I don't know of too many that was as a result of evacuation. However, when you speak to the residents there, this is an area that we do know they're feeling the earthquakes, they can hear the noise, they can see the lava. When the wind shifts they do have effects from the SO2. On top of that, the agricultural area has definitely been affected. So, the total area—if we had to give you the range today that you're going to lose, it's approximately $3 million for 2018 in tax revenue lost. Fiscal year 2019, tax year 2018, sorry. MS. LEE LOY: Chair? CHR. POINDEXTER: Yes, Council Member Lee Loy. MS. LEE LOY: I heard that number, but do you have like square miles or acreage that these Zones, A, B, C, and D cover? MS. MIURA: We don't necessarily go off of—we go off parcel counts, so I can tell you what our total parcel counts is. And we can definitely get you the square miles for all of the zones. I mean the zones are really rough. They're based on how we do our neighborhoods and how the values are affected in relationship to each other. MS. LEE LOY: Yeah, and if you don't have it now, that's fine, but, I think for talking points, we hear a lot of concerns from the visitor industry, which Mr. Okabe spoke about. If we could quantify this affects ten square miles of 4,000 square miles of our island so we can message better in our tourism piece, I think that would be very helpful. MS. MIURA: Well, I can go over the numbers I have, and hopefully, the staff at Real Property are listening and they will be texting me that acreage real soon. That was a major hint in case they missed it. Page 9 Hawaii County Council-39 May 22,2018 MS. LEE LOY: So, Real Property, if you're listening MS. MIURA: Yeah, get me the acreage. But, the total number of parcels is 12,247 parcels. When you're looking at the total number of homeowners in that area, so the number of people claiming a homeowner exemption is 1,583. Just to put in some perspective, we have a number of parcels that have ag use, so these are the ones that have applied for ag use with us because that's come up before, and that number is 429. We have a lot of statistics but I realize those can be boring and may not be what you're interested in. MS. O'HARA: Chair? CHR. POINDEXTER: Council Member O'Hara. MS. O'HARA: I really appreciate the work you're doing here, Lisa, but this is only one of the areas currently affected by volcanic action. Do we also have a similar slide of impacts in the Volcano area and Ka'u? MS. MIURA: No, we don't, because the area we're focused on right now is the immediate impact and not necessarily from ash. We can look at it at a couple different ways. I mean the whole island is impacted. If I adjust the values on the whole island, you're just going to have to really increase all the tax rates. It doesn't really help the immediate area. Now, should the volcano explode, and I realize there's earthquakes affecting a lot of volcano, and I'm not down playing that at all, it's just this area, because Airbnb and there's other factors with insurance that have been easier to quantify and justify going in and doing proclamation for, we can point to other areas to do that. Otherwise, I mean there's honestly, people in West Hawaii that feel like they're being greatly affected, and if we start adjusting that, the tax rates will just, they're just going to increase. So then, there's no benefit really, at the end of the day for the people in this immediate area. We will keep watching the market, I mean I'm not saying we won't go there, but for purposes of today, we are focused on this area only. CHR. POINDEXTER: Okay, thank you. Do you want to continue with the presentation? MS. SAKO: Just as a reminder, we are committed to the farmers that are impacted by ash and other things. They will not be rolled back as a violation of the ag program because of the ash or volcanic activity. In just the last few weeks since May 3rd, the over time for the first pay period of this month added up to $745,000. That includes all of our departments, especially Police, Fire, and Public Works, Parks and Recreation and then the other Page 10 Hawaii County Council-39 May 22,2018 departments were smaller. We have incurred $560,000 in road repairs and we've paid $65,000 for security, shelter, meals and other things, as well as other supplies and meals for people working was about $9,900. When we prepared the slide, we did not yet have the helicopter cost, the flying either to do routine searches or to actually help evacuate people as we did on that one day, which is another twenty some thousand dollars. So, we're already at cost of$1.4 million. The road repairs are unknown if those will be ongoing costs. It depends how the lava covers other roads, if we'll continue to maintain those or have to actually build even additional roads to allow people access out of the area. So, as Lisa said, we expect the impact on revenues to be roughly $3 million for the coming year. If all the areas that were shaded lost complete value, then it would go up to $6 million. So, our range is kind of$3 to $6 million, but we do believe that $3 million is the more realistic number in that area. Based on my calculations, if we had to incur over time of this amount every pay period for one year, and even if FEMA reimbursed us 75 percent of that, our cost, of the 25 percent share, would still be a little over $4 million, when you take into account security and other things, ongoing costs that we would have to pay. So, one year would be roughly $4 million. So, we're looking at an impact of$7 million to our budget. $3 million reduction in revenue and roughly $4 million in cost, and the $4 million is probably on the low end. But of course, we also don't know that it would last a full year. In 1955, I believe the eruption lasted 89 days. We don't know how to estimate that. This one is very active indeed. Plus, we also have the ash at the same time. In the current fiscal year, we're kind of at the end of the fiscal year. We're asking departments to try and absorb as much as the cost as they can. For what they're not able to absorb, we do have that disaster account in the General Fund. We have a disaster account in the Highway Fund and then we have the Disaster Fund itself. So, for the current fiscal year, we can cover cost. For those of you who may or may not be familiar with FEMA, it's definitely a reimbursement basis. It does require a 25 percent match. Not all costs will be allowable, but hopefully, many of them will. We've already gone through some training and will be going through additional training on their procurement requirements, which are new and very stringent. The biggest one is delay in receiving reimbursement. So,just to put it into perspective, some of you may remember the 2006 earthquake, the 6.2 that hit off the Kona side. We have not been reimbursed for everything from that disaster yet. They're still in the process of closing it out. In addition, 2014, we had both Iselle and the 2014 lava event. We have been reimbursed for half. That's kind of their system. It flows through the State and Page 11 Hawaii County Council-39 May 22,2018 then we get reimbursed half, kind of up front or early on, and the other half is when they close out their project or their grant. The State is fairly short staffed. I have no idea, it could be several years before we get the remainder of that money. There's at least $700,000 that is owed us in that Disaster Fund that we carry that receivable on but there are other amounts recorded as a receivable in the Highway Fund and Capital Project Fund, I believe. So, it's a long, drawn-out process. We looked at a variety of options. We may decide to do any one of these together as a group, or to do a little bit from all of them. So, we would need to cut at least $3 million just for our revenue shortfall and probably at least $4 million for the additional expenditures. So, that would be like $7 million that we're looking for basically. We have started to look at it. When this first happened in Leilani Estates and Lanipuna Gardens, the area most impacted, we knew it was roughly $1.2 million in revenue. So, we had started to look for that amount. It would mean reversing what we put in the May budget of$500,000 for the non-profit grants, reducing miscellaneous claims and judgments by $100,000, although I'm still not sure that's a wise idea, taking away the Council contingency funds that we just put back in, reducing R & D, (Research and Development) ag, tourism, business development, eliminating the hazard mitigation project, and a lot of other little things that Nancy and our team were able to come up with. But, that would give us only the $1.2 million. There's not a lot more to reduce. We could unfund funded positions, but as you know, every County employee is pretty much impacted by this disaster, whether it's police manning road blocks, we have National Guard help, we have highways people out there, we have a lot of other people out there. I don't think this is the time to unfund positions or to do a RIF, which would be a reduction in force. For those of you that may not be familiar with the reduction in force process, it requires a 90-day advanced notice and you can pick the position that you plan on laying off, but they have the opportunity to apply for other positions within the County that they qualify for. They would bump someone, and then that person that gets bumped has the opportunity to apply for other positions, until you get all the way down to the lowest level person. So, even though you thought that maybe you were going to lay off someone who's making $100,000 a year, by the time is process is all done, you may end up only laying off a clerk that makes $25,000 to $30,000 a year. In addition, that process usually takes up to a year because of all the bumping. And the person that you bumped gets red-circled and they keep their pay. It's not a fun process and the State went through it and I think at the end, they didn't really save anything. So, it's definitely not something on our list of recommendations. It's more just to make everybody aware of what the process would be and the little, if anything, it would save us. Page 12 Hawaii County Council-39 May 22,2018 There is a section, I got asked about it yesterday, Section 10-8 I believe it is, in the Charter. It does allow for supplemental and emergency appropriations. So, I've seen this section before and I've read it before, but you know, I guess I never read all the way to the very bottom of the paragraph, that very last sentence that said, "The total of emergency appropriations in any fiscal year shall not exceed one-half of one percent of the total operating appropriations, excluding those for debt service . . ." So, when you take our $582 million upcoming budget, less debt service, and you take a half percent of that, that's only $2.3 million. You have to have a funding, a revenue source and the budget still has to remain balanced. However, this section does allow us to borrow. Instead of borrowing from a bank, we would probably prefer to borrow from maybe one of our funds that had additional funding. It would require Council action. So, let's say, PONC (Public Access, Open Space and Natural Resources Preservation Commission) has probably the most money in it right now, of our funds. But also, the way this section is worded, we would have to repay that no later than July 1, 2019, the beginning of the next fiscal year. And we'd have to obviously, take the action after July 1st of this current year. So, why that's helpful, especially if this disaster continues on and we don't estimate correctly how much we need to save, it may be helpful to us next year. It really just buys us a little bit of time, not a lot. As I said yesterday, everything is on the table. It's to give everybody an opportunity to see what the impact would be. We ran numbers on if we were to adjust real property taxes and we did a $3, $6, and $9 million impact. The $3 million would cover just a shortfall in revenue that we're losing from the Puna area. The $6 million would provide $3 million additional to help support the disaster cost, and $9 million was kind of a combination of if all $6 million in Puna was loss plus additional expenses. That would be important as well. So, if we had a $3 million revenue shortfall that we wanted to cover with increases in real property taxes, residential would go from $11.10 to $11.30, apartment from $11.70 to $11.90 and all the way down. We did impact every single classification, even the across the board because we are one island and one community, and we felt that we should all pitch in to help everybody out together. Same thing for the $6 million scenario that you have before you. The rates would go from $11.10 to $11.45, $11.70 to $12 for apartment, commercial $10.70 to $11. And again, the numbers at the top are the total revenue that would generate, both to help us make up for the shortfall in revenue that we're expecting from the loss of real property taxes in Puna, as well as to help cover costs. And the last one would be $9 million to generate, which means residential would go from a current rate of$11.10, and it would go up to $11.55. Apartments from $11.70 would go to $12.10, commercial from $10.70 up to $11.15. So, these are to give you some options,just to look at. Page 13 Hawaii County Council-39 May 22,2018 The next one is to look at possibly getting a reconsideration of the GE surcharge. It would generate $25 million in fiscal year 2019. Based on the final acts signed by the Governor, it would all have to go to transportation, but that doesn't mean we couldn't lobby the Legislature to make it more usable for disaster related monies as well. But, some of our costs are definitely going to be road related. Obviously, some of the roads covered by lava are County, some are State, and many are private. One of the things that we could also lobby the Legislature for was to help with disaster related private roads or something like that. This is all just coming about in the last few weeks. It's not like we have all the answers of what exactly we would lobby for, but trying to think of all of those possibilities. It would free up $4.6 million in the General Fund, that's the Mass Transit portion that's not covered by grants. So, that money could be moved over to that, GE tax would cover that, and that would free up $4.6 million either to help cover revenue short falls or to cover the disaster related expenses. We do believe that the GE surcharge could pay for a portion of our FEMA match, anything related what we currently spend in the Highway Fund, whether it's the emergency road work, their labor, but at least that portion, we do believe, would be able to cover it before that. Anything over and above what we need for that, as we've said before, the Mayor is committed to having the GE surcharge, at least in the first year go to help implement the Mass Transit Master Plan, as well as to do those other larger road projects that would not be covered by fuel tax. If we have to wait to borrow money or get federal assistance for some of those larger road projects, they could take a long time to come. One of the things that I continue to be concerned about is our bond ratings. We've already received telephone calls from our bond rating agencies. Obviously, they're concerned about the lava. Of course, we've tried to put it in perspective for them that the portion of the island where the eruption is occurring versus the rest of the island, how the impact on tourism is definitely going to impact our bond rating at some point. One of the things the bond raters look at is our reserves. Basically, what our fund balance is, what our Budget Stabilization Fund is, what our disaster fund is. Yes, we have prepared for the future and yes, we have a Budget Stabilization Fund, and yes, we have a Disaster Fund, but we cannot deplete those down to zero. As you know, our island is one of the most disaster-prone islands. We have had more FEMA events than any other county. I remember the 2000 floods, the 2006 earthquake, the 2011 tsunami, the 2014 hurricane, the 2014 lava, and now the 2018 lava event. And those are just in my career with the County, there were many others. Page 14 Hawaii County Council-39 May 22,2018 There have also been several fires, FEMA fire events and what not as well. So, we need to be prepared for the future as well. We can't eliminate all of our reserves in one year. That's not going to put us in a good place financially, not to mention hurricane season starts on June 1st of this year. I'm just trying to be realistic, sorry. A budget stabilization fund in the County Code does set an amount of five to 15 percent of General Fund total expenditures. We are at five percent right now, so we do want to be cautious. Our fund balance probably will take a little bit of a hit because of the expenditures we're incurring in overtime and what not right now. So, we're not expecting that to go up in any way. That's all we had in this part of the presentation. We're happy to answer any questions you have. I spent a lot of time, as well as our staff yesterday with Corporation Counsel looking at a lot of alternatives and what might be helpful, many of which I mentioned in here. But, if you have questions, we're more than happy to help answer them. CHR. POINDEXTER: Okay, Council Member O'Hara. MS. O'HARA: Deanna, you mentioned the emergency funding that we could pursue, it was $2.3 million or something? MS. SAKO: If we were to do an emergency appropriation, it would be $2.3 million. We currently have $6 million in the Disaster Fund. Of course, $700,000 or a little more of that is a receivable from FEMA, so, there's really about $5.3 million in cash there, as of the beginning of this month. MS. O'HARA: I'm wondering what it's going to take to potentially repurpose the Geothermal Funds? Maybe Mr. Yee needs to be involved in this discussion because some of these impacts, I have to say, in terms of people reluctant to move back and decline in property tax revenues, is related to what that situation has contributed to the natural disaster. MS. SAKO: So, we do have two Geothermal Funds, and I'm happy if Mr. Yee would like to come forward. The first one is the Community Benefit and Relocation Fund. So, that one is where we would buy out people's properties that live in the geothermal zone. We have bought out several parcels already. It's based kind of on the assessed value, so, I'm not sure how that would work going forward. (Note: At this time, Planning Director Michael Yee came forward to address the members of the Council.) Page 15 Hawaii County Council-39 May 22,2018 MS. O'HARA: Well, my concern here is up until—well, this initiated as a volcanic event, which wouldn't have triggered any usage of the Geothermal Funds. But, it has since evolved into a complicated mess and we are sitting on, I believe, Deanna, you can verify about the total of close to $7 million of unexpended funds. I know there's a $1 million cap on the relocation, and it's questionable if this will ever resume that activity in that location. Very questionable. MS. SAKO: I have about $4 million in the Geothermal Relocation and Community Benefit Fund and about $2 million in the Geothermal Asset Fund, but those were very quick calculations I did last night. MS. O'HARA: Yeah, and I've done some previously too. It's actually a little more than four in the Relocation but we have rules in place as to how we can potentially use that. So, it's going to take action if we want to repurpose that, but I just wanted to bring that into play. What do you think, Mr. Yee? MR. YEE: Michael Yee, Planning Director. I think like you said, there are things in place right now that would probably prevent us from just out right using the funds for a volcanic event. However, I think as we've tried to consider how we can rewrite some of the criteria for using those funds, I think obviously, if folks want to bring that forth, we should certainly consider that. MS. SAKO: When we looked with Corporation Counsel last night, the community benefit portion of the fund, I believe Civil Defense is one of the allowed purposes of that. MS. O'HARA: Absolutely. MS. O'HARA: As is land acquisition and we may need to be replacing farmers. I'm already in discussion with the State on this because we do have a lot of large tracts of State ag land and we had a meeting last night with the Department of Ag, the Deputy Director and USDA (United States Department of Agriculture). It wasn't well publicized, so, we didn't have that many farmers. But right now, they're not even aware, they've not been told yet whether they've lost the land that they are using and if it's just loss of crop or if it's actual loss of land. So, we're still in the dark on a lot of that. CHR. POINDEXTER: Are you done? MS. O'HARA: Yes, I'm sorry, I yield. CHR. POINDEXTER: Okay, thank you. Council Member Lee Loy. Page 16 Hawaii County Council-39 May 22,2018 MS. LEE LOY: Thank you, Chair. Thank you, Deanna, for all of these different options and scenarios. My first question is to option, I guess option 1 or 1, 2, 3, 4, is this a comprehensive option or can we cherry pick something out of one? MS. SAKO: Yeah, it's meant to be—these are all options that we can implement even altogether, some of each one. We were not able to come up with $7 million in expense reductions. Too many of our expenditures are mandated by State law, nor do we think it would be the wisest thing to do given the situation we're in. In addition, borrowing from PONC is probably not something we would do right now as we develop the budget. It would probably be something we would save for next fiscal year when we're in the budget and maybe we didn't budget enough, maybe the disaster got, heaven forbid, bigger or cost us more than we anticipated. And during the real property tax rates, we only get one opportunity each year to set those. So, same thing. I mean maybe why we realize probably $3 million is what we're probably are going to take a hit on, there are also additional costs, but that may not be the only way people want to fix it. And then, the GE tax, so it could be a smorgasbord of things. MS. LEE LOY: So, let's talk about that smorgasbord a little bit because clearly, there are timing elements related to those options, right? So, what I just heard you say is if we consider some of these options, for example the real property tax increase, not that anybody is interested in any of that right now, that's going to sunset rather quickly here. MS. SAKO: Correct. MS. LEE LOY: So, that option will quickly get taken off the table. MS. SAKO: Right, rates have to be set no later than June 201h. MS. LEE LOY: Okay, so, June 20'h? And then MS. SAKO: For the GE tax to work, we would have to implement that by June 30'h for that to be effective for the coming fiscal year. Anything after June 30'h, it would not be effective until fiscal year 2020. MS. LEE LOY: So, from a timing perspective, the Real Property Tax and the GE has the closest sunset or deadlines that we would have to—if we use those options. MS. SAKO: Right. Page 17 Hawaii County Council-39 May 22,2018 MS. LEE LOY: And then after that, it would be the borrow from the PONC Fund or reduce expenditures. MS. SAKO: I'm trying to balance everything, the needs of Puna, our financial situation, our bond ratings. I think we want to take some action to generate additional revenue or reduce expenditures now as we adopt the budget and save the borrowing from PONC and those things, if the emergency gets larger in the future. And just—while people are thinking about things, the total acreage, and I believe this is all four shaded areas, is 55,000 acres, or 2.1 percent of our island that's being impacted by the lava right now. I would think our Real Property Tax staff were catching the hint and getting those to us quickly. MS. LEE LOY: I'm going to yield at this time. Thank you. CHR. POINDEXTER: Council Member Eoff, you had your light on earlier, did you want to MS. EOFF: I think Deanna just pretty much answered my question because I was wondering priority wise, whether it's better for us to lookI didn't realize that we could borrow from other funds. MS. SAKO: Right, and it's one of those cases in the Charter that I believe is set up so that if something does happen we have an opportunity. I don't believe it's meant to be our first option, but definitely, as things happen. I mean a lot of the Disaster Fund, the Budget Stabilization Fund and this Emergency Appropriations, they're all set up in cases of a true emergency, if something were to happen during the fiscal year. In some ways, we're fortunate that we have the opportunity to amend the budget that's coming up to try to take that into account, but none of these are easy decisions, as I said yesterday. MS. EOFF: My other question was regarding the emergency or our Disaster Fund. So, you didn't want to borrow from that to the point of it being zero? MS. SAKO: Right. We will be using some of that this year. As I mentioned yesterday, and I guess probably not everybody was tuning in, but, we have not written any of the project worksheets with FEMA yet. They've been onsite and they've been very helpful. We've gotten them to approve projects before we started them, but we haven't actually written up what they call the project worksheets where they actually obligate the funds to us. So,probably at the end of the month, we'll start that process. We have somebody coming out tomorrow that I hope to get more information on that. So, right now, we have to fund, basically, all the cost related to that. So, the $1.4 million in cost that we've incurred to date, some will be coming from the Highway Fund, but the seven hundred some thousand that we've already spent from General Fund, we may not Page 18 Hawaii County Council-39 May 22,2018 have adequate appropriations to cover that. So, we will have to use part of the Disaster Fund, even in the current fiscal year just to cover those costs. MS. EOFF: And when we do receive the reimbursements for the previous events that you mentioned, the earthquake and tsunami and Iselle, et cetera, do those go straight into the same Disaster Fund? MS. SAKO: Yes, the receivable is set up in the fund in which the expenditures were incurred. So, if we spent the money out of the Disaster Fund, then yes, it goes back into the fund. MS. EOFF: Are we expecting any other reimbursements to come in, the ones that are still due? MS. SAKO: I'm expecting all of them to come in, I justI highly doubt if it will be this fiscal year. They are that far behind. MS. EOFF: And there's not a way to get that information? MS. SAKO: If the State could get more staff, then they probably could look at our information more quickly. They've had an unfortunate MS. EOFF: Seems that would help us a lot. MS. SAKO: They've had a unfortunate series of events, including some of their personnel passing away. So, every time somebody starts on it and gets down the road of reviewing our expenditures, something happens and we have to have a new person start looking at it again. So, it has been a very long, drawn-out process. MS. EOFF: It seems obvious that would be the first place to be able to MS. SAKO: The balance that I gave you of$6 million includes those receivables from FEMA. So, we've already taken that into account. MS. EOFF: Thank you. CHR. POINDEXTER: Council Member Richards. MR. RICHARDS: Thank you, Chair, and Deanna, thank you for promising an interesting conversation today, and you guys did deliver. Also, thank you to Real Property for taking the hint for the information. What we're talking about, and I think your fiscal thought process is real sound as far as not wanting to touch any of those funds, because we're talking about cash flow management and the liquidity of the County. So, leaving that available to us, if we get real stuck, is Page 19 Hawaii County Council-39 May 22,2018 probably the best way. The projects that you're talking about for FEMA, and conceptually, yeah, go ahead, we haven't done the paperwork yet, what kind of cash liability are we looking at there for the short-term for the next 90 days? And again, off the top of your head, I realize. MS. SAKO: No, so, based that we spent $745,000 just in overtime, and if I add in the security and other recurring costs, if we say it's about $800,000 for one pay period, that would be $1.6 million per month. So, for 90 days, that would be $1.6 million times 3 or roughly $4.8 million, of which I would expect to get 75 percent back. MR. RICHARDS: At some point. MS. SAKO: At some point, yes. MR. RICHARDS: Which comes back to trying to figure out how to manage the cash flow going forward. MS. SAKO: So, in terms of liquidity, I have already talked to our Treasurer and he's keeping everything short-term. Normally, this coming July, when the first installments of real property tax would come in, we would invest some of that for a little bit longer term, three or four months out. But, we're going to keep everything liquid because we're unsure of the timing of some of the reimbursements. In addition, we've been very thankful that both our federal legislators and our State legislators have been out here to look to see how they might be able to help. But none of that is for sure yet. I'm aware that Kauai received some assistance after their flood from the State, but I really don't know in what terms that is. We're appreciative of the State providing their National Guard and other helpers as well. MR. RICHARDS: And you could actually see the end of that flood coming. This one MS. SAKO: Yeah, this is the most unique disaster I've been involved with since I've been at the County. When we had the 2000 flood, the rain came, it ended, we fixed things. Same thing with the earthquake. It came, it ended, we fixed things. All the disasters have been like that. The 2014 lava was a little bit different. It started more upslope, it crawled down the hill, it did take a structure. It was very scary for the people of Pahoa. We didn't know where it was going, but it was a much slower moving lava. This, I cannot even imagine what some of those residents in that area are going through with not knowing where the next fissure will appear. Not knowing where the lava's going to flow. This is very scary for anybody down there and we don't know when it's going to stop. This is the first time, since the last ash eruption, Page 20 Hawaii County Council-39 May 22,2018 was 1924, I believe, to have both of them occurring at the same time. As Dr. Jim says, we're in unprecedented times. We've never had an eruption like this before. So, we don't have a lot of information to go on. We're hopeful it is like 1955 and it's only 89 days, but time will tell, and we really have no way of knowing. MR. RICHARDS: Okay so, we have a 518 budget in front of us, with the projected reduction in income stream, projected increases in expenditures. Our target is somewhere around $7 million? MS. SAKO: I would be most comfortable if we somehow generated $7 million. Part of that $7 million, $3 million of it would go to replace the expected reduction in property taxes. So basically, I'm saying we overbudgeted our revenue for real property taxes by $3 million and we need to reduce it. And then part of it goI would suggest go directly to the Disaster Fund so that we can cover the expenses related to the lava, no matter which fund they're actually incurred in. Let's say we budget $7 million for next fiscal year and let's say we raise, I'm just going to pick one, but let's say we do it by raising real property taxes. If the event ended maybe midway through the year, and so the expense portion, let's say we didn't use all of it, it would go to fund balance, which would then be able to be utilized in the future year to potentially reduce the rates if needed. The other thing is, we're at the beginning of this disaster. We don't know yet what the impact on tourism will be. I don't know yet what the impact on the values will be for fiscal year 2019. Many of the hotels would prefer we use the income-based approach on setting their values. They're empty, that's going to have a significant effect as well. MR. RICHARDS: To clarify, $7 million, that's a combination of either increasing revenue or decreasing expenses? It could be a combination of the two? MS. SAKO: Somehow finding $7 million yes. MR. RICHARDS: Okay, at this point, I yield. CHR. POINDEXTER: Council Member Ruggles. MS. RUGGLES: Thank you, Chair. Thank you, Deanna, I can tell this has been a lot of work,just in a very short amount of time. MS. SAKO: Yeah, I really appreciate all the awesome staff I have, yes. MS. RUGGLES: So currently, let's see, I have so many questions. The Community Benefit Fund, what is the balance for that? Page 21 Hawaii County Council-39 May 22,2018 MS. SAKO: It's roughly $4 million. MS. RUGGLES: Okay, and as far as the Disaster Fund, you said that there's $5.3 million in it currently? MS. SAKO: Of cash, yes. Of spendable cash. MS. RUGGLES: Okay, spendable. What is the total? MS. SAKO: The fund has $6 million in it, but $700,000 is a receivable from FEMA. MS. RUGGLES: Okay, I see. Thank you. Have we yet used any funds from this Disaster Fund for this event? MS. SAKO: We did back in 2014 for Iselle and the 2014 lava, most of which was reimbursed by FEMA. MS. RUGGLES: Okay, great. Do you know how much we used? MS. SAKO: No, I don't have that with me, but we can calculate that. MS. RUGGLES: Okay. What do you feel would be the max that we could use from this Disaster Fund? MS. SAKO: You know, the whole idea when the Disaster Fund was first set up was to have that safety net. What happened in 2000 is we didn't have a Disaster Fund so we had the flooding, we had a lot of infrastructure repairs that needed to be made, and so, we didn't have a source of funds to really fix those. We were fortunate that year that I believe we had an excess balance that they were able to appropriate, but other than that, they would have had to probably borrow and do bond money. We cannot use bond money for operating cost and a lot of our cost for this disaster are actually overtime and operating costs. So, we want to have at least several million to carry forward for the next time because we do have to front the money. Even though we get FEMA assistance, we always have to front that money until they reimburse us. So, by having the $5 to $6 million in there at all times, I think the goal in the County Code is to have it reach $10 million, but by keeping that $5 or $6 million, that means we'll have the cash to kind of front for the next disaster. MS. RUGGLES: Right. I'm wondering how much, if at all, would you feel comfortable taking from this fund? Page 22 Hawaii County Council-39 May 22,2018 MS. SAKO: What we are taking right now is whatever it's going to take us to get through the end of the fiscal year. Because the 250 Disaster Account in the General Fund is not going very far for this disaster. So, we'll probably be using part of it but then, like I said, we do hope to be reimbursed by FEMA. MS. RUGGLES: Okay. In option one, one of the expenses that was proposed to cut was reduced R & D ag, tourism promotion, and business development. Do you know what that number would be? MS. SAKO: I'm hoping Nancy Kelly is bringing up her sheet. I left that on my desk but it was like $10,000 here and $20,000 there. One of the things we're realizing is that we can't really cut tourism. We can't really cut ag promotion. Our farmers and our businesses need that money more now than ever. We definitely got to do something to kick in gear our economy for this coming year. We already have people thinking that the whole island is impacted and not to mention the whole state. So, now that we know it really is only 2.1 percent of our island, it does help to tell that story. Yeah, it was $45,000 in total across all of those areas. And again, we started working on that a little while ago when we thought we just had to find $1.2 million, and before we started realizing the true impact it's having on ag and the true impact it's having on our tourism. MS. RUGGLES: That's all the questions I have. I think that we have a good variety of options here that we can start exploring. I'll yield at this time. Thank you. CHR. POINDEXTER: Council Member Chung. MR. CHUNG: Hi, Deanna. You did touch upon this subject, and my question may have been asked and answered, but we're all reeling, so, I apologize if it was. MS. SAKO: We are, yes. I can tell MR. CHUNG: But, I'm talking—I want to ask a question about this emergency ordinance in Section 3-11. You talked about it, as well as—it relates to Section 10-8, appropriations and supplemental emergency. What would be the purposes of an emergency ordinance? Is it only to appropriate monies under an emergency or are there other applications for this, and to borrow? MS. SAKO: There probably are other applications, especially if life, health, and safety are impacted. However, they're not to be used to levy taxes, which is why we have only that one opportunity to set the real property tax rates by June 20'h. They may not be used to authorize borrowing or grant, I mean on these particular emergency ordinances. So, the emergency appropriations are the ones under Page 23 Hawaii County Council-39 May 22,2018 10-8. Joe may have other ideas but I think emergency ordinances have been utilized before, but in terms of money itself, it's limited to that 2.3 million based on our current numbers. MR. CHUNG: Right, I mean because it's kind of a strangely worded Charter provision, this emergency ordinance. It tells us what we can't do and it refers us to a different section relating to appropriations. But, I'm just wondering if there's anything else out there, and probably not because it's not explicit. MS. SAKO: Right, there's not a whole lot of other options. We've been really thinking about it since May 3rd and trying to go through and determine what all of our options are. If this is a short event, then, yeah, we might be okay, but there's no signs of it stopping is the problem right now. MR. CHUNG: Then, I have a question of our County Clerk. You know the deadline for submission of Charter amendment proposals was in early May, but what if we utilized this emergency ordinance provision to fast track Charter amendments because it's only one reading? Would that be possible? MR. MAEDA: I'm not really sure if that would be possible or not. So, the emergency ordinance would only require one reading as opposed to the three readings? MR. CHUNG: Right. MR. MAEDA: If we could do that, certainly we could get it in time because we would have enough time still. MR. CHUNG: Or my other question would be to the Chair, because we need three readings, but given the exigent circumstances that we're faced, and I'm sure many of us have ideas of what we could do within the context of the Charter, I'm just wondering, we need three readings, we're already behind if we go on our regularly scheduled rote, but would it be possible now for us to have a special meeting? CHR. POINDEXTER: Can I call up our Corporation Counsel, Joe? Because I don't mind doing the extra meetings, I just need to know if we're going to be okay with that. (Note: At this time, Corporation Counsel Joseph Kamelamela came forward to address the members of the Council.) MR. KAMELAMELA: Okay, that's a good question. Actually, a similar question came up previously on something else, and my answer to that is going to Page 24 Hawaii County Council-39 May 22,2018 be no. When you look at the Charter, it's basically a form of the government, and so MR. CHUNG: What question are you answering, first of all? MR. KAMELAMELA: It's fast tracking the Charter amendment. MR. CHUNG: Through the emergency MR. KAMELAMELA: Yeah. MR. CHUNG: Okay, never mind that. MR. KAMELAMELA: Okay. MR. CHUNG: Let's just go with the three readings. Let's try to be real safe about this. MR. KAMELAMELA: Okay, so that's a different question. CHR. POINDEXTER: Okay so, can we look at maybe the dates? MR. CHUNG: Yeah, so, we have to have three readings. MR. KAMELAMELA: Right. MR. CHUNG: I mean this is actually the Chair's question, but we have to have three readings, but does it have to be on regularly scheduled meeting dates, or can we go first Wednesday of June, second Wednesday of June, andno, second, third and fourth special meeting? Can it be done? Can the three readings be done with a special meeting, as long as notice is given, proper notice and everything, no problem? MR. KAMELAMELA: Exactly. Yeah, as long as proper notice has been given, you can always do a special meeting. MR. CHUNG: Okay. MR. KAMELAMELA: Okay, so that's the question? MR. CHUNG: Never mind about the fast-tracking part. MR. KAMELAMELA: Okay, thank you. MR. CHUNG: Okay, thanks, Joe. That's all I have. Page 25 Hawaii County Council-39 May 22,2018 MS. SAKO: Can I just add one thing? As a reminder, also, when it comes to revenues and just as you're considering all the options, as a reminder, the State Legislature did vote to put on the ballot this year the real property tax surcharge for investment property to be used for education. We are not sure yet the impact that's going to have on us in the future. As you know, we try to tax those same properties, which is one of the reasons we would like to, at some point at least, make our revenue stream more diversified. CHR. POINDEXTER: Okay. I just got to ask Council Member Chung if he's done. Okay, Council Member Lee Loy. MS. LEE LOY: Thank you, Chair. Since we're kind of looking at a smorgasbord and possible Charter amendments, I'm looking at Section 10-12, Special Funds. "Upon recommendation of the mayor the council may by ordinance abolish or establish such special funds as may be necessary for the proper and efficient segregation of fiscal operations of the county." So, when I look at our budget, we have the Beautification Fund, we have the Bike Way Fund. Are these other funds that we could maybe shift to help with some of the shortfalls, but still require some, and I'm not looking to abolish them, but maybe suspend them? MS. SAKO: Right,just to suspend them. Joe probably could speak to it better. Some of those funds are actually established by HRS (Hawai`i Revised Statute), and so, the Governor's proclamation may impact those but probably not the Mayor's proclamation. MS. LEE LOY: Yeah, Mr. Kamelamela, I mean if we're going to look at all options, and I appreciate everything Deanna put together and her team, and they're all really smart, but we might as well try everything and see what we can get. I mean what I'm hearing is we're looking at $7 million and possibly growing. We might need more than just an amendment to borrow from the PONC Fund or reduce expenses. MS. SAKO: And just to put it into perspective, Bike Way Fund has $650,000, and Beautification Fund has about the same amount. MS. LEE LOY: So, $1.2 million, right? MS. SAKO: Yeah. MR. KAMELAMELA: This is Joseph Kamelamela. So, I do agree with the statement made by the Finance Director. We have to look at these State laws. MS. LEE LOY: Okay, could you follow up and provide that feedback to us because if we're going to try and do some amendments or work within the confines of our Charter but use some emergency relief provisions, I want to be Page 26 Hawaii County Council-39 May 22,2018 able to use everything we can. Again, I appreciate what the Finance Department is exploring, but I think we can explore a little more. That's my point. I yield. CHR. POINDEXTER: Council Member Richards, you had your light on, and then I'll go to Council Member Eoff MR. RICHARDS: Thank you, Chair. A couple of questions, Deanna, and I don't even have this information available to you at the moment. But, we talked about the $7 million number, and—have you looked at budget reductions as far as where we can cut expenses? First question. MS. SAKO: We did in option one, that total that we came up with was $1.2 million. MR. RICHARDS: Okay, comment on some of the cuts, given where we are with our tourism, this is just editorialized. I don't think cutting the tourism promotion budget is a good idea. MS. SAKO: Right, we realize that now, too, yes. So, if we took out that, I mean we'd be at roughly $1 million. MR. RICHARDS: Then,just looking backI'm constantly looking back at our history. I know Kalapana went through an event back in the 1980's, early 1990's if I recall right, and I was trying to look it up. How did the County—what kind of year did that start and how did the County manage that? What I'm looking for is relative numbers that they dealt with as far as finances and then maybe there's some things that we don't need to reinvent that were already tackled at that point. MS. SAKO: We can go back and check, but one of the things about that event was it covered a period of almost 20 years I think. When it first started, it took out some homes and then I think it was staggered over numerous years. So, I believe the disaster section of the Real Property Tax Code has been in there for a long time, so helping individual owners. But, this kind of impact in terms of having an eruption along the rift zone and being in a neighborhood, I don't think it's like that. I think all the other flows have come down towards the MR. RICHARDS: No, I get that point. Leilani is well, I think all of these things have their own unique aspects of it. I'm trying to see if there's just portions of it. MS. SAKO: No, I agree, and we're all about not recreating the wheel, but we did contact one of our former Real Property Tax Administrators who's been here since 1980 when Real Property Tax came over from the State. Even he doesn't remember it having such a large impact. I think it was just a few properties at a time. Page 27 Hawaii County Council-39 May 22,2018 MR. RICHARDS: If I could ask, could we get a history of the real property tax annually for the last maybe since back to 1980? If we could look at that then maybe correlate it to anything that was going on at the time. And again,just, I don't know if that will give us any answers but it's more information. I yield. CHR. POINDEXTER: Thank you. Council Member Eoff Wait, hang on one second. Council Member David never had a chance to speak, even in the first round, so I'm going to allow Council Member David, if that's okay. Thank you. MS. DAVID: Thank you, Chair. Ms. Sako, I just hadearlier, you said that given our situation, between $3 and $7 million would be the number we're looking for, about. Anywhere from—okay. MS. SAKO: Yes, three to seven. MS. DAVID: Yeah. So MS. SAKO: And again, $3 million is what we do expect real property tax loss revenue and $4 million would be to cover a year's worth of overtime and cost, just our 25 percent. MS. DAVID: Right, and given the discussion we've been having about potentially reducing borrowing from PONC, if what you're saying, the 1.2 reduction in your reduced expenses, you know, the amounts that was put back into our contingencies on your PowerPoint, that you said totaled $1.2, then we're talking about possibly the Bike Way and Beautification Fund around 1.3 and then maybe emergency borrowing from PONC, maximum is $1.2 million. MS. SAKO: $2.3 million. MS. DAVID: $2.3? MS. SAKO: But we would have to wait to do that until next fiscal year because—and that would have to be repaid back and I think even using some of these special funds they may also have to be repaid back. We would have to look at that more carefully and I believe that's what Mr. Kamelamela is looking at now. MS. DAVID: Right, and if he could also—even though there's a repayment because maybe could we extend that repayment timeline if we have to, given that this is an emergency situation, down the road? MS. SAKO: I fully understand what you're saying and I agree. One of the things I have been told is because that's in the Charter, that does not get overridden with Page 28 Hawaii County Council-39 May 22,2018 the disaster proclamation. Things in the County Code can but not the Charter requirements. MS. DAVID: I see. That's where maybe a Charter amendment would come in. MS. SAKO: Right. MS. DAVID: Okay, then if we eliminate that and the potential for the tourism, that makes it 3.5, without the PONC, but we're still looking for the total, the best scenario. Okay. Alright. I just wanted to keep thinking. MS. SAKO: My feeling was that we probably need to adjust the budget by the $7 million now and then the $2.3 million that we'd be allowed to do under the disaster or emergency section, would actually have to be utilized next year in case the cost even go higher. I mean I think that's the unfortunate thing about this event, we're not sure what's going to happen yet. But, we're definitely appreciative of the things we do have in place, like the fuel tax and what not that we can utilize that for roads and the emergency in clearing out Government Beach Road and allowing people to evacuate when necessary. MS. DAVID: I see. Okay, I yield for now. Thank you. CHR. POINDEXTER: Okay, thank you. Council Member Eoff MS. EOFF: Thank you. My thinking was kind of along the same lines as Ms. Lee Loy and Ms. David because there's so many moving parts. But, there's some things that we can be assured of, like where we are allowed by disaster mechanisms to borrow or even to—so, the timing is also something that you're phasing in the need. So, as—even if we were to consider a Charter amendment, even that would put the ability to access that extra money would be way down the line, too, plus, there's an uncertainty about the voters passing the Charter amendment. MS. SAKO: I've read the Charter many times, but yesterday with much more detail probably than in the past. One of the things I did realize is the Charter is really set up to protect the public and our voters and not to put them in a precarious situation. So, even if we were to borrow, having to payback by July 1st of the following fiscal year, is really to protect them from digging ourselves into too big a hole that they would have to make up through like real property tax increases in the future. So, I applaud those who really have created the Charter over the years. It really was set up to protect the tax payers. While we want to look at all possibilities, I think Joe can help us determine which funds would have to be paid back. Let's say he determines Bike Way Funds, we can utilize that now but we'd have to pay it back. Those are going to be the key Page 29 Hawaii County Council-39 May 22,2018 factors here because if we could utilize them, great. Other ones, maybe not, but making sure we do pay it back as mandated by the Charter. We're not trying to put anyone in this situation. None of us could foresee this disaster coming. Yes, we have hurricane season, but we don't have lava season. Yeah, it's all the time, you're right. I mean it's just Kilauea has been erupting since 1983, and I still remember the article my mom sent me when I was in college. So, it's a long-time event, sometimes it's more active than others. MS. EOFF: Did you want to add something because I did have a different question. MS. CRAWFORD: If I can just briefly. I'm Nancy Crawford, Deputy Finance Director. I know you're all very well aware of this, but I just thought it bears repeating that while we are looking at sort of, immediate costs and immediate reductions in real property tax revenues, this is not the revenue side of it. It may end and we may be able to cover all the expenditures, but the revenue side of it is not short-term. This is a long-term effect, certainly on the lower Puna area and likely in the Ka'u area. As Deanna mentioned before, given revenue losses to individual businesses and the resorts, what we're planning ahead for the next fiscal year's values and the year after that, and probably after that, I think it's hard for any of us to imagine a very quick rebound in property values here. So, I just thought that I would mention that again for the benefit of everyone that this is—that we're trying to look at something short-term here but it really is going topayback is going to be difficult going forward. Thank you. MS. EOFF: And could you justI know you've explained this before but it's still a little bit unclear to me, is the uses of the Geothermal Funds, the two accounts, and is any of that money available? MS. SAKO: Mr. Yee I'm sure will correct me if I'm wrong. So, there are two funds, one is the Relocation and Community Benefit Fund, and initially, it was just for relocation, and both of these were set up, I believe, with the license that for the geothermal site, PGV (Puna Geothermal Venture). So initially, it was to relocate people within that area, should they so choose because we weren't sure, I guess, of the possible impacts of having the geothermal in the area. So, you could put yourself on a list and we would buy your property and then we'd sell it to get more money to buy more properties. At some point in time, probably about 10 years ago, we created the community benefit portion. That was to be able to do roadwork and whatnot because there had been some money that was accumulating in the fund. One of the purposes that was added was the Civil Defense aspect as well. So, the purpose—that fund Page 30 Hawaii County Council-39 May 22,2018 can be used for relocation expenses, including the appraisals and all of that. In addition, for road improvements, water infrastructure, land acquisition, Parks and Recreational facility needs, Civil Defense, and mass transit improvements, and it's specified for lower Puna area and, it's defined in here. I believe the Planning Director is the one that approves those expenses or approves the allowable expenditure before we spend it. Then there's also the Asset Fund, the Geothermal Asset Fund, and that one, I believe, was set up so should there be some kind of accident or other—something happened at the site, that those funds could be used to, whether it's to help evacuate the area or clean up or anything like that. So, those are kind of the two different funds and kind of the main purposes. So, there's a little over $4 million in the Community Benefit and Relocation Fund, and then there's about $2 million in the Asset Fund, I believe. MS. EOFF: So, those aren't really available to us in this situation for any MS. SAKO: I think the community benefit portion would be for Civil Defense, but I'm not sure if there are people who would try to get us to repurchase the home. I'm a little confused. I don't have the Planning Director's rules in front of me in terms of how we set the price, but it is based on assessed value, of which those values would be being reduced right now. MS. EOFF: Madam Chair, can Ms. O'Hara chime in? I think she CHR. POINDEXTER: Is it MS. O'HARA: Just to add to Deanna's explanation, with the Geothermal Asset Fund, which is there to mitigate the negative impacts of geothermal, it also—the rules require that it be approved through the commission. So, it's a little bit lengthier process than the Relocation and Community Benefit Fund, which is approved by the Director and the changes in the budget comes through us. CHR. POINDEXTER: Thank you. Council Member Ruggles. MS. RUGGLES: Thank you. I'm coming up with a lot of different ideas here and I'm wondering what the process is for proposing these ideas. CHR. POINDEXTER: In funding? MS. RUGGLES: In making up for the $3 million reduction in revenue for real property tax. Page 31 Hawaii County Council-39 May 22,2018 CHR. POINDEXTER: Do you want to just talk about it? Because I don't know where you're going with this yet, if you're going to be proposing amendments or if you want to ask the Director if some of your ideas would work. MS. RUGGLES: Okay, great. So,just off the top of my head, it looks like we have $6 million in the Disaster Fund with the $700,000 in receivables. My initial thought wasI mean when I asked you about the Disaster Fund, I'm having a hard time getting an answer as far as how much you think would be available for us to use now. MS. SAKO: I think I did answer that we have $6 million in the fund but only $5.3 million cash and it was $1.6 million or so in ongoing expenditures per month. So, we'd be at $4.8 million in three months, and I don't know when we'd get FEMA reimbursed. So, I'm kind of looking at it that—even just from this fiscal year, May and June expenditures that we're incurring, it could kind of wipe out the fund already. There would be little left until we got reimbursed by FEMA. But ongoing, we want to keep at least $5 to $6 million in there because that is kind of our cost or our fund to kind of front the cost because every disaster is like this. We incur the cost and then FEMA reimburses us at a later date and only 75 percent is reimbursed. So, I'm kind of looking at there's not a lot in the Disaster Fund right now beyond this fiscal year until we get reimbursed by FEMA. MS. RUGGLES: Okay, so, would you say that there's—is there any that we could use in the Disaster Fund for this disaster? MS. SAKO: Well, we are. I guess what I'm trying to say is right now, in this fiscal yearso, one of the things to try and clarify is we still—May and June of this year, are still in fiscal year 2018, in which we only budgeted $250,000 in our General Fund Disaster Account. We still have to pay for the cost in this fiscal year and the Disaster Fund is going towards that. So now, the budget before you is actual for this upcoming fiscal year, which starts on July 1, so, the fiscal year 2019 budget. I don't think we're going to have anything left in the Disaster Fund for fiscal year 2019 until at some point when we get reimbursed by FEMA. MS. RUGGLES: Okay, so the $5.3 million that's in there now is going to be gone by next fiscal year? MS. SAKO: It's very likely but it depends on the actions that are needed and that's the difficult part for me. Once we get confirmation from FEMA that they'll be reimbursing us and we'll get, hopefully, our first half portion of that, that will restore some dollars in there. But, I have no idea on the timing and what I've been trying to explain as well, is FEMA keeps changing the rules and their procurement guidelines are very stringent now and we're having a special training Page 32 Hawaii County Council-39 May 22,2018 tomorrow. So, even though we typically expect to get 75 percent back, it's not guaranteed because of their new rules as well. MS. RUGGLES: Okay, and so for the expenses that you just—you said the overall impact to the budget, $3 million reduction and our PT (Property Tax) revenue, and $4 million increase in cost. MS. SAKO: Right. MS. RUGGLES: Does that current fund in the Disaster Fund help cover the $4 million increase in cost? MS. SAKO: Well, because the $4 million was calculated as roughly $800,000 in ongoing cost per pay period, not only employee cost but also things like security and food and things like that, so, that would be $1.6 million per month. So, when we did it last night, I looked at that $4 million is actually only our share or the 25 percent. But, it's a new event and we are having new cost all the time. But, if we did it 12 times .25, our cost if it was really $1.6 million per month, I had based on a little bit lower number, our 25 percent share would be $4.8 million. So, when I did it last night, I was assuming the $4 million cost is just our 25 percent share of this disaster. MS. RUGGLES: Okay. MS. SAKO: That we would be getting reimbursed by FEMA for the rest of it. Of course, we have no idea how long this event will continue, not to mention even if the lava stops, I don't know how long it will take for the gasses and other things to stop or when the ash would stop. I mean there's a lot of different things going on and this one, it's a much different disaster than we've had before. MS. RUGGLES: Okay, so just to be clear, as far as the Disaster Fund applies to this $7 million deficit we're trying to make up to, those funds are not available to us. MS. SAKO: Right. I believe we're going to go through those pretty much all this fiscal year. MS. RUGGLES: Okay, thank you. Well, that changes everything. I think that MS. SAKO: We're not in an easy situation and I tried really hard to say that yesterday. MS. RUGGLES: I think that utilizing the Geothermal Fund is a good idea, simply because after this event, it's not smart of us to continue geothermal down there. It's just nonsensical, but that's just my personal opinion. I don't have the Page 33 Hawaii County Council-39 May 22,2018 authority to even make that decision, but, I personally think that using the Geothermal Funds for this would be appropriate. There's also—and this, what I'm talking about is the Community Benefit Fund, not the Asset Fund. MS. SAKO: Just like the $4 million MS. RUGGLES: Yeah, and borrowing from PONC or the Bike Way Fund, I think is also good options. I understand now that weI mean for the time being, when I first heard the options of the general excise tax and real property tax, I personally would like to do everything we can to not have to increase taxes. So, if we can borrow or use geothermal, use PONC Funds and use the Bike Way Fund instead of increasing taxes, I think we should go that way. MS. SAKO: Okay so,just—not to interrupt you but I just want to be sure we're all on the same page. While I totally agree borrowing would get us through, it would only really kick the can down the road because we have to repay them by July 1, 2019, which would be fiscal year 2020. The only way we're going to be able to do that is by raising some kind of tax or some kind of revenue. And as we've been trying to explain this, we believe this would be a slow recovery in real property tax values as well. Just to clarify. MS. RUGGLES: Thank you, Deanna, that's where I was going. Thank you. So, with that, I think looking back on different scenarios that can help protect people who are most vulnerable to tax increases is a good option. I'll yield at this time. Thank you. CHR. POINDEXTER: Okay, thank you. Let me go to Council Member Chung first. Go ahead. MR. CHUNG: I just wanted to say because this is going to be a protract discussion and it's going to be a work in progress because actually, I guess you guys are giving us options. It's going to be up to us to really balance the budget right now. MS. SAKO: It is but definitely, we're willing to work with you guys and if you need us to help prepare amendments or to help run other scenarios. MR. CHUNG: I'm not in any way suggesting that you guys are leaving it up to us. MS. SAKO: No, but I mean we figured today was a good chance to have discussion because I don't know what everybody feels. I think probably somewhere is a combination of all four maybe, but we're in unprecedented times and none of us have all the answers. Page 34 Hawaii County Council-39 May 22,2018 MR. CHUNG: Yes. I'll just to say right now, I'm not going to be supporting any real property tax increases, that's out of the question. I'm not going to be supporting borrowing money from any funds because as you said very clearly, it's just kicking it down just a year from now. That's ridiculous. So that, as far as I'm concerned, that's off the table. I will tell you this. I'm getting second thoughts about the GE, too, if it relates to this emergency. That's not what I intended. My support was never based on balancing the budget or anything like that. It was always to look prospectively, to diversify our revenue stream. My support was never to use it as an emergency stopgap measure. So, I mean, I still support it somewhat, but you would think logically that more than ever I'd be supporting that thing. But actually, it never was my intent to use it as an emergency thing. Now, we just have to deal with it, like any household, you got an emergency, you got to deal with it already. So, if we got to cut services, we got to cut services. Thanks. CHR. POINDEXTER: Council Member Lee Loy. MS. LEE LOY: Thank you. I appreciate what Ms. Ruggles is trying to do. She's trying to move us in a direction on where we go from here. And then Mr. Chung just kind of continued that conversation. I, too, will not support another real property tax increase. I think the other part of this conversation that is missing is not only are we trying to provide funding for this dynamic event, we have to start looking down the road. I had an amendment that moved money from tourism, but now more than ever, I am reconsidering that thought because we need to start thinking about revenue generation through our tourism industry, which we are getting a lot of mixed messages, not only here, but abroad. So, you know, some of the GE numbers were based on a very robust tourism number that we're seeing is tapering down based on the events. So, as we discussed this as colleagues, I don't want to forget the piece of, yes, we have to take care of this emergency situation, but we also have to plan for the future and ensure that there will be some revenue generation two, three, five years down the road, which will then, hopefully, create a more robust real property tax collection. I mean I think we're having to look at this through a multiprong approach, and that's what I needed to share with the rest of you as far as where my thoughts are going with all of this. I yield at this time. Thank you. CHR. POINDEXTER: Council Member O'Hara. MS. O'HARA: Okay, we do have options, but none of them look really that great; and I'm going to bring Mr. Yee back up, if he'll come. (Note: At this time, Planning Director Michael Yee came forward to address the members of the Council.) Page 35 Hawaii County Council-39 May 22,2018 MS. O'HARA: As Deanna has pointed out several times, the surplus that we have in the Geothermal Fund lies within the Community Benefit Fund. This is the most accessible fund and it is up to Mr. Yee to make approvals on that fund. If we're looking at an amount in the neighborhood of$3 million, we do have that in that fund, without violating the rules as they currently exist. What are your thoughts about releasing that? Because that's not borrowing, this is money that we have in the bank? MR. YEE: Michael Yee, Planning Director. Not too long ago, there was a proposal to fund Wi-Fi through the Benefit Fund and we heard a lot from the community about using those funds for a community benefit and not for possible relocation. That was a very vocal outcry against it. Given that there's the other half of it, not financially but the other side of it, which is relocation given current events, would we not see an uptick in folks wanting to relocate now? So, that's one question that I'm not sure. If people were against it for Wi-Fi, are they going to be against it to use it for a lava event? MS. O'HARA: Mr. Yee? MR. YEE: Yes. MS. O'HARA: That would presume that the plant was operating. The plant is no longer operating. This is where we find ourselves today. If they can cap the 1 Ph well and quench it, or whatever the correct term is, the community will be a lot safer. The outcry wasn't just about relocation, it was about expending the money to keep the community safe. And when and if PGV ever attempts to come back online, which it may not, the longer that plant stays shut, the more likely it never will reopen. That's just the facts. I don't know that you'll see an outcry from those people on use of this money to mitigate what's happening in Puna. I don't think you will. I have been dealing with them on a daily basis, many of them are evacuees and many of the people that you spoke with are not in the neighborhood right now. They're staying with friends and relatives elsewhere. But, I am encountering them and talking to them online on a daily basis. That was a different situation. That was business as usual. This is not business as usual. The geothermal plant is shut down and the likelihood of it reopening, we don't know. That's going to be up to the public in a large regard because there will be a huge, huge response from the public if that plant is attempted to be reopened in the future sometime. That's all I can tell you. MR. YEE: Well, in response to that, I'd say the fact is it's not completely shut down and it doesn't mean we won't get applications for relocation. And to draw a conclusion today that it's pau and all done and we can start expending, I think is premature to say that too. Given the timeline of having to make decisions around Page 36 Hawaii County Council-39 May 22,2018 the budget, I don't know the likelihood of that. Again, I'm not saying we can't use it. I'm not saying I wouldn't forward it as a request to you folks, but I would expect that you're going to have to listen to what the folks impacted by PGV, what they're going to feel about it. I mean I wasn't around when they created this fund and have questioned about it in the past. MS. O'HARA: I would imagine they would say we can use it as long as we prevent it from reopening. That's probably going to be the tune that comes out of this. That's actually, in my opinion, a reasonable request given the course of events here. HELCO (Hawai`i Electric Light Company) is not having a problem keeping the lights on. We have excess capacity without PGV. They're already planning a future without PGV. I've met with them and continue to meet with them. But as far as the fact that PGV has not left the island, but they are not operating, which means we have no revenue coming into that fund anymore. I think we're still holding three unsold homes, which will probably be worth about a nickel on the dollar right now. But other than that, there's not going to be any revenues. That's from the royalties of the sale of electricity to HELLO, which is no longer being produced. What it took to get them to get the pentane offsite was ridiculous. The public is not real happy. The reason they're not happy is they took forever to start quenching the wells and they're still not quenched because the one that they're having problems with has been a problematic well for 30 years. The public knows all of this. All these facts are recorded. So, I thinkI kind of understand the public view on PGV, they want to see that it remains permanently closed. I know the problem for HELCO is it reduces the percentage of their profile from renewables, which is a problem given the state's goals to get 100 percent renewable by 2040. Still yet, they have other options for bringing renewables online and they do have enough capacity in their existing plants without PGV being online. So, that's going to make that argument even more strong to keep it from coming back online. I can't tell you what the outcome will be. I'm not going to take sides in this argument, I'm just analyzing what I'm seeing in the public and what the facts are in terms of generation right now. So, that is the most easily available money that we have at this point in time and because it only takes the Director's discretion to release it. The rest of the funds we would be borrowing from to pay back. This is not a pay back, necessarily pay back situation. It has put the community through a lot of trauma, the risk that they are concerned about because of the slow response of geothermal on all of this, the pentane and the closing of the wells. So, I think we Page 37 Hawaii County Council-39 May 22,2018 have an argument to make here. I just wondered if you want to mull it over because it's a very important piece. MR. YEE: I'm just going to reiterate that it's not about me just releasing the funds, okay? It's not that simple. I think—again, I'm not here to support or not support PGV, that's not the question. The ordinance was written partially for the relocation of folks impacted by the PGV. I get that if the plant remains closed, that could be kind of a moot question at that point, but we're not at that determination today. And again, I don't know how fast we can act on these things by the time a decision for budget needs to be made. So again, I'm open to it but I don't have a conclusion for you today. CHR. POINDEXTER: Thank you. We're going to take a 15-minute break, but I see Council Member Chung, so maybe just right after your MR. CHUNG: I have a question though. CHR. POINDEXTER: Sure. MR. CHUNG: Given the nature of this matter, are we going to get to speak more than three times? If not, I'm not going to say anything. You know why, I only talk one minute at a time, right? CHR. POINDEXTER: No, definitely, I'm just keeping track of how many rounds so everybody has a fair time. But, go ahead and then we'll take a 15-minute break. MR. CHUNG: I just want—every so often, I just want to give my colleagues a glimpse into what I'm thinking about in terms of things when we formulate some kind of decision. I certainly understand where Ms. O'Hara is coming from. She is fighting—she has the pulse of that community and their welfare in mind. But, for the same reasons that I eventually voted or stated my opposition to using some of those geothermal monies, might be a little different fund, but those geothermal monies for some computers or whatever it was down at Pahoa, I got to say, it's probably an improper use of the funds. It's not geothermal related. I mean that's just my thought. I don't make that decision though, but I got to agree with Director Yee in many regards. I just had to state my opinion on that. Thank you. CHR. POINDEXTER: Okay, thank you. We're going to take a 15-minute break. Thanks. Recess: At 11:29 a.m., the Chair called for a recess. Reconvene: The meeting reconvened at 11:59 a.m. Page 38 Hawaii County Council-39 May 22,2018 CHR. POINDEXTER: I'd like to call this meeting out of recess. Okay, Council Members, we're still on the motion to amend 110 with Draft 2, any other discussion? I'm not seeing any discussion; do we want to amend it and then go into the communications to amend? Okay, all those in favor of amending Bill 110, Draft 2, please say "aye." You know what, can I take back that vote? I didn't call it out yet. MR. HENRICKS: Yeah, as long as you don't announce the results. CHR. POINDEXTER: Because she had asked if she could take a phone call and I said yes. So, can I just recess for about a minute? I'm just going to check MR. HENRICKS: Yeah, and for the record, you have not called the vote yet. CHR. POINDEXTER: I have not called the vote. Thanks. Recess. Recess: At 12:00 p.m., the Chair called for a recess. Reconvene: The meeting reconvened at 12:03 p.m. CHR. POINDEXTER: I would like to call this meeting back to order. MR. HENRICKS: I'm so sorry. I wish you had taken a little longer. Can you take a short recess? I just need to clarify something before we move on. CHR. POINDEXTER: Okay, short recess. Recess: At 12:03 p.m., the Chair called for a recess. Reconvene: The meeting reconvened at 12:03 p.m. CHR. POINDEXTER: Okay, I need to explain early what had happened early on. When we had Bill 110 read into the record and then Council Member David made a motion to approve Bill 110 and file all communications, then we had the motion and the second. We shouldn't—even if she moved to approve it, we should not have approved it because that would have canceled all discussion because we were looking at the older budget, before it was amended. So, we shouldn't have even voted on that Bill 110 to approve it and file all related communication. So, we're going to need a motion toClerk, do you want to explain it better? MR. HENRICKS: No, you did fine. So basically, the bottom line is there should not have been a vote to approve Bill 110 because that would basically, sent Bill 110 to second reading, which is not what we want. But, before we move to the vote for reconsideration, on the vote on 110, we should remove the amendment from the floor, because it's kind of still out there and we can't go that Page 39 Hawaii County Council-39 May 22,2018 far backwards until that'sso, somebody just needs to withdraw their motion to amend with Draft 2. Withdraw Motion Ms. David withdrew her motion to amend Bill 110 with the To Amend: contents of Comm. 755.10. CHR. POINDEXTER: Okay. MR. HENRICKS: And of course, that can be brought back forward. CHR. POINDEXTER: Right, so now I need acan I get a motion to reconsider? Vote on Motion to Ms. David moved to reconsider the vote taken on Bill 110. Reconsider: Seconded by Mr. Richards and carried by the following (Approved) voice vote: Ayes: Council Members Chung, David, Eoff, Kanuha, Lee Loy, O'Hara, Richards, Ruggles, and Chair Poindexter—9. Noes: None. Absent: None. Excused: None. MR. HENRICKS: So, now we're right back to where we were before with Ms. David's motion to approve Bill 110, seconded by Mr. Richards, and now we can have a motion to amend Bill 110 with Bill 110, Draft 2. CHR. POINDEXTER: Right. Okay, so, I think we got enough information or everybody felt they had enough information at this point. So now, we want to take a vote on MR. HENRICKS: Just need to make a motion to amend to Draft 2. Vote on Motion to Ms. David moved to amend Bill 110 with the contents of Amend: Comm. 755.10. Seconded by Mr. Richards and carried by (Approved) the following voice vote: Ayes: Council Members Chung, David, Eoff, Kanuha, Lee Loy, O'Hara, Richards, Ruggles, and Chair Poindexter, —9. Noes: None. Absent: None. Excused: None. Page 40 Hawaii County Council-39 May 22,2018 CHR. POINDEXTER: Now, we are on Bill 110, Draft 2. Council Member Lee Loy. MS. LEE LOY: Thank you, Chair. Thank you, Deanna, for all the various options and the robust conversation we had about different ways to balance this forthcoming budget, but, we also discussed a lot of different revenue streams and—which is raising some concerns in my head. So, I think what I'd like to do is request an executive session pursuant to rule two of our Council Rules and procedures and then Hawai'i Revised Statute, Chapter 92-5(d), I would like to convene in executive session to consult with our board's attorney to discuss questions and issues pertaining to the Council's powers, duties, responsibilities, and liabilities. Vote on Motion to Ms. Lee Loy moved to enter into Executive Session in Enter into Executive order to hold attorney-client privilege discussion Session: regarding Bill 110, Draft 2, as authorized by (Approved) Section 92-5(a)(4) of the Hawaii Revised Statutes. Seconded by Ms. David and carried by the following voice vote: Ayes: Council Members Chung, David, Eoff, Kanuha, Lee Loy, O'Hara, Richards, Ruggles, and Chair Poindexter, –9. Noes: None. Absent: None. Excused: None. Recess: At 12:09 p.m., the Chair called for a recess to clear the room. Reconvene: The meeting reconvened at 12:51 p.m. CHR. POINDEXTER: Okay, we are calling this meeting back to order. We are on Bill 110, Draft 2. We're still in discussion. Council Member David. MS. DAVID: Thank you, Chair. While we're on discussion on trying to find revenues, I would like to call Mr. Kucharski up, or Director Kucharski because just to explain a potential for revenues from the County, and this is relating to the possible revenues from solid waste and disposals. (Note: At this time, Department of Environmental Management Director William Kucharski came forward to address the members of the Council.) MS. DAVID: Right now, I believe you said we are—we do not the County pays for all of the disposal fees, right, for our solid waste? Page 41 Hawaii County Council-39 May 22,2018 MR. KUCHARSKI: Bill Kucharski, DEM. Yes, currently, we collect or we generate somewhere in the area of 200,000 tons of waste per year. Of that, about 82,000 comes from our transfer stations, 82,000 tons per year. That is 100 percent paid for both the operation of the transfer station, the transportation, and the disposal are paid for by the County. When we take a look at that, the revenue loss from not charging, not for the collection or anything,just the disposal, it's about $8.8 million a year, starting this, coming this July 1 when the new rate comes into effect. There would be cost involved if the transfer stations did collect for the disposal like most other state jurisdictions, county jurisdictions do. But, there would be approximately $8 million in revenue available if there were some collection made, somewhere between what we do now, zero, and going into the current rate, which is about $8 million. MS. DAVID: What would that cost be if we would assess a fee? MR. KUCHARSKI: The current fee right now would be about $0.05 a pound for waste. So, if there's 100 pounds of waste, that would be $5. MS. DAVID: How would you assess those costs? MR. KUCHARSKI: There would have to be some measure. There would have to be a capital investment for either scales at the weigh in and weigh out, which is a pretty normal in most jurisdictions. There could be estimates made for truck load or per bag, or some way like that. But, we've not delved into specific detail as to how this might be handled as far as being a fair and equitable way to apply a fee. But, that is an area where fees are not in any way assessed today and any set up for collection. If we had to do something, paying for services might be better than cutting services. MS. DAVID: Is the other rest of the counties, do you know, do they charge a disposal fee? MR. KUCHARSKI: I'm not certain. Most of the other counties have pick up and force pick up, and so, they don't have the transfer stations that we have. So, it might be an apples to orange type of discussion. But, I've been in a lot of different locations. Bend, Oregon, for example, you weigh in and weigh out with your pick-up truck if you're taking your—disposing of material, solid waste that you've self-generated. MS. DAVID: I see. MR. KUCHARSKI: There is a payment and there's generally shock when you come here and say what does it cost to go to the transfer station and we say nothing. For the County—the County has been very, very generous in the use of County funds. Page 42 Hawaii County Council-39 May 22,2018 MS. DAVID: Okay. Well, thank you for explaining that because I think at this point, we need to talk about or consider everything that we have—any options that we might have. So, I'll yield at this time. Thank you very much, Director. CHR. POINDEXTER: Council Member O'Hara. MS. O'HARA: Thank you, Ms. David, for bringing this up. It's a discussion this County has long evaded. Pay as you throw is the norm almost everywhere and people are generally shocked when they come here and find out you can throw your garbage away for free. We've looked at several models back when I was in DEM and since installing scales at the 22 transfer stations, it's a pretty significant cost and difficult to maintain, et cetera. We were looking at it in terms of bags, and there's another advantage to that. A lot of people haul their trash to the transfer stations unbagged and it flies out of the back of their trucks and it's litter all up and down the road. So, requiring people to bag it can help reduce that liter. The concept was the first bag free, subsequent bags, $1 or $2, or whatever, not weight based but volume based. That also encourages people to recycle more because we have recycling at all of our transfer stations and that remains free. So, the more you recycle, the less trash you pay for. It's the old pay as you throw concept, and it is about time for us to look at that. We are the only county in the state that doesn't truck or have a municipal garbage service that picks up waste. We have some private sector that does it in the more populated areas, but all throughout the island, most people are still self-hauling. I'd say 85 percent of our populous is still self-hauling to the transfer stations and it contributes significantly to the rubbish that we see on the road sides. There has always been the argument that if we were to create a pay as you throw system, that would increase the amount of illegal dumping. But, when you give somebody something for free, they don't have the incentive to take care of it, and I don't really feel that is going to be the result of creating a pay as you throw system. I think what's going to happen is we're going to have to spend more money on education and a little more money on enforcement, initially, and people will learn that new behavior. It may take a few years, but we're trainable, humans are trainable, and I think that may be a direction we need to move. Thank you. MR. KUCHARSKI: Council Member, one additional value is we are reasonably certain that there are a number of commercial entities who are not legally allowed to dispose of their waste in transfer stations, that are—continue to use the transfer stations and that would be a revenue stream that would also be capturable. MS. O'HARA: That is correct. I remember doing a study, when I was at the—as a Recycling Coordinator with DEM, two studies in fact, and we determined that Page 43 Hawaii County Council-39 May 22,2018 about 30 to 35 percent of the users of our transfer station are actually commercial. And the second study we determined that over 80 percent of the small businesses in downtown Hilo, self-haul their rubbish to the transfer station. So, you're absolutely right. They're intended for residential, free use only, but that's not what's happening. You're right. CHR. POINDEXTER: Okay, any other discussion? Council Member Richards, I don't know if you want to go into your amendment now. Okay, go ahead. MR. RICHARDS: Thanks, Bill and Chair. So, the $8 million that you quoted, is that the estimate of what it's costing us to haul, put the waste into the landfill, all the handling, and all that? Is that your estimate for that portion? MR. KUCHARSKI: No, sir, this is just—that would just equate to the disposal fees that we collect for putting the waste in. For example, since all the waste is going to Pu`uanahulu, we pay them by the ton, whether it's paid for by somebody dropping it off or the County is. The County is paying waste management for depositing waste and when we get no fee for the collection or the disposal, we get hit twice. This is just if you take the $107 a ton, that comes to $5.35 a pound. At $.05 a pound, that's what this is based on, for the 82,000 tons, that will get you about $8 million. MR. RICHARDS: Okay. Alright. Okay so, I understand where that's coming from. I think we all remember the old style was the way we used to dispose, you went to the dump and the dozer would push it around and bury it. So, the actual cost for the County was minimal back then, but we're still using that thought process coming forward. Very different time. So, okay, I appreciate it. I yield. CHR. POINDEXTER: Any other discussion on Draft 2? Okay, now we're going to move into the amendment and I'd like to ask Council Member Richards to make the motion to amend. MR. RICHARDS: Okay, do I make a motion or does it—okay. CHR. POINDEXTER: It's been read in already, yeah, at the very beginning. Motion to Amend: Mr. Richards moved to amend Bill 110, Draft 2, with the contents of Comm. 755.13. Seconded by Ms. Lee Loy. CHR. POINDEXTER: Council Member Richards. MR. RICHARDS: Thank you, Chair. Okay, like the theme of this whole discussion has been for the last two days, the intent of this, when we had to go through our timing has—submitted—everything changed last weekend. So, coming forward with this, my intention was based upon my concern for the mass Page 44 Hawaii County Council-39 May 22,2018 transit and to reallocate funds there while we're trying to get mass transit under control. As I said before, mass transit is very important but I'm not confident that we have the structure in place as of yet. Now, that being said, Chair, I'd like to have latitude as we go forward because I think, as we've stated numerous times, everything is on the table right now and because of that, I don't want to get locked into something here. I don't want the Council to get locked into it. So, I'm wide open. I do think there's some merit here. For instance, the allocation to the Prosecuting Attorney for the agriculture crimes, the State was supposed to fund that, they didn't. Prosecuting Attorney is scrambling trying to get that covered. If you saw the news this morning, there was someone that stole something like 40 pounds of lychee and started shooting at the owner. So, we need to take a very firm stand on that. So, I think Prosecuting Attorney very much needs to have the support going forward. MS. SAKO: Specifically on the Prosecuting Attorney, can I just give you one bit of information since Mitch could not be here today? MR. RICHARDS: Sure. MS. SAKO: He was able to receive $92,000 from the Department of Ag, so, he is short $14,000, not the full $150,000 anymore. MR. RICHARDS: That is very good information. That's why I don't want to get locked into anything. What I want to do is, once again, look at everything in context, revenue, as well as expenses and come up with some good answers going forward. Concerning the mass transit, yeah, we have the paratransit we have to pay attention to. I got all that. What I did was, with the budget side, was to pull the funds out of the General Fund and trying to get through the whole process of reallocating. I decided not to go any further because I knew we're going to have conversations going forward. So, that's how I decided to do that. Police, we've talked about how much Police needs help and funding to get more cops on the beat. That's where my thought process was coming from there and without question, Parks and Recreation, they need funding for the maintenance. When it came to our CRF (Contingency Relief Fund), I think going forward, some of the stuff is going to be happening in Puna. Though yes, it's for all of us, but if we need to commit funds towards one of our districts, this is one county, one island. So, that was my thought process going forward, but like I said, Chair, what I'd like to do is kind of leave it where it is right now and talk story and I'm Page 45 Hawaii County Council-39 May 22,2018 very willing to talk about amendments, changes, whatever if we look at everything in context. So, at this point, I yield. CHR. POINDEXTER: Council Member Lee Loy. MS. LEE LOY: Thank you, Chair. Thank you, Councilman Richards for this conversation. I have an amendment, too, but since we're talking about this one, a lot has changed and we have a lot of different information right now. What I would want to speak to is some of the things that I do like about this amendment, but also unveiling how, us as colleagues, can maybe follow this as a model and look at different ways of getting funds into programs to help the rest of the department and the rest of the administration. So, one thing I did like about the contingency relief amount was I saw this as an opportunity, specifically for Council Member Ruggles and Council Member O'Hara, that has an incredible event going on as a way to inject monies into their communities rather quickly. So, this Contingency Relief Fund, I saw as a huge opportunity to get monies into the community while we get some of the administration's agencies and other ducks in a row. So, maybe as kind of a stopgap measure. I like the agricultural crimes. I think we're going to need more there, but it's good to hear that we don't need as much. I really want to support Police and Prosecuting Attorneys, but I also see that there might be a bigger need right now with Public Works and some of the overtime. And maybe if it wasn't Police Headquarters Salary and Wages but more overtime cost. So, those are the things that I like about Mr. Richards' amendments. But, also viewing it more as a work in progress and then exploring some of the things that Deanna shared with us as far as reducing other areas like albizia and maybe using some of the monies there. I do want to guide a little bit more monies into our tourism industry because I think we have to get ready. I really believe that. This event is going to cause some stalls while we kind of get through it and we don't know how long it'll take, but I think we also have to get ready. Those are my thoughts on this amendment. I yield at this time. CHR. POINDEXTER: Okay, Council Member David. MS. DAVID: Thank you, Chair. Yesterday, we in Council, I believe we voted on—Ms. Sako, could you just refresh my memory? We had a, for Parks and Recreation, we had an amount of like the MS. SAKO: The $30 million in ADA (American Disabilities Act) bond? Page 46 Hawaii County Council-39 May 22,2018 MS. DAVID: Yes. So, I was wondering, on the park maintenance that we're looking at in Mr. Richards' proposed amendment, would that be in addition? Are they still in need aside from the $30 million? MS. SAKO: Specifically, that bond was for the ADA projects because we're part of that federal consent decree. These monies in the operating budget normally go to the day-to-day repairs, and I don't know how much they are traditionally short in that area, but in the coming year, depending a lot of them are working to man shelters, man phones, and do other things. I don't know how much of that work would get done, but the answer might be somewhere in between. But, I think also initially, this budget amendment came up when we were talking about doing GE tax as well, so, there'd be an additional source to fund mass transit because right now is probably not the time we want to get rid of mass transit either. I know it's all part of a larger budget discussion, but just to remind people of that as well. MS. DAVID: So, that $30 million then would not have included any of the regular maintenance? MS. SAKO: No, it was specific to the parks that were listed on that communication. MS. DAVID: Okay, great. Alright, thank you. I yield. CHR. POINDEXTER: Any others before I go back to Council Member Richards? I'm going back to Council Member Richards because it went, Council Member Richards, Lee Loy, oh no, I'm sorry, Council Member O'Hara, you didn't speak on this round. Go ahead, I'm sorry. MS. O'HARA: Thank you, Chair. I find Mr. Richards' proposal interesting. I just don't know that we can afford to gut the mass transit system, which this basically does at this point in time. I know it's needed, but what I would also like to ask, right now we have—we're limiting our bus routes in lower Puna to nothing beyond Nanawale. I don't know what that reduction translates into in terms of cost savings. Would that be something—Sole, would you be able to respond on that? (Note: At this time, Mass Transit Administrator Maria "Sole" Aranguiz came forward to address the members of the Council.) MS. ARANGUIZ: Good afternoon, Mass Transit Administrator, Sole Aranguiz. We have just one route that we have cut part of the alignment, but in terms of like savings, it's minimum. So, that doesn't represent anything significant in terms of the operational cost for the entire service. Page 47 Hawaii County Council-39 May 22,2018 MS. O'HARA: Okay, thank you for that response. And then I wanted to respond on what we only need 14k now for the ag crimes, and that is an important element. But the park maintenance piece, Parks and Recreation does have options for increasing fees or creating fees where they haven't had fees before. I don't see anybody from Parks and Recreation here right now, but we talked about it in the past. We've talked about the zoo and charging and perhaps making it free for kama`aina. There are many places where they could increase fees and increase the revenues that they need in order to operate. Mass Transit doesn't really have that option. Increasing fees, we've seen just adding fees just reduces ridership, so, that's not something that we can consider in this model. But, I know that Parks can and I think it's maybe, like our discussion on pay as you throw, maybe this is time that this has to be looked at seriously. Again, police, we need extra police, especially in the Puna district and in Ka'u, but, they can't charge. I guess they could give out more tickets but I don't think it doesn't come to us anyway. MS. SAKO: Just as a reminder, we get none of the revenues from the tickets. MS. O'HARA: I know, I understand that. So, we do need more money for police, I agree, but I'm not comfortable taking that amount out of the mass transit system. That's my thought on it right now. CHR. POINDEXTER: Council Member Ruggles MS. RUGGLES: Thank you. At first glance of this amendment, I was, "Oh yay, our CRF's, an idea." And then I looked at where it was coming from and I was quickly deflated. I think that our Mass Transit Program is extremely important. Even at the status it is now, there is so many people in my district that rely on the mass transit. It's the people that are barely making it in our society that are still using the mass transit system as is, because it's all they have. So, to just take more from the mass transit system, I don't think helps the situation. We just spent so much money on this, on the SSFM's Master Plan, and we now need all the resources that we have to begin to implement these things step by step. We can't expect Mass Transit to improve if we don't give them the resources they need and especially, if we're reducing the amount of resources that they have available to make the improvements that we are asking from them. So, I support increasing our Contingency Relief Funds, I appreciate the sentiment, Ms. Lee Loy, on how it can really benefit us because it is a quicker way for us to get resources out to our community. However, at the expense of Mass Transit, of the safety net that it provides for our entire island, I don't believe it's worth it. With that, I'll yield. CHR. POINDEXTER: Thank you. Council Member Richards. Page 48 Hawaii County Council-39 May 22,2018 MR. RICHARDS: Thank you, Chair. First of all, I want to correct and clarify something. I'm not talking about getting rid of Mass Transit. What I'm talking about is reorganizing. When we had this discussion before us, I used the audit report as what's highlighting my concern. If you recall during our budget hearings a year ago, it was proposed that we add an extra $1 million into Mass Transit to buy more buses. I was adamant against it because throwing more money at a situation that's broken doesn't fix it. First, we have to fix the management before we commit resources. Without question, Councilwoman, I agree with you, we need a Mass Transit that functions, but we have to fix the management first before we commit a lot of resources. Last year the budget was proposed $14.7, this year it's $15.1 million. Though I agree that we need to get things done, we still don't have the buses running. If we look at our cash handling, this is the glaring evidence of the problem with the management in the system. I am not for getting rid of Mass Transit, very contrary to that. I'm all for having Mass Transit. What I'm not for is throwing more money at it until we fix it. And a year ago, we had this problem, this was before our new Director was here, so, this is not on her. But in the last year, we never fixed anything, and that's my problem with Mass Transit. Two of the Directors said, concerning the budgetary side, when we were talking about GET, that was a component of this because under the GET, funds from GET could be used for mass transit. Now, I still wasn't going to support a $15 million budget request, but some of that would be coming from there. As I went through the process, each year is a learning curve for all of us and when you try to take funds and reallocate funds from the General Fund and try to replace some of it from the Highway Fund, that in itself is an interesting challenge. I chose not to do that because at this point, I wanted to get the conversation on the table and that created a very interesting legislative challenge to get that done. My intention was not to completely remove Mass Transit, that was not the idea. The idea is to throttle it back, get management around it first, and then see where we ended up with that. So, I just wanted to clear up that misunderstanding first, okay? Now, going forward, it's kind of like the conversation we had yesterday. Everything is on the table right now. I'm not locked into this. One of the things I thought about with the CRF, and part of it is what Councilwoman Lee Loy said, we are one island, and some of the things that we have going forward, it's going to demand fairly rapid response. And I think that somewhere where the CRF initially, I was sort of in the middle of the road whether or not we needed them. I think there's huge value in some of the instances coming forward, so that was some of my thought process for it. But, like I said, this paper was done two weeks ago because of our timings, and now, everything is on the table. Because I don't think we can do any one thing Page 49 Hawaii County Council-39 May 22,2018 and fix the challenges that are facing us right now. By no means do I want to unemploy any of our County workers. That's not the intention here. This is a reallocation of funds and throttling back. When Mass Transit, and I have every hope that Mass Transit can get a very tight program running, smaller than what it is right now, and with that, then we allocate the funds. But throwing more money at a program that they've had—we've all been in office a year and a half right now, when we came into it, it was problematic, when we went through the budget last year, it was problematic. They've had a year to fix it, it's still problematic. We haven't changed and I won't continue throwing money at something that I don't believe is set up to succeed. We have to see it change. So, that's my process. So, with that, I'm going to yield at this point. Thank you. MS. SAKO: Madam Chair, could I respond? CHR. POINDEXTER: Sure. MS. SAKO: So, one of things is that we have been on Sole to get the program better and she's only been here three months, and it does take time. However, one of the big things I see is that when she got here, we only had seven buses working, we now have 13 buses working. In addition, they were able to move it to their new base yard. They're able to now organize the inventory so it's easier for the mechanics to get to, and they're being a big part of that. I'm not saying we don't have a long way to go, but things are getting better. When we talk about the $15.1 million, I believe that does includes some of the grants as well. So, it's not entirely County funded. But,just to kind of brag a little bit, that things are getting better. And then one of the things in the Park's amendment that was bothering me, was that, yes, on that specific line, Park Facilities Repairs, we do only have $10,500. It's because part of it is in the 229 account for Building Materials and Supplies and they have over half million dollars there. It was just bothering me from the standpoint as I was sure we gave them more than $10,000 to fix facilities during the year. So, it's like a combination of a lot of lines that goes to keep their facilities fixed and maintained. Not disagreeing that they don't need more to keep them better, it's just I didn't want anybody to be misled, like in the public, that we only gave them $10,000 for facility repairs because we do give them more than that. CHR. POINDEXTER: Thank you. Council Member Chung. MR. CHUNG: As Ms. O'Hara described, Mr. Richards' amendment, it is quite interesting. Again, inasmuch as I've been actually advocating for an expansion of the bus service and its availability to various residents throughout the island, I cannot really support something that's going to decrease the amount of service that's going to be provided to them. What I'm worried about, and I understand Page 50 Hawaii County Council-39 May 22,2018 where Mr. Richards is coming from, but, once you take something away from a program, it's hard to put it back because it's going to be devoted to other items. Now in this one, I don't mind $150,000 for Agricultural Crimes Project. That's a small amount, we can find money for that somewhere. Beefing up our Contingency Relief Account by $630,000, I think that's, of course, intended to restore it back to $900,0000. I was actually in favor of just cutting out our contingency relief altogether. These are tough times and we got to show contingency relief, as important as it is to all of us, I've stated on many occasions, and this is really an important thing, because that's really all we have, but at the same time, it should be a function of how the budget is, and our budget is tight. Maybe the amount that the Mayor gave us, it might be the upper limit of what we deserve, but I'd say just cut it out altogether. With regard to the salary and wages, if we're going to have a big ticket like that, assuming that this thing does pass, I don't think it's going to pass, but if it does, then anytime you have a big ticket, when it has to do with operations, what I would suggest is we sequester those. I think I've said it on occasion, we sequester those amounts in a Council, some Council account, and have the departments come back to the Council on occasion to explain why they need those monies. It's almost like an accountability type of mechanism that we're going to have there because we're really in dire straits over here. But, as much as I respect Mr. Richards and as much as I normally would support his initiatives, this one is very difficult for me. It's taking just too big a chunk out of our already broken or crippled Mass Transit System and it's really going to break it to a point that we might not be able recover. I think what he's saying is we want to break it down so that we can build it up properly and I certainly understand that. It's a good point, but I think it's going to break it irreparably, in my opinion. That's all I got to say about it. Thanks. CHR. POINDEXTER: Okay, anyone else on the amendment? Council Member Lee Loy. MS. LEE LOY: Something that Mr. Chung just touched upon, which is that sequestering of money, or what I'd like to call parking it and I think I touched upon this yesterday. We do now have an audit and it has 30 recommendations. So, I actually saw that as a tool and suggested to Ms. Ruggles, as the chair of the Mass Transit Committee, to interface with the department and if we were to park the monies in the Council of fund and allow our Council Chair of that committee to work with the agency and go through those 30 recommendations and as those recommendations are satisfied or achieved, we could continue to fund the department. That's what I suggested yesterday and it's more like a deliverable. It's program measurables. I think everybody can understand that we want to see Page 51 Hawaii County Council-39 May 22,2018 some change and we want to see the program succeed, but we have to incentivize it somehow. So, that was more of my thoughts as to how to help that department move forward a little, kind of hand in hand with the Council. So, when I look at Mr. Richards' amendments, those big chunks of money going to Police or Parks, that's where I kind of waver a little bit maybe parking some of that to ensure that mass transit has some monies and we can incentivize the improvements, incentives meeting the recommendations of the audit, and then dovetail the Mass Transit Plan that SSFM has. Those were my thoughts, and that's why I said There are parts of Mr. Richards' amendment that I like and some of it that I think we could use as a model, but maybe retool or refocus a little bit. I yield. CHR. POINDEXTER: Council Member O'Hara. MS. O'HARA: Thank you, Chair. I think it's important also to remember, I'm glad Ms. Lee Loy brings up the 30 recommendations that were in the audit. They need to be implemented and some of them can be done without additional cost, but not all of them. So, to stand back and say, well, Mass Transit has failed to improve over the last year when there hasn't been any new funding applied and I'm sorry, Sole, you were only here three months, is just ignoring what's really going on the ground. Furthermore, we have this great plan that's almost complete, and we have been informed that in order to implement that plan, we would need approximately an additional new $5 million a year for the next 10 years because we need to purchase new equipment. We can't survive on the old hand-me-down busses that Honolulu has been giving us. We've seen where that led, the whole bus system. So, it isn't the fault of any one person for even the department, the demise of our bus system. You could have predicted it,just by the way it was being managed. So, we have a plan now, we never had one before. We can't even begin to fund it with the budget we have in front of us. That's sad to me because we have a great plan. But to take the money out of Mass Transit at this point and to say, well, you failed to get any better over the last year, doesn't make sense to me. It's already starved for cash and there's reasons how that has happened, because of the way it's been run and the lack of foresight and the lack of planning. And here we are, on the verge of being able to actually implement an effective bus system and we have no money, new money, additional money to put for it. We can improve, and I'm happy to hear that we have more buses on the road now than when you first arrived, that's wonderful news. I'm sorry that we've had to disband the bus into the lower part of Puna but we have to because of what's happening. But, in essence, it is getting better already, so, I just can't do this. I just can't cut the mass transit in this manner to use in other places. AlthoughI Page 52 Hawaii County Council-39 May 22,2018 mean, it would be great to have more contingency funds. It would be great to have more police, especially, but I can't see doing this. Thank you. CHR. POINDEXTER: Thank you. Let's see, I'm going to go to Council Member Richards then Council Member Chung. MR. RICHARDS: Thank you, Chair. Actually, what Councilwoman Lee Loy mentioned as far as having a fund to park it, the question was posed to Deanna, I know these meetings are all kind of blurry now, about setting up an account, and it's my understanding that at that time, you did say that's easy enough to do. I would have actually transferred it if we had that. I thought about transferring all the funds into the CRF so it it'd be managed by us but I didn't think that was going to work at all. But, I'm wide open for that. I don't mind putting it into an account where we can hold it in reserve and act upon it. The problem is, like I said, a year ago, we discussed this exact problem and we're discussing this exact problem again. So, it's more than the funding. Councilwoman O'Hara said it's the leadership. We have to have the strong leadership and vision for going forward and that has not been proven to my satisfaction at this point. But, if we created an account, Deanna, what would that take? MS. SAKO: I believe we already have an account on the general ledger that's been used in the past. One of my concerns though, is there's more to my job than just doing the budget, and one of it is payroll. So,if they're S&W account is not funded, I'm not sure that we can continue to employ those people because I have no guaranteed source of payment. So, it's the S&W dollars I think I'm most concerned about, that we would have to work with HR (Human Resources) and Corporation Counsel because I need to know those funds are there because we have agreed with the employee and with the union to fund these personnel. MR. RICHARDS: I am, like I said, I'm wide open and everything is on the table right now. This is a different conversation that we would be having if we had this conversation a week ago because again, we have to look at everything in context with everything else, which brings back the ad hoc committee question, Finance Chair. But like I said, I'm wide open. What we do have to do is we have to fix it for the County. I'll yield at this point. MS. SAKO: If I understand the amendment right, you're thinking of moving the transit dollars into the special fund and then as transit meets certain goals, you would move it back to transit. So, there hasn't really been any dollars generated to go towards our $7 million shortfall or the additional six hundred and some odd dollars to put in contingency relief. MR. RICHARDS: And that's the problem. And that's why everything's different. Page 53 Hawaii County Council-39 May 22,2018 MS. SAKO: I just want to make sure I'm understanding correctly. MR. RICHARDS: You're spot on that because we're still talking about a $7 million shortfall. Even if we were to cut mass transit, the $4.5 million, we're still $2.5 million short. So, like I said, the conversation now is all different. As far as I'm concerned, everything is on the table and we shouldn't be married into any decision at this point. So, I yield. CHR. POINDEXTER: Thank you. Council Member Chung. MR. CHUNG: Well, I was going to talk about something else, but that thing that Tim talked about putting it into the Contingency Relief Fund, it brought a chuckle to me and others. But really, I've also thought about this in the past. Maybe we use $50,000 in contingency a year and we beef up our County use contingencies to about $3 million apiece. That would be the accountability piece that we're all looking for, and it would actually enhance the cooperation between the Council and various departments of the administration, I think. You could also use it for capital. So, I'm just talking conceptual, but that's something to think about too. I have to go someplace for five minutes, but maybe you guys touched upon this, but Sole, what about the possibility of raising the price for the—did somebody ask that? I'm sorry if it was asked, then I apologize. MS. SAKO: No, I believe, yes, it was asked about raising the fares and I think the reduction in ridership tends to have that MR. CHUNG: It would have that sliding scale. Okay. MS. SAKO: So, I'm not sure we would net anymore. MR. CHUNG: Okay. Alright. So, you mean to tell me then thatI'm sorry to have to bore you guys through this repeat. So, we're at that level that if we raise it, we're going to have a decrease in ridership? I mean, is that a fact? MS. SAKO: It has mentioned—be true in the past. However, I believe they are looking at other possibilities. What came up in a lot of the community meetings and what I think Sole is more familiar with is the regional fares. Right now, you pay the same thing whether you ride all the way across the island or you just go five miles down the street. So, looking at something a little more regional and we have not had a chance to analyze what the additional income for that would be. MR. CHUNG: That's probably more in line with what I was thinking about, even if I wasn't able to articulate it because I don't use the bus. But, people who do and come from the mainland, they say this is the greatest deal almost half joking but really, it's kind of ridiculous. Page 54 Hawaii County Council-39 May 22,2018 MS. SAKO: Yeah, and a lot of people that came from the mainland were some of the ones who reminded us about that system and I think transit has already started to look at that. We just need to make sure we have a reliable bus to get them back and forth, whether it's to Waikoloa or wherever. MR. CHUNG: I mean for all intents and purposes though, even if we were to do it, we're just talking about a negligible kind of increase. Okay, thank you. CHR. POINDEXTER: Thank you. Council Member David. MS. DAVID: Thank you, Chair. Ms. Sako, on the salary and wages expenses or the reduction, so, I know the concern about—you've discussed that when we were going over the options, and so, a reduction in this to me, is pretty much devastating because of the timeframe that you have to process because of the union contracts that you have to pay attention to. I'm not sure whether that even calls to question some appeals and that sort of thing. So, this is not going to be something that we can actually look at right now. For that, there are several reasons that I can't really justify this request, in my own mind. It's because of the salary and wage issue and also the fact that it is coming all from one department. I'm not really sure. In fact, I'm not sure whether we could actually doI appreciate what Mr. Richards is trying to do, to be thinking outside of the box on how we address our budget shortfalls. But, I don't believe, in my own mind, that this is the method that we should be looking at. Mr. Richards, I'm sorry, the ad hoc, I like this nine-member thing. The ad hoc committee, I don't believe we'll be able to have a wide variety of discussions among all of us because the budget affects all of us in one sitting. So, I really believe—and number two, I don't believe there's one issue that we're required to identify to form an ad hoc committee that we could even identify one issue to address. I know you've heard that before but since you raised it, I just wanted to say that. So, I'm having real problems with this and thank you, Deanna. I yield. CHR. POINDEXTER: Thanks. Okay, Council Member Richards. MR. RICHARDS: So, how are we going to fix this? We have to talk about revenue side, and like I said, the conversation is different right now. It's not how it initially was set up to happen. So, how are we going to fix this? CHR. POINDEXTER: That's a question for who? MR. RICHARDS: The nine-member ad hoc committee we have here. CHR. POINDEXTER: And I think that's what we're deliberating and discussing. Page 55 Hawaii County Council-39 May 22,2018 MR. RICHARDS: That's exactly right and that's why this is triggering conversation. Like I said, it's all on the table. I hear everyone's concern without question. I think there are ways to work within the confines of the law to get things done, but that's really beside the point. What we're talking about is trying to get the best decision made for the County to get us from June or May 2018 to May 2019 in reasonably good shape, and that's what we're truly trying to talk about. The question is how are we going to get there? We have a shortfall of approximately $7 million. We have to fix that. This is actually an ancillary discussion and I am less concerned about this and more concerned about the $7 million shortfall that we're facing. So, like I said, this is out on the table as an avenue for more oversight. Mr. Chung's conversation is very interesting and I think harps back to the old style how they used to do funding. But, that's—what we're talking about fiscal oversight because that is what we, as elected people, need to have and mass transit has a big problem. I think the Director would have to acknowledge that. It's a big problem. But, the bigger question is how are we going to deal with this $7 million shortfall that we're facing? Like I said, I'm willing to table the amendment for the time being, do whatever we want to do because the bigger effort we have to concentrate on is that $7 million shortfall. So, I yield. CHR. POINDEXTER: You want to table it or withdraw it and somehow look at—you cannot table it. So, either you would want to withdraw it or we can vote on it or however you want to MR. RICHARDS: Let's keep this conversation going. Like I said CHR. POINDEXTER: We'll decide when we want to vote on it. Until somebody calls for the question. MR. RICHARDS: We have to—the $7 million is what I'm losing sleep on. CHR. POINDEXTER: Council Member Chung had his light on. Council Member Chung, are you—okay. Council Member O'Hara. MS. O'HARA: With regard to this proposed amendment, and we've talked about several different things, the one thing that, of course is attractive because we are able to expend those monies effectively and quickly in our districts, is increasing the contingency funds for the Council. I understand as things were pitched this morning, it implies that they had been restored and they haven't really been restored. We're only at about one-third of what we would normally anticipate in the way of MS. SAKO: I was pretty clear we only put $270,000 in, yes. Page 56 Hawaii County Council-39 May 22,2018 MS. O'HARA: But the public doesn't know what that used to be, which was more like eight hundred some thousand or $900,000, something like that. So, this is a big reduction in what we can expend in our districts. Ms. Lee Loy is right, there is aid that we could be giving to our districts quickly, in particular in district 5, 6 and 4, the ones most affected by this volcanic event, but we don't have any money to put there. But, I like the discussion of having a reserve fund at the Council's disposal that we collectively can consider that could also be used for capital improvement. Right now, you cannot use the CRF's, the contingency relief funds for capital. So, it would be nice if we were able to find a way to get some money that we create said fund and it be used in a more collective manner rather than just in particular districts, and that it has a wider reach in terms of what it can be expended on. I do like that idea coming out of this discussion. CHR. POINDEXTER: Council Member Richards. MR. RICHARDS: Thank you, Chair. I don't want us to get stuck in the weeds talking about this amendment. I'm thinking though I like the conversation and I like the direction it's going. I'm perfectly willing to withdraw the amendment as long as we can continue on with this conversation, because it's a very productive conversation right now. So Chair, if I withdraw because this is not going to fix what the intention was several weeks ago, and we're stuck. So, I'd prefer to withdraw it so that we can venture in a different direction. Withdraw Motion Mr. Richards withdrew his motion to amend Bill 110, to Amend: Draft 2, with the contents of Comm. 755.13. CHR. POINDEXTER: Okay, thank you. Okay, so now, we're back to Bill 110, Draft 2, and I believe we have one more amendment. Council member Lee Loy. Motion to Amend: Ms. Lee Loy moved to amend Bill 110, Draft 2, with the contents of Comm. 755.14. Seconded by Ms. David. CHR. POINDEXTER: Council Member Lee Loy. MS. LEE LOY: Thank you, Chair. This amendment was, again, prepared based on what we now know to be old information. Just as an impetus, this amendment was based on a letter that the Mayor wrote during our legislative session that talked about providing $250,000 as a match to help with Banyan Drive Redevelopment Agency. Deanna and I talked about it from the first draft, like where did it go? How come it's not in there? And then, now we have 50. MS. SAKO: So, one of the things that happened is we did have it in our original amended budget, and we did have the 250 prior to submitting to you guys, and Page 57 Hawaii County Council-39 May 22,2018 then the bill, where the match was required, died. So, a lot of things changed. As you know, the legislative session kind of wound down. So, we did leave $50,000 in, should there be need to have some cost and when I talked to Director Yee, then anything really more than that, that's not maybe the full half a million. Like the way the State was going to put in and we were going to put in. Then it wasn't really going to be enough to do anything like an EIS (Environmental Impact Statement) or anything like that. So, that's why we kind of left it at the 50. But yeah, that's just from our perspective. MS. LEE LOY: Yeah, and I agree with that. It was kind of all contingent with everybody kind of bringing their pieces to the table. Then for a moment, which is why I put this amendment in, was well, maybe if we showed some interest that the legislature, the next legislative session would see that we were serious. Again, we need to be serious about that income revenue source with our tourism. But things are a little different now. I did move that money out of R & D, which was the tourism fund. So, that's why, as Spock would say, logical, to move it out of the tourism fund and into this BDHRA (Banyan Drive Hawaii Redevelopment Agency) Fund. Now, having heard more information, I do want to hear from my colleagues because again, I'm going to say it, I think we need to fund tourism. I think we need to message that and at least keep some monies there or even bump it up so that while this event happens, we can message and at least try and stay in front of a bigger dip. I see Deanna nodding her head and it's back to that multipronged approach. So, I'm looking forward to any feedback from the rest of my colleagues. Then, I'll probably withdraw it and maybe come up with a different amendment that fits better along with the conversation that we just had with Mr. Richards' amendment. So, I yield at this time. CHR. POINDEXTER: Council Member Richards. MR. RICHARDS: Thank you, Chair. Spring boarding off of Sue's comment about tourism, without question, talking to Ross Birch, I know west side, there has been up to 50 percent cancellations of the bookings in the hotels, coming up for this summer. So, if we don't think that this is a countywide impact, it is severely a countywide impact. The trickle-down effect of that will be felt probably starting midsummer and then working into the rest of the year. So, if we want to look at that economic generation for that side, which is realistically for this whole island, the number one attraction on this island, as I understand, is Volcano National Park, which is closed. Need I say more, right? I think we have to put a lot into our tourism advertising because though I don't believe that should be our only industry, it's a very important industry. If we don't steward that and pay attention to it, I think we're going to really kick ourselves a Page 58 Hawaii County Council-39 May 22,2018 year from now. Which comes back to, again, what we're talking about is what we need to spend money on. We still have not addresses the shortfall of$7 million, so, we got to get that conversation of how we are going to do that? Because we either cut expenses or increase revenues, or a marriage of the two. So, we need to get that conversation going. MS. SAKO: Just to clarify, based on the conversation I heard, I think it's a $7.63 million shortfall because everybody seems to be saying that they want the contingency funds restored to $900,000. So, if that's the case, we're really short $7.63 million. I'm keeping a running total. MR. RICHARDS: A quick follow up on that. CHR. POINDEXTER: Thank you. Council Member Richards. MR. RICHARDS: Just a quick follow up. I like the conversation about the contingency fund and what Councilwoman Lee Loy said about—I was serious, we look at Puna. Puna is going to need a lot of help going forward and I don't think anybody on the Council isn't willing to put funds in that direction if we need and identify the need. But, a case in point on that, in Waimea, we have an airport that has federal subsidy to the tune of almost $500,000 million. We had to come up with about $20,000 for this next year funding. If I didn't have contingency, the County would lose almost $10,000 because we came, the Mayor came up with $8,500. If we didn't have those funds available to us, our County would lose a half million funding. So, there is a good reason to have that but this is a very good conversation and healthy for the direction that we're going. I yield. CHR. POINDEXTER: Thank you. Council Member Ruggles. MS. RUGGLES: Thank you. I just have a question about the $45,000 for the contract projects. Could you describe what those contract projects are? MS. SAKO: I'm sorry, you're talking about the budget cuts, or where are you talking about? MS. RUGGLES: On the amendment that we're talking about right now, Communication 755.14, from Ms. Lee Loy. MS. SAKO: That was all under tourism. I believe some of that is where they do an RFP (Request for Proposal) to allow different programs to apply for grants, like whether it's for festivals and what not, but to like to increase tourism on the island. So, that's kind of what part of that is. But, it's all tourism related, that whole amount. Page 59 Hawaii County Council-39 May 22,2018 MS. RUGGLES: So, the contract projects are for different projects that the communities do that attract MS. SAKO: Right. They have an RFP Program and a lot of different agencies apply. MS. RUGGLES: Okay, great. MS. SAKO: Yeah, that's their RFP Program. MS. RUGGLES: Okay, thank you. Did you have any examples of what those are? MS. SAKO: I want to say some of them are like festivals and different types of events that would kind of help to bring the community together and bring tourists and visitors to our island. Not necessarily mainland only, it could just be other, from outer islands too. So,just drawing attention to our island and increasing the noticeability. MS. RUGGLES: Would this remove all of the funds from that fund? MS. SAKO: No, there's currently $500,000 in tourism, $145,000 for contracts or projects, $30,000 for tourism and promotion and then $325,000 for tourism, marketing, and promotion. So, this would take away $100,000 of that and reduce it to $400,000 MS. RUGGLES: Okay, great, thank you. And this would reduce the contract projects to $200,000? MS. SAKO: Right. MS. RUGGLES: Okay, great. That's all the questions I have. Thank you. CHR. POINDEXTER: Council Member Chung. MR. CHUNG: I support this amendment. Naturally, I'm from Hilo, but, I mean there's a broader discussion to be had on this. I think it makes sense to take it out from the tourism, Madam Spock, right? Very logical. Because if it's true that there has been a 50 percent reduction in cancellations in, I guess, island-wide, hotels, or just West Side? And that is basically because our volcano isVolcano National Park is closed. And it just shows us how important that attraction is to us and it also indicates to me that our tourism promotion wasn't really promoting other aspects of the island as well as they should have. So, do we keep on giving them money? I don't know. Page 60 Hawaii County Council-39 May 22,2018 MS. SAKO: Can I just clarify one thing? The reduction and the cancellations are not entirely because Volcanoes National Park is closed. The calls to Civil Defense that many of my staff have been taking are people are afraid for their life and safety. MR. CHUNG: Okay, see, that's a different element because if it was solely on the MS. SAKO: No. MR. CHUNG: Okay. But now, do we use our tourism promotion to get the word out to people that only one or several areas of the island are really being affected by this physically, not emotionally or anything? Because we all feel a general malaise because of this thing. Look, if the whole island goes under then we've got worse problems than tourism, right? The fact remains that most of the island is open for business. Do we need tourism promotion monies for that? I don't know. I really don't know. MS. SAKO: So, one of the things is the cruise ships are pulling out and different things. Senator Inouye wrote a great letter to them emphasizing all the other things you can do. Hamakua Coast and looking at the gardens and different things, botanical gardens, and there's a lot more to do, including the helicopter ride. Maybe it's not the exactly the same as it was before, but it's still a great tour. You still get to see a lot of our beautiful island, including some of the new eruption. So, there's a lot of great pieces to our island, and only 2.1 percent is impacted. So, I think we've been trying to get the word out. I think the State Tourism Authority is trying to get the word out as well. It's not only our island being impacted. I mean when our island has the same name as our State, people have a lot of misconceptions out there. MR. CHUNG: Of course. So, that's what I think. They're just scared. There's this apprehension and quite frankly, I mean, I can see if they wanted to see the volcano, that becomes a big problem, but aside from that, everything is okay here. I haven't been to Kona since the eruption started, but, how's the vog over there? MR. KANUHA: Kona's beautiful. MR. CHUNG: Yeah. I would think South Kohala is the same. So, I think it's going to resolve itself as soon as this hysteria is over. I'm with Ms. Lee Loy all the way on this thing. I mean there's greater good to be had right there because if we can beef up Banyan Drive for just $100,000 or a little bit more, I think it's money well spent in the short term. It's not like we're asking for $100,000 or $200,000 every single year as a recurring expense. I think this is important, quite frankly. Page 61 Hawaii County Council-39 May 22,2018 CHR. POINDEXTER: Council Member O'Hara. MS. O'HARA: Thank you, Chair. I'm at this point undecided if I can support this or not. Something in the discussion is a little troubling to me because there's something we haven't discussed at all. While we are talking about expending more money in Puna, we need to understand there are thousands of people right now who are displaced. I'm fielding text messages and e-mails as we sit here, asking, do we have money to bring in trauma teams for mental health services? Do we have money for this? Do we have money for that? We need to be putting money into that community now. Tourism is our main driver, I'm well aware of that. But, I really believe the industry, those people who are vested in businesses, will resolve this issue themselves. I really believe that. So, I don't see any need to put that money in that direction at this point in time. In fact, a lot of people in my district are very upset with the attempt to message, "Oh, everything's honkey dory on the Big Island." It is not honkey dory, and it's not just in lower Puna, it's throughout the Puna district. It's down into Ka'u and the air is foul in South Kona. It's not just the Puna district and people are very upset that we're putting this focus, this spin to try and tell the visitor industry, "Oh, everything's fine,just come here anyway." Because they're hurting and that's the perception they feel and they would like to see more money spent on their issues, their trauma relief. We aren't dealing with all the pet problems and all the animal problems in Puna right now. We are not. We are not dealing with a lot of different things that I'm hearing about daily, all day long. So, I'm sitting here thinking about where can we cut some money to provide it in a better way to provide the services that we need? This is a real hard one for me. Springer Kaye was here this morning. She's the head of Big Island Invasive Species. She couldn't stay but left this note: "Albizia has mitigation money, the $200,000 that you put into this budget is for Kahakai Boulevard." That's my subdivision, okay? I care very deeply about my neighborhood, but I are very deeply about the whole island. "We lost 37 homes during tropical storm Iselle, this is similar to the number of homes we have lost due to lava, but, we can actually do something about albizia." And it's hurricane season next week. Now, the unfortunate part about this is the albizia funds are going to go directly from DPW (Department of Public Works) to a private arborist, no County staff involved, no Big Island Invasive Species cost included. But the problem is that they were planning to have this $200,000 as matching fund to a bigger State grant. We did not get the State GIA (Grant-in-Aid). They did not get it for this project. I know they will try again to get that money, but they did not get it for this year. Page 62 Hawaii County Council-39 May 22,2018 So, that $200,000, what she's saying is only going to do a very small portion of that road, that's a six-mile long boulevard. So, do we roll the die and say, "Well, maybe we'll make it through this hurricane season without any more albizia losses falling on people's homes." And forestall this until they perhaps can get the matching money next year? I mean this is kind of the stuff that we're having to decide, right here, because no, $200,000 paid out in contract to an arborist is not going to get you more than 10 trees down. And we're talking hundreds of trees along Kahakai Boulevard that are within 30 feet of the boulevard and could bring down the whole power system. So, I just throw that out because I'm not sure how to counsel everybody on this kind of stuff Should we take that $200,000 out,put it in contingency funds, or should we not? That kind of thing. I yield. CHR. POINDEXTER: Council Member Ruggles. MS. RUGGLES: Thank you. I just wanted to ask Council Member Lee Loy, what does this miscellaneous contract services, what does that look like as far as these monies being utilized? What would that accomplish? MS. LEE LOY: I'm sorry, Council Member, could you start again. MS. RUGGLES: On your amendment, it says that the $100,000 would go towards Planning and operation services, Miscellaneous Contract Services. MS. LEE LOY: The Banyan Drive Redevelopment Agency is the agency that was established under HRS that kind of deemed that area blighted. So, it kind of was a vehicle for this agency to rise up and take on planning for that particular area. So, the $150,000 would further all of the environmental studies, the technical studies, sewer, water, road connectivity for Banyan Drive because that would have been the first piece that we needed with Banyan Drive and revitalizing that area. Ms. Sako can speak to this but part of that was this partnership that we had to do with the Board of Land and Natural Resources and the Department of Land and Natural Resources (DLNR), which owns the properties in that area. So, as Ms. Sako spoke earlier, there was a piece of legislation in which the Legislature would provide $250,000 and the County would bring $250,000, whereby we would have $500,000 to further all of those plans and designs, the technical studies and then allow for various people to come in and bid on revitalizing that area. Yesterday, we also spoke about two bills that we passed. One was for the port of Hilo and the other one was for Bay Front Park and Trailways. So, the overall concept for Hilo was to revitalize the port,provide walking paths from the port, which brought in the tourists through the cruise ships. They would be able to Page 63 Hawaii County Council-39 May 22,2018 walls from the port of Hilo, take in stuff at Banyan Drive, and continue through Bayfront Park and Trailways, to downtown Hilo and back. It was championed by our Blue Zones Project. So, there were a lot of partners and a lot of government partners, kind of subscribing to this large overall Master Plan that tied in a lot of different industries, not only tourism, but the hotels. We've seen a lot of revitalization down in Waiakea House Lots with the restaurants that we have there. It was a larger connectivity plan that together, would enhance and provide some real revenue generation for Hilo. And I saw Director Yee stand up, and maybe he can help kind of share that larger vision for it. (Note: At this time, Planning Director Michael Yee came forward to address the members of the Council.) MR. YEE: Michael Yee, Planning Director. Sue gave a nice recap over what we were hoping for, which was $250,000 from us, $250,000 from the State. We could push along an EIS process, which would provide different options for us on how to redevelop Banyan Drive. That was a great idea. From what I hear, politics within the Legislature kind of killed the bill and made it to conference and it just died. So, I think people will want to pick up the bill again next year, but who knows? So, I didn't ask for extra money. I was glad that Deanna left 50 for me. Sue was suggesting another 100. The question was what will we do with that money? Frankly, it was not a gift I was looking for, so, I haven't given it much thought. So, all I can kind of say is I have a lot of-20 years of my experience was with the public development authority, a quasi-government entity that is not funded by local government. It raises its own money through certain other financing vehicles, and you do economic development through that. And the reason why you do that is because government sometimes is not the best entity to spur economic development. What kind of ails the progress of economic development is there are so many silos that happen within government that it's not efficient to do it. So, the BDHRA was an entity to try to bring in the expertise of economic development, community planning and all these good things you've heard about under one house, that really can kind of coordinate that. With $150,000, could we start to do that along with the BDHRA? There was one bill that passed, SB (Senate Bill) 3058, that creates a subcommittee, planning committee out of DLNR, that will have to probably work with, if the governor signs it, and what that means? We don't know. So, if the funds were given to me, could I figure out ways on how to best spend that and how to continue to build the framework around trying to get revitalization going on Banyan Drive? Of course. That's a good thing. I'm also Page 64 Hawaii County Council-39 May 22,2018 very concerned that it's a bad precedent to set with DLNR that they should be at the table, providing that they collect the rent. I just don't like the idea that we put up first and we try to absolve them of their, we're not absolving them but whether or not they perceive it as that. I think that's kind of a tough precedent. And I can't promise that if I got $150,000 I can start some of the EIS process with just that amount of money. So, I don't know how far I can go. So, there's a lot more questions than answers that I can give you today. Thank you MS. RUGGLES: Awesome. Thank you. That makes it all clear. I'll yield at this time. MS. LEE LOY: And again, Ms. Ruggles, there were a lot of moving pieces, but it really started with a letter from the Mayor promising the money. I know the times are different right now and I know Mr. Yee has a position that we don't want to let DLNR or the State off the hook, because I absolutely agree, they have to be at the table and they have to be with the money. I kind of viewed it a little differently that maybe if we showed up first with their money, then we would show them that we were serious and then they would come to the table knowing that we were serious. It's not the complete $250, it's just $150, but it was again, maybe incentivizing everybody to get back at the table next legislative session, work hard, and find the money to fund this program. It's just a huge economic generator for Hilo. Thank you. Thank you, Director Yee. CHR. POINDEXTER: Council Member Chung, you had your—okay. Council Member Eoff. MS. EOFF: I can ask this of Director Yee or Ms. Lee Loy, so putting it off into the future, if that's what we have to do today, would still be leaving the 50 there, right? And then that would still be maybe more apropos given everything that's going on right now. I mean I think the project is really important too, but because of MR. YEE: I never expected the 100, so, given everything that's going on, it would MS. EOFF: Maybe better left alone. MR. YEE: Yeah, right now. CHR. POINDEXTER: Any other discussion? Council Member Lee Loy. MS. LEE LOY: A lot of Mr. Richards' amendments and mine were based at a very different time. So, I'm willing to withdraw this and maybe even reintroduce something a little later because I think what we really need to get to, Ms. Sako, is where are we coming up with $7 million for this budget? I do have to leave at 5, Page 65 Hawaii County Council-39 May 22,2018 so, we're going to have to really pound poi between now and five o'clock so that thank you. Withdraw Motion Ms. Lee Loy withdrew her motion to amend Bill 110, to Amend: Draft 2, with the contents of Comm. 755.14. CHR. POINDEXTER: Thank you. So now, we're back on the main motion, Bill 110, as amended to Draft 2. So, are we ready to vote on that? Okay, all those in favor say "aye." So, you have a point of clarification? Council Member Richards. Point of MR. RICHARDS: Deanna, is this budget balanced? The version two? Clarification: MS. SAKO: I mean when we submitted it on May fourth, yes, it was balanced, but based on what Lisa has shared with us and the additional information we provided you, I would say no, because at a minimum, I really do believe we're going to be $3 million short in real property tax revenue. While we do have a Budget Stabilization Fund that might help with that, we don't want to deplete it because this is the beginning of the new fiscal year. So, if we use up everything now, we're going to be in sad shape. So somewhere, Finance is willing to help come up with some items, but I'll remind you that departments already took cuts to prepare the March budget. They all had to come up with cuts and this is not the first year they've had to come up with cuts. It's a progression of years, even when the real property tax values were increasing because our fixed cost are going up more quickly than what our real property tax values are increasing, and because the State keeps changing. It's amazing how much the State Legislature controls our budget, and setting those ERS (Employees' Retirement System) rates, those are significant. When we get to the next year, not the year we're talking about right now, not fiscal year 2019 but fiscal year 2020, the ERS rate for Police and Fire is going up five percentage points and in fiscal year 2021 again. So, we have some big changes coming up, but at the same time, when you ask people, they want more police officers, they don't want less in their community. So, those are some of the challenges we have, which is why, yes, we're not saying we can't reduce any expenditures, but if you want us to come up with $7 million, reduction and expenditures or $7.63 million, do we start Council Contingency Funds? That's going to be very challenging for us to do. MR. RICHARDS: So, I appreciate that clarification. So, it would appear we don't have a balanced budget. I'm not sure we should vote on it from a procedural standpoint. Page 66 Hawaii County Council-39 May 22,2018 CHR. POINDEXTER: For clarification, too, we were looking at amendments, but because we didn't do an amendment, we had already amended the 110 to Draft 2. So, right now, it's currently Draft 2, we did vote on Draft 2, so before us is the Draft 2. So, that Draft 2 now will move to be amended to Draft 3-well, it passes first reading. The second and final reading is scheduled for June 6�h. MR. RICHARDS: So, we haven't done the vote yet? CHR. POINDEXTER: No. Earlier, what we were supposed to vote on is any of the amendments, if it is amended. So, when we withdrew that, it brought it back to the Draft 2 that we voted on earlier, that had passed. Correct? So, we're actually—we have Draft 2 that has been voted on and before us and then that goes for second reading on June 6�h. So, we know now the conversation is that Finance is saying, will be short. So, at that June 6th meeting, between now and then, you can be putting in amendments or if somebody MR. RICHARDS: You're going to have to have a special meeting. CHR. POINDEXTER: You guys want to do a special meeting? MR. RICHARDS: How else are we going to—well, like I said, we've got financial problems, and if we think amending independent of each other is going to solve it, that's not going to happen. MS. SAKO: So, one of the reasons we have provided so many different scenarios is to try to get input on what everybody's kind of feeling towards. As we shared, we came up with roughly $1.2 million in cuts. That's not $7.6 million or $7 million. I believe it's going to be hard to find another $6 million in cuts without totally gutting something because we've been gutting this budget over and over again and the more we cut it, the less fund balance we're going to have going forward. It's just going to put us in a more difficult situation. I do understand the fact that it's election year, but at the same time, we have to do what's best for our County. So, we also proposed possibly doing a real property tax increase, which I know is not favorable. Everybody's being impacted by the lava, our hotel industry, everyone. Or doing GE Tax. So, we're more than willing to listen and help come up with some amendments as well, but I've heard a few Council Members say how they feel. I don't know that we've heard all of them, but, it's up to you guys and if you all want to come up with separate ones, that's fine too. CHR. POINDEXTER: Okay, so while we're still if discussion about that, do you want to continue discussion about—Council Member Richards. Page 67 Hawaii County Council-39 May 22,2018 MR. RICHARDS: Thank you, Chair. We better talk about this because that was the whole point, that everybody wants to participate, so we have to have the venue to participate in that. We are in a very unusual time. The Director is very clear that we have a,just use the number $7 million shortfall for the time being right now and independently coming up with nine different versions of how we're going to fix the budget, and then getting together and seeing if we can blend them, I don't think that's a way to work with it. I think what we have to do is we start this afternoon and start having that conversation as far as what are people's wishes? The Director pointed out not everybody has weighed in on this. Nobody likes this right now. This is a junk situation, but we better start talking story collectively now, because this is the only time we can. If the next meeting isn't until June, the Sunshine Law is—the only way we can function under that is having meetings. So, we're here now. I think if we wait until June, that will be remiss. CHR. POINDEXTER: I think I have to ask about what we discussed, if it has to be agendized or can we just continue discussion on this because we are on Draft 2. So, we can overall just keep going on this? Is that okay? MR. MAEDA: I don't see a problem with that. CHR. POINDEXTER: Okay. Council Member Lee Loy stated that she has to leave at five. So, I'm wondering if we could come back to this and move to the next bill and thenno, better not? Just continue to talk is safer? Okay, I guess we'll continue the discussion. Can I go to Council Member Chung? MR. CHUNG: I think the most efficient way of doing this, this is my humble opinion, is everybody just weigh in, what their thoughts are in terms of revenue generating mechanisms or cost cutting measures, feed it to the department, and have them try to figure out something. I already said how I felt. I'm not going to support any real property tax increases, that's out. I also said I'm probably not looking atI'm reversing my position on GET probably, unless there's a wholesale change of heart on the part of this body. But I mentioned earlier that I never anticipated, or I didn't want it to be emergency pool. It was something to move us forward. Now that we're here, we basically got to suck eggs, in my opinion. So, that's where I stand. I think we have to cut stuff, unfortunately. That's my position. Like our budget, my position is fluid, too, though. But, I just want to see what you guys can come up with in terms of cutting. If more people voice their position as being otherwise, then you have to go with the majority on what they say. But, I think I've made my position clear, and I think everybody should just briefly give a glimpse as to where they're coming from. Because if we do it by amendments, look, we took up two amendments today, both of which were Page 68 Hawaii County Council-39 May 22,2018 withdrawn. We took all that time. Imagine what's going to happen if we all come up with our own individual amendments? That's going to be a mess. Then we're going to come up with something that's crazy. So, leave it up to the experts, let them deal with this problem, and it is a big problem, but just let them know how each Council Member feels. I think that's the best way of doing it right now. We might have to put in a lot more work into it in the back end, but for now, let the experts do their job. CHR. POINDEXTER: Council Member Eoff MS. EOFF: Thank you. The first draft of the budget was based on $515,710,662 because there was an increase in the valuations of property. We had an increaseda larger number of property tax that was factored in, along with a couple of other increases that gave us a new number of$518,400,985, right? So, the difference there is almost $2,300,000, right? I know it's not all from property taxes though. MS. SAKO: Right, only $1.7 million is from real property taxes. MS. EOFF: So, if we rounded it up we just say $2 million was from taxes. MS. SAKO: No, $1.7 million was from real property taxes. MS. EOFF: Okay, $1.7 million and now we're looking at a $3 million decrease in property taxes? MS. SAKO: Right. So, on the $1.7 million was utilized for a variety of things, one was to increase the Council contingency funds to put in $270,000 because it was zero. Part of it was utilized to increase the non-profit grants back to the full $1.5 million. MS. EOFF: Okay, I know that, but what I'm getting at is that there was an increase and now there's a decrease in property tax income. And whatever that number is, is actually a number we need to make up now because we can just go back to Draft 1 actually, not put any of your changes that were in Draft 2, and base it on a lesser total. Because that's what you're saying, we don't have a balanced budget right now because we have a different number to work with property taxes, income from property taxes. MS. SAKO: Yes, while I agree with the bulk of that, I was just clarifying that Council contingency funds will go to zero, non-profit grants will stay at a million, and there are some amounts I need to go back and check on that they were not legally mandated, but yes. Page 69 Hawaii County Council-39 May 22,2018 MS. EOFF: I'm just saying that's an option. We could go back to Draft 1 and then we'd only have to come up withno, I'm not talking about this, I'm just talking about to balance to budget, the extra $4 million, is that something that has to be factored into balancing this budget, or can we go just with the difference in the property tax? MS. SAKO: We need a way to fund the cost that I expect to be forthcoming, yes. I think it would be prudent on our part to have some expectation of those costs and to budget for them. I hear what you are saying. I mean one way is to just take care of the $3 million real property tax shortfall and $1.7 we made up between March and May so we can reverse all of the amendments that we made, every single one of them. MS. EOFF: I'm not saying that's what I favor doing, I just want to get an idea of MS. SAKO: Yes, but we will then still need $1.3 million more. But also, now we've only covered the $3 million shortfall in revenue. We haven't covered any of the expenditures. And while Lisa and I hope very much that $3 million is the total impact on our island for the reduction in real property taxes, we can't say it won't go higher. MS. EOFF: Is there any other anticipated source of income because we are declared as a disaster? For instance, I saw that after the Kauai flooding, the State infused, I'm not sure if it was a $100 million, and I don't know all it was used for or could be used for, but would that, in any way, help us if we can get something like that? MS. SAKO: I mean obviously, yes, it would help us, but I don't think we can put it in our budget if we're not aware of it, and I believe it would require a special session by the Legislature. I mean I'm not—yes, it would definitely help. I also did not look carefully because I guess it was Kauai at the time, I didn't look carefully as to what that $100 million was to be used for. But, if we did become aware that funding was available to us, obviously, we would receive it with welcome—very much welcome it. MS. EOFF: Because the $4 million that you are anticipating is going to come out of this year's budget, right? I mean you said we need to use our Disaster Fund to cover cost that we're currently incurring,just to take care of what's happening now. MS. SAKO: Right. So, in the current year, we're at about, for two months' worth, we'd be at $3.6 or roughly $4 million. Coincidentally, if we spend at the same rate for all of next fiscal year, and I took 25 percent of that, which would be our match for FEMA, it's $4 million, actually a little over. Page 70 Hawaii County Council-39 May 22,2018 MS. EOFF: That's kind of an unknown, too, because we don't know what July brings. MS. SAKO: You're right. I mean if it stopped, it would be very different, but I don't know how to know when it's going to stop. MS. EOFF: Right, or when to budget for it, and I guess that's my question, is how do we balance this budget? I guess that's a projection. MS. SAKO: It's a projection. I guess I'm sharing with the Council that I believe we should budget for it because we're going to run out of mechanisms to fund it. I mean once June 201h passes, we cannot change the real property tax rates. If GE tax is not adopted by June 30'h, it won't impact the next fiscal year. We're discussing all the options and I know many people don't want to raise taxes, and that's fine, but if I have to go find $7 million in cuts, which is what it's going to come down to, ultimately, then we will go find $7 million in cuts, but I can't guarantee everybody is going to be happy with that either. MS. EOFF: Thank you, Madam Chair. CHR. POINDEXTER: Okay, thank you. Going back to Council Member Chung. MR. CHUNG: Yeah, I think we all should operate under the assumption that we're looking at about a$7 million shortfall, on the low end, instead of dealing with $3 million or $4 million. Because we're looking at a $3 million shortfall in revenues and an anticipated $4 million in expenditures on the low, both sides, on the low. To do anything less is going to be really irresponsible on our part. So, let's just work under that assumption already, $7 million, on the low, so that we don't start going all over the place, in my opinion. Okay, thanks. CHR. POINDEXTER: Thank you. Council Member David first and then I'll go to—yeah, you didn't get a chance on this other round. I was keeping track of rounds. So, go ahead. MS. DAVID: Thank you, Chair. So, Ms. Sako, then I'm thinking about, I also would not do the real property tax consideration for that, but, as opposed to cuts, maybe I'm thinking about what Director Kucharski was saying, and I'm not sure how that could be implemented if they did implement something like that. Because the numbers he was tossing around was about $8 million but I don't know if it'll help this year's budget, whether there's enough time as opposed to cutting services. If you look at that and see what that wouldI think at this point, we're just tossing around ideas and I know that's something that we should be thinking about, too, because we're footing the whole bill on our solid waste disposal and that's really, I think that's something we should kind of revisit. That Page 71 Hawaii County Council-39 May 22,2018 would be my only suggestion because I really do not even want to do any real property taxes or GE for that matter. So, that would be my suggestion. Mahalo. CHR. POINDEXTER: Okay, Council Member Ruggles. MS. RUGGLES: Thank you. My original questions were very similar to Ms. Eoff s questions. Thank you for that discussion. I think that was really important information that we covered. So, the $4 million, Ms. Sako, is that expected to be an annual recurring cost? MS. SAKO: The $4 million is the annual amount, but, for as long as this lava situation remains, and I have no way of predicting that, or we would need alternative resources. I mean we're already using National Guard. So, I don't know what other alternative resources we would have. So, I guess it's an estimate, an annual estimate for as long as the event continues. MS. RUGGLES: Okay, thank you. What you mentioned about Kauai, they got $100 million from the State? Did they do that through an act? MS. SAKO: Yes, it's when the Legislature was still in session. MS. RUGGLES: Somebody mentioned the zoo fees. I'm just wondering are there any numbers that we have on the amount of traffic that we get to the zoo, and a percentage of how many of those are tourists? MS. SAKO: They may have figures of how many people visit the zoo. I highly doubt they have figures on how many are tourists. MS. RUGGLES: Okay. I wish we had someone from the State that could give us some guidance on what chances we might have of getting into the situation that Kauai was in, because that would be a perfect fix, I think. As far as putting my ideas on the table, I think that we should pursue the State aid. I think that we should not increase general excise tax or real property taxes. In the meanwhile, while we're pursuing our options of what we have at the State, we can utilize those other funds like the geothermal or the PONC that will be paid back. I also have another question, where does the Disaster Fund money usually come from? MS. SAKO: Back in the years when we had—there was a time period when real property tax values were increasing significantly. There was actually excess revenue over expenditures in the budget and so, the money came from the General Fund and transferred to the Disaster Fund. Most of that money has been there for many years already. It was kind of given in one or two big chunks. Now, we annually put in $250,000 as required by County Code. Page 72 Hawaii County Council-39 May 22,2018 MS. RUGGLES: Okay, great. Thank you. I want to correct myself on the real property tax rates. I think that the only way that I would be amenable to looking at property tax rates is if we had assurances that it wouldn't impact people who are already hurting. I did have an idea earlier that I had shared last year, which is increasing rates for residential and for providing exemptions so that properties under around $250,000 would actually see a decrease and from there, it slowly goes up. I just want our most disadvantaged populations to be buffered because 50 percent of our island is already living paycheck to paycheck, and my district is the poorest in the state, and we're already struggling with what's happening with the lava. The other option is waiting to see what happens with Oahu's luxury tax and seeing if that's something that we can do in taxing second million on occupied homes on our island. With that, I yield. Thank you. CHR. POINDEXTER: Thank you. MS. SAKO: I just wanted to clarify that. On the Puna map, much of the shaded areas will be seeing some kind of property tax relief in the coming year. CHR. POINDEXTER: Okay. Council Member Kanuha hasn't spoken yet and he had his light on. So, Council Member Kanuha. MR. KANUHA: Thank you. I appreciate the conversation. It's going to be difficult to figure out what to do in the near future and how to really look at the overall budget throughout next year and the years following. It's not going to be an easy fix and really looking towards the Finance Department and the administration to give us a lot of the guidance on how we really move forward. But, in terms of emergency appropriations, yeah, it was true that the State Legislature appropriated or gave that emergency aid package to Kauai, during session. It was very easy for them to do that. It helped offset a lot of the desperate needs that they had. We have been in conversations with the State Legislature to do something similar to that over here, but they're going to have to do a special session if they're not going to be—for the immediate need. It's going to have to be a special session for that. We'll see what happens with those negotiations with our delegation here on Hawai'i Island and the leadership at the State Legislature. Hopefully, we can get that process can move up quickly. But in terms of how we—given the certain options available, thank you, Deanna, for giving us those. I, as well, am not in favor of property tax increases. I think we're going to have to find the necessary cuts to the budget and everybody is not going to be happy. We really need to show our community that because of the Page 73 Hawaii County Council-39 May 22,2018 situation we are in, this is what really has to happen. I'm happy to do that. My community might not be that happy about it, but I'm kind of going down the line as what Council Member Chung was speaking about earlier. So, saying that, it's hard to talk about the what ifs within the next couple weeks of the budget. So, I don't have anything in front of me that I can really speak too much about. So, that's just my open thoughts. MS. SAKO: Just to clarify on the special session, it's very unlikely they would complete that by our next reading of the budget, right? They have to give notice and then meet, right? MR. KANUHA: I don't know the details with that. MS. SAKO: Yeah, I can't remember them—I never cared about one quite this much before. MR. KANUHA: But, it is something that we're talking to them about. MS. SAKO: We appreciate that. I mean we appreciate everybody's input and we are hopeful that we would get some assistance from the State. I think what's hard about this one is it's such an ongoing event. No one knows how much longer it's going to last. We are also very aware that they are providing some assistance, and FEMA's been here, definitely the National Guard, I mean they have been providing a lot of help as well. We do appreciate that. MR. KANUHA: Definitely, and hopefully, continue into the future. So, thank you. I'll yield. CHR. POINDEXTER: Okay, Council Member Chung. MR. CHUNG: Thank you. We talked about the $7 million shortfall but I think that doesn't even factor in the possibility of capital expenditures too, right? MS. SAKO: Right. I mean down the road, what we're going to have to do, Leilani Boulevard I believe is our road. I don't know what or if we'll fix it. But hopefully, for public projects, for County road projects, hopefully, we would get some FEMA assistance, but it's the private roads and whatnot that Kauai wasn't able to hit the threshold to get assistance for private. I don't know if private roads were counted to that. There's a lot more recovery that's going to have to take place. MR. CHUNG: Anyway, but there's been talk about special sessions and maybe all these different things, and I think Mr. Kanuha characterized them as "what ifs," I think, appropriately so. I don't think we can deal with what ifs. Very illusory and very irresponsible. We have to deal with it what we've got right now Page 74 Hawaii County Council-39 May 22,2018 and if things come up, then terrific, right? If there's a special session and they give us $50 million, terrific. I don't think we can count on it in terms of this budget. I only got two suggestions right now, things that I can think of. The $500,000 that you guys beefed up for non-profit, knock it out, it's $500,000. Our contingency, $240,000 or $270,000? MS. SAKO: $270,000. MR. CHUNG: $270,000? Out. I mean, right off the top of my head, those are things. You've got miscellaneous contractual services for some departments, out. Not completely out but greatly reduced. If you can find some revenue generating tools with Parks and Recreation, but again, that's all what ifs too. So, that's the only thing I can think of, really. MS. SAKO: Right, it's really generating revenue or cutting expenses. The departments have gone through and some of them are more current than others in terms of increasing fees. But, whether we call it a tax or we call it a fee, it's going to impact the public. MR. CHUNG: Yeah, and I'm absolutely against this kind of grades in the residential class. Absolutely cannot do, okay? Because I know Ms. Ruggles has consistently tried to be a champion for the disadvantaged population. The fact is that a lot of that disadvantaged population is getting stuff free. And they're not the guys paying—who have a home that's $200,000 or whatever. Those houses are foreclosed on. I do this kind of commissionerships all the time and all of those houses are getting foreclosed on left and right, okay? So, I don't think her target population, the ones she's trying to help, and then the other one she's trying to get money from, I think it's misdirected, quite frankly. I still thought that the GET would have gotten us out of this mess, really, if we had looked been forward thinking, but that's neither here or there, too, right now. I don't know. We're in a big mess though, big mess. You know, tourism, we talked about tourism earlier. Now that Ms. O'Hara is back, I just wanted to say, we're not trying to make the Puna people feel worse than they already are feeling right now, but the fact remains, we need to keep generating income for this island. That's the only way we're going to be able to get help down there. I mean I used this example to someone, I don't know who it was. You know, the United States sends missiles into Syria or when we're having this whole thing with North Korea, this thing is so far away, but yet, we just feel kind of crappy, right? We just have this crappy feeling about it. Same thing with our neighbors in Puna. Yeah, we have nice skies over here, but it doesn't make us feel any better. We just have this general malaise. So, we're all in this together, but we have to make Page 75 Hawaii County Council-39 May 22,2018 sure that we don't lose those income generators, those things that are going to be able to provide the help that they need. Thanks. CHR. POINDEXTER: Thank you. Council Member O'Hara. MS. O'HARA: Thank you, Chair. Thank you, Mr. Chung. I didn't really mean to imply that we're not all concerned, we are. But, I have seen a lot of comments about some of the tourism messaging that is coming out. It is our main economic activity and we have to keep it alive or we all sink into the poverty cycle, and that's not good for any of us. The State Legislature, the special session, I've been working with the State Representative and State Senator from my district to try to formulate a plan, and it doesn't really have much bearing on this budget at all. It will be how to deal with the temporary housing of displaced people and potentially, some agricultural land swapping because people are losing the properties on which they've been growing papayas, and noni, and ranging their cows and all that stuff So, that land cannot be remediated quickly once it's covered with five or ten feet lava, so, we need to do some land swaps. But, that's what we've been talking about, been meeting with the Governor's liaison and the Senators and folks from the County here. We're trying to formulate a plan for that special session, but, it does not have direct bearing on the budget. In this slide, you gave us with the expenditure changes and revenue changes, since we know that our revenue is not going to be what we thought it was going to be by at least $3 million and potentially more, and I agree, that many of these expenditure changes can indeed be cut, contingency relief, albizia hazard mitigation, as much as I hate to release that, but, I guess it can go until we get a match from the State. The non-profit grants, that's another really hard one to let go of because when we're getting cries from mental health services and dealing with homelessness, that's going to hurt. But, those can leave the budget if need be. The reason that we're in this point is self-imposed, fiscal austerity. I'm with Mr. Chung and was with Ms. Lee Loy on supporting the GE tax increase because I saw this coming. Not the volcanic eruption but the fact that there is just nowhere else to cut. I think Nancy's slide, when you presented this budget to us a couple months ago or whenever that was, it seems like a couple of months, where all we've done is defer maintenance on equipment, defer purchase of new equipment. The efficiencies of our operations go downhill rapidly, and we did not need to be here. If we look across the rest of the State, we're running a ridiculously small budget for the number of people that we're providing services to and the geographical size of this island. That alone and so, that's why I supported it. But, if we had gone that route, we would not be here today having this very, very uncomfortable discussion. But, here we are. Page 76 Hawaii County Council-39 May 22,2018 I want to ask Deanna if the Civil Defense grant match, $175,000, and the vacation pay need to remain in the budget. We're talking about the $4 million in additional expenses that we might end up with in terms of FEMA match. Does that also have to stay in the budget? Because that will make it $4.5 or somewhere around there. MS. SAKO: So, we might be able to get along without the vacation pay. I don't know where we'll get the money if we ran short, but the $175,000 for the Civil Defense match is kind of important or we lose, whatever it is, $700,000 in grant money. That money has really gone to help a lot of our public safety agencies with equipment or even securing our internet and IT (Information Technology)- type of things. Civil Defense can give you a list of all the projects that's been completed with those grant dollars, but they are kind of vital to our island and unfortunately, the fells are now implementing that 25 percent match that we didn't have in the past. So, because of that, we do feel it's kind of critical to leave the $175,000 in. MS. O'HARA: Okay, thanks for that. What are your initial thoughts on closing the gap? Where are we going to take it? MS. SAKO: We can work with the departments to see if there's fees they can increase. There are some, I'm sure, I don't think it's going to make-up the full $7 million. But, both of them, what—fees are either increased by departmental rules or by act or bill or ordinance. So, either Council will have to take action or they'll put it out to public hearing and have rule changes, both of which would take a little bit of time, but at least the fee increases would be effective for most of next fiscal year. Those will be met with a lot of complaints and screams as well, but that's the point, nobody is going to be happy. But, the more we have to cut, the more difficult it's going to be because right now, our resources are already stretched thin by having to cover the various events with the lava. MS. O'HARA: Okay again, we're $7 million short by your best estimate and it could be actually, a bigger gap, depending on how long this event goes on and how much more damage it causes. We have a lot of unknowns. I don't know if the State is going to give us a bailout to the County itself, and that remains to be seen, but we might luck out there. I find this a very sad situation, and to me, a lot of it comes down to just not making the right choices initially, with regard to the tax piece. I've said it to many people, I feel like the GE tax should have been the first thing we considered before we raised property taxes, before we did fuel tax even. So, I think this has kind of been managed in the reverse order, and therefore, we are here. It's painful, but the rest of our economy is doing quite well, not here on the Big Island right now, but the rest of the United States and the rest of the State. So, to find ourselves in this belt tightening situation just somehow does not seem right. Page 77 Hawaii County Council-39 May 22,2018 It never did. So, it's always hard for elected officials to raise taxes. I understand that piece, but I think that somehow, we dropped the ball and here we are. Thank you. CHR. POINDEXTER: Council Member Ruggles. MS. RUGGLES: Thank you. I just wanted to respond to Mr. Chung's comments. I had to, I'm sorry. People who are living paycheck to paycheck means that they are one paycheck away from being homeless and costing us a lot more money in all of the wrap around social services that we have to provide. We need to protect them from property tax increases and that's the bottom line. We have a great amount of wealth on this island, an amazing wealth of disparity. So, to say let's protect the mass amount of people that are struggling on our island and not tax those who compete for who can fit the most helicopters on their yacht, I believe is not misdirected. If you look at the nations that have the most wealth and the least economic disparity, this is what they do. They protect poor people and they tax those who can afford it. Honestly, I think it's typical that one could say let's cut the non- profit grants, who actually help provide a basic safety net and barely keeps people's head over water, and to say to cut that and not even mention the golf course fund, I could say is misdirected. So yes, I'm concerned about the disadvantaged populations, the people in my district, the poorest in our State. Those who are not born into wealth, those who are struggling to raise families, those who work hard paycheck to paycheck, those who are disabled vets, I will continue to be a voice for and everyone is certainly entitled to their own opinion. Thank you. And I certainly hope that we can at least do it in a respectful way. CHR. POINDEXTER: Council Member Richards. MR. RICHARDS: Thank you, Chair. We're still not getting to the root with Councilman Chung pointed out. We, all nine of us, need to give Finance an opinion and a very short summary. Chair, I think we need to have, under your direction, have us do that. Mr. Chung has been very articulate on that. I think that's a place to start because we do have a glaring problem. I think the communications are, well, opinions are what they are, but it still doesn't change the conversation. We still have to solve the problem. So, I will join Mr. Chung in giving my opinion going forward. Just thinking, sitting here to cut the budget two percent across the board, that's one way to do it. Is that the right way to do it? Probably not, but that is one way to do it. I, too, won't support any real property tax. I am the one to introduce amendments to cut real property tax, but I recognize that's not appropriate at this point. Page 78 Hawaii County Council-39 May 22,2018 Funding, I think for the user fees is interesting if we can enact them reasonably quickly. But, the problem is the impact is not going to be realized, and that still comes back to the initial conversation as far as cash flow. The County has to have something in the bank to pay its bills while we go forward. That's nice if FEMA comes along, but you're telling me 2006, that's 12 years ago and we still haven't closed that one out yet? So, let's not get too excited. To Mr. Chung point, what ifs are nice, but that's going to be a bonus, that's not something we can plan on going forward. When it comes toand we've had all sorts of different amendments and all that and that's fine. Increasing revenues, as I had said, I could support a GE tax increase if we had compensatory or offsetting reductions. Okay, everything is back on the table now and if that's what we need to do without the offsets, I will entertain that as well, maybe not a half percent, maybe a quarter percent. But, I think we need to put all that on the table and have a conversation because what we don't want to do is get into a situation, and I'm sure we have some funds in the bank now that will probably buy us some time. But, if we completely delete all of those and we get to a point where we're insolvent, that's not good for the County as a whole. So, I think that gives you my position on that stuff, Deanna. Is there any other question you would ask me because I'll give you the answer? MS. SAKO: No, I think that's good. I think it's helpful. We do have some of the departments that are still here and some of the larger departments have actually taken the most cuts over the years. So, if you'd like to hear from them in terms of what some of the impacts have been from having to cut their budget, we're happy to have them share with you as well. It wasn't like it was a few years ago when we hit the recession. We had come off this steady incline in revenue increases. The budgets were, I wouldn't say fat, but there were some extras in them. We have really added services and built up but through the recession and the last several years, we have trimmed and trimmed so that we can afford the labor increases, which are not only salary and wages, but also the fringe benefits, and those rates are set by the State. It's not anybody's fault here today that we're in this situation, but at some point, we are going to have to raise revenues. And if not this year, it's going to have to be next year. So, at some point, we're going to have to make the tough choices and I want to get us through next year with enough cushion that if this event continues to go on, our real property tax values will be impacted and somehow, we're going to have to make-up that difference. So, I guess I'm trying to hear what everybody wants and that's very helpful, even like a quarter percent GE tax increase or something. But somehow, it help us to be able to layout some scenarios for you guys for the next meeting. Page 79 Hawaii County Council-39 May 22,2018 MR. RICHARDS: So, with that, I yield, Chair. CHR. POINDEXTER: Thank you. Some of us already have given their opinions. Council Member Eoff then I'll go to Council Member Chung. MS. EOFF: I don't know if I've actually given an opinion. I don't have probably all the knowledge to be able to do that except for that I do support the idea of fees, as Mr. Kucharski mentioned. There's also, I think everything's up for—fees, including rounds of golf and zoo visits, everything that's been mentioned where we could impose a small fee if that would amount to a difference that we're trying to make up or at least get us closer. I would prefer to do that than raise property taxes. MS. SAKO: So,just to help put—and thank you, I mean I appreciate that and I think I did hear someone say that earlier. Our entire charges for services, which is kind of our fee section of the General Fund, that doesn't include golf courses, some of the special funds, but the budget for the current fiscal year 2018 is $8 million. So, we're basically talking about doubling all fees to make that up. So,just to put it into perspective for everybody. MS. EOFF: Could you say that again? MS. SAKO: So, right now, our charges for services, the current budget is $8 million in the fiscal year 2018. So, we would basically be talking about doubling that for next year, I mean with fee increases. MS. EOFF: Although I know earlier Mr. Chung had said that he didn't support borrowing from any of the special funds because it's just kicking the bird and that we'll see later down the road, but, I don't know if that would be something that I would consider still possible to look at. Only because I think down the road, we may find if this disaster were to continue on and on, that we would be eligible for some other means of financial support, that we could use to pay those back. So, that's just another thing that if you have toI don't know, do youI don't know how our law is about providing us a balanced budget because now you have indicated that there's a different valuation. MS. SAKO: So, the Charter does have provisions that if we were to be aware of revenue shortfalls once we're in the fiscal year, that we would have to come back to Council with the proposed budget amendment to keep the budget in balance. We're just trying to take care of that before we hit the new fiscal year because this is the early part of this event. It could get worse. If that's the case, we may have to come back with additional corrections next fiscal year. We're trying to fix what we can now so that it still would give us opportunities to be able to fix more next year if we have to, and to leave some things there should we have to fix more. Page 80 Hawaii County Council-39 May 22,2018 My real fear is that $7 million is not nearly enough and we're trying to work with everybody. We get it, but two of our four proposals were revenue increases, some kind of tax increase and there's a reason for that, and I know it's not popular and I apologize. I do get it. Every person on this island is impacted by this lava flow, some way or another. Whether it's their employment is going to be changed because tourism is down, the hotels are losing occupancy, but sometimes we all have to stand together. MS. EOFF: I understand that, but it was good that you just told us that can be done at the new fiscal year as well, if we see that there's need for another adjustment because then we have some options too. MS. SAKO: Right, but we have to have something to adjust. So, if we cut everything now, there won't be nothing left to adjust in the new fiscal year. MS. EOFF: No, I mean as far as another tax, whether it be property tax or GE. MS. SAKO: Well, we cannot—we can only reduce or we have to have a special—the budget has to remain balanced and the taxes can only be set by June 20'h. The Charter is clear, that we cannot have emergency ordinances for additional tax levies. MS. EOFF: Oh, I see. MS. SAKO: So, we can come up with budget cuts, or if by some miracle, we ended up with excess fund balance or something, we could come in and appropriate that. But, our excess fund balance this year was $18,000. That's not going to get us very far. So, I'm really sorry to be such the downer today. CHR. POINDEXTER: Okay, can I move on? Council Member Chung. MR. CHUNG: Thank you. First of all, there was some suggestion that my earlier discussion was disrespectful, I think Ms. Ruggles is still back there. But really, I think I started my conversation off by saying that she's been consistently a champion for the poor. I don't know how disrespectful that is, but we have differences of opinion. The fact that I suggested cutting our non-profit grants, which affects all of us, all of a sudden it turned into something else when she was getting kind of angry, I guess, about that suggestion. But, if I was disrespectful, I apologize. I really don't think I was though. But anyway, I stated that we have to defer to our experts, in my opinion, but at this point, too, we have to pull out all the stops. I don't want to put any attention on anyone, but right now, we've got to seek leadership from within too. We've got our Chairman, we've got our Finance Chair, we've got to get suggestions from them, how are we going to do this? So, if the two of you guys can work Page 81 Hawaii County Council-39 May 22,2018 with the administration, come up with some proposal as to how we're going to wiggle out of this mess, I'm all ears on that. MS. SAKO: Yeah, we're happy to have those conversations in the coming week. MR. CHUNG: Thank you. CHR. POINDEXTER: Council Member Lee Loy and then I'll go to Council Member Richards. MS. LEE LOY: Thank you, Chair. First and foremost, Deanna was looking for some guidance. Yeah, I'm not interested in raising real property tax. I am open to exploring some of the funds and how we do that, but, I'll leave that to you and all the experts at Corporation Counsel, including the leadership here. I think that is very critical, that there be some interfacing going on. I think the challenge on other revenue sources, like the zoo or the golf course or park fees or user fees, that's still down the road. I seriously want this administration and every department in this administration to consider using a bill that I passed that would provide partnerships to enhance County assets. There's a lot of opportunity with that bill for equipment, for funding, and I'm serious about that. If we're not going to be able to generate revenues and we're not going to be able to cut expenditures, we have to look outside and stop using the same model over and over again. I think what I do want to end with is something that Deanna started with, which is, we've got to do this together. We really got to do this together. And part of that, which makes us special, and that spirit of aloha and generosity, also means sacrifice. So, we're going to have to sacrifice as a whole. If we're going to do this together, we're going to have to sacrifice as a whole. If that can be a common theme through some of the interfacing between our leadership and the administration, it's shared sacrifice. I also strongly believe that we're not done. We're going to have to do this and we might have to amend the budget again. That's where I stand. We can control what we can control. We cannot hope on the what ifs, like Mr. Kanuha said. We have some tools. MS. SAKO: I totally agree. My only concern with the sponsorship, partnership kind of thing is right now, in these kinds of times, we have a lot of our local businesses that are already giving out and donating to Puna and different things. Some of their businesses are being impacted by our reduction in tourism and other things and just people in general. So, while we're willing to do that, I don't know that it's going to be the one thing that's going to solve our problems. But, if Council Members are aware of people that maybe you've talked to that are willing to sponsor, and be part of that program, please let us know because I think Page 82 Hawaii County Council-39 May 22,2018 the departments would be willing to reach out. But, many of our departments are busy up at Civil Defense. They're there every day, so making phone calls for sponsorships might not be what's going to happen in the next couple of weeks any way. But definitely, that's something that they can be working on. MS. LEE LOY: Thank you for that, Deanna, because if I know that I can champion that conversation, and I know the administration is incredibly busy with this event. I do know of a few individuals who can bring that kind of capital investment, but the administration has to make it a priority too. MS. SAKO: No, definitely. It's just like if you can give us a name and they're not like going down a list making phone calls, but now, it becomes a more concentrated effort dealing with one person. That's so much easier for them than trying to find the person themselves. MS. LEE LOY: Thank you. That's my thoughts. And again, Chairs, both Ms. David and Ms. Poindexter, we've got to exercise that muscle and work hard with Deanna. I think at the end of the day, it's going to take all of us working hard. Thank you. CHR. POINDEXTER: Thank you. Council Member David. MS. DAVID: Yes, thank you. I really appreciate, Ms. Lee Loy, your comments, especially the fact that we are one body trying to find a solution, as Mr. Chung had said. In that respect, I want to just say that I am definitely willing to work and I'm sure Chair Poindexter will because I've already suggested some method of finding some revenues. Whatever we come up with, I know it's not going to be easy. It's not going to be—everybody is not going to be happy, but I look forward to this body supporting whatever we work with the administration and bring forward to this Council. And that's what I look forward to, the support from my fellow colleagues and the administration and working with you folks. So, I look forward to it. Thanks, Deanna. CHR. POINDEXTER: Okay, thank you. Council Member Richards. MR. RICHARDS: This is more of a question on procedure, which is, Clerk, where are we? Stewart, a lot of things has been kicked around, possible—the real property tax is essentially off the table because no one is supportive of that. If the GE tax was on the table, is there enough time from today to get it done with reasonable—would it take special meetings? Is it possible because if we can't get it done, there's no point even talking about it? MR. MAEDA: So, your question is to approve to have the GE back on and to approve it? Page 83 Hawaii County Council-39 May 22,2018 MR. RICHARDS: I'm asking, everything is on the table right now MS. SAKO: So, I had talked to Corporation Counsel about that before we proposed it as an amendment, and our understanding, but I'm not going to override the County Clerk, obviously, but our understanding is that one of the Council Members on the prevailing side of the postponement could ask for a reconsideration and the bill could be reconsidered. If it's adopted in its current form, then it would be two readings in June. You have the two Council meetings coming up. I know I heard you say if it was like maybe a quarter percent, then I believe it would need one more public hearing. So then, that would probably require some special meetings. MR. RICHARDS: Again, this is to explore all avenues and if it's not possible, no need to go further. Point of Order: MS. O'HARA: Point of order. CHR. POINDEXTER: Council Member O'Hara, your point of order. MS. O'HARA: Yes, clarification on that reconsideration has a time limit on it, and I think we are past that time limit at this point in time. I had that discussion. MS. SAKO: It may take a waiver of the rules or something. MS. O'HARA: Is that even possible? MS. SAKO: I don't know if Renee is here but because it wasn't a final vote, like it didn't—the bill wasn't voted down or up, her interpretation was that it was still a live matter before the Council that the five day CHR. POINDEXTER: I think the question is the five day for motion to reconsider and our rules don't allow after the five day because Council Member O'Hara did check on that about a week ago. So, when—and it was just in that period, so, it wasn't brought back, so, there'sI don't know how they would override that rule. Then we could reconsider anything we want. MS. SAKO: No, I think her point was that this one was a little different in that it was a postponement and not like a final decision. But, I don't have that right in front of me, but it's something we could continue to look at. MS. O'HARA: Can Mr. Kamelamela provide a response? Is it possible? What rule is that anyway? CHR. POINDEXTER: I think I gave it to you when I Page 84 Hawaii County Council-39 May 22,2018 MS. O'HARA: Rule 15? Is that something that we can waive? We do certain rules all the time but I'm just going to ask for Corporation Counsel's guidance on that. MS. SAKO: Can we take a short recess while he looks at that? CHR. POINDEXTER: So, we're going toand we need a break anyway. So, we're going to take a 15-minute break. Recess. Recess: At 3:14 p.m., the Chair called for a recess. Reconvene: The meeting reconvened at 3:43 p.m. CHR. POINDEXTER: Okay, I'm calling this meeting out of recess. Okay, so since—is it possible for me to speak now on my opinion or whatever since everybody gave theirs? Okay. MS. O'HARA: Chair, didn't we leave this meeting to the point where Mr. Kamelamela was answering a question? CHR. POINDEXTER: Who was asking him the question? MS. O'HARA: About whether the rule CHR. POINDEXTER: Okay, you're right that Deanna asked for us to go to recess to talk with Mr. Kamelamela. Okay. So, Mr. Kamelamela, do you want toI think it was on whether or not we can bring back on a reconsideration. Go ahead. (Note: At this time, Corporation Counsel Joseph Kamelamela came forward to address the members of the Council.) MR. KAMELAMELA: Okay, thank you. Joseph Kamelamela, Corporation Counsel. I'm not too sure who asked the question, whether it was Mr. Richards or Ms. O'Hara. Anyway, it's a very interesting question, but when we talk about reconsideration motions in bringing something back, usually, we talk about where there's an action that has been done. So, what usually that means is that there's a bill that usually, that either has been voted upon up or down. So, that's how I recall it. CHR. POINDEXTER: Okay, can I just ask you on the action, you just said action, so, isn't a postponement an action? MR. KAMELAMELA: That's what I'm going to get to because given the context of the rule, when you look at the type of motions that we have and so you look at Page 85 Hawaii County Council-39 May 22,2018 rule number 14(c), there's a motion that you can make to postpone to a certain time. "This is a motion that delays action on a pending question to a definite day, meeting time, or until after a certain event." So, in this situation concerning the GET tax, when it was last heard within the last month, the motion was to delay action on the GE tax, okay? That's the motion that was made. Given that was the motion, when you look at the rule that we're looking at, it's not applicable in this situation because rule 15 talks about when basically, when there has been an action. Okay, this is just one way of looking at this, okay? But, this is the interpretation that you can look at, but you can't vote on it today. If you were to tell me, well, can we do a motion for reconsideration on what we did to postpone? I would have to say yes, you can do that, but you can't do it today. Somebody from the Council would have to do like a communication to bring it up the next time, and because we're talking about possibilities. Now, if the Council Members are uncomfortable with what I'm just stating, then, you go to rule 19, talking about the suspension of the rules, but you need a two- thirds vote on that. So, everything is actually in the Council's hands at this point. So, this is my opinion, which is similar to what, not on all points, but similar to what the Finance Director had informed Council Members. Any questions? CHR. POINDEXTER: Any questions on what Corporation Counsel just said? Okay. Everybody is okay with that? Okay, so we continue on MS. O'HARA: I'm sorry, I do have a question. CHR. POINDEXTER: Okay, Council Member O'Hara. MS. O'HARA: So, we have no chance of reconsidering is what I'm hearing. Is that correct? CHR. POINDEXTER: No, that's not what he said. MS. O'HARA: I just want to be clear, Joe, because sometimes it's kind of hard to understand the language. MR. KAMELAMELA: Sorry. MS. O'HARA: No, that's okay. The reconsideration would take waiver of the rule or not? MR. KAMELAMELA: No, I'm saying that the rule that people have been looking at doesn't really apply in this situation. But yeah, the five-day—but, if the Council Members are not comfortable with what I just stated, you can go to the Page 86 Hawaii County Council-39 May 22,2018 route of the rule 18, which is the suspension of the rules as another way to do it. Totally up to you. MS. O'HARA: Thank you. CHR. POINDEXTER: Okay, everybody okay with that? Meaning that you could bring a communication up to ask to suspend the rules. And then if we need more clarification, I would speak to our LRB, correct? Our Legislative Research Branch to get more clarification. Okay, we're still on Bill 112, Draft 2. So, everybody—okay. So, I'll speak now before we vote to send it to final reading on June 6 and turn it into Draft 3. Opinion, well, my thoughts, I don't think we, as Council Members, all dropped the ball on the GET because we spoke on behalf of our constituency in each of our respective districts. So, I think each of us felt that we made the right decision. As far as supporting the GET as is, because it is conditional, with conditional expenses, I am not supporting it. I'm also not supporting the real property tax, so what do we have left to look at? I have a question for our Finance because we're looking at a budget that we're saying is now not balanced because now we're, all of a sudden, using projected numbers. I remember last year asking, here's the revenue source, but where are all the grants that are coming in that we've applied for and all? I was told that we got to use what are the real actual numbers, we're not using projected numbers. Now, it changed. Now, we're using projected numbers. Did we project in the grants that were written and the things coming in within the next fiscal year as well, beside expenses in this budget? MS. SAKO: So, one of the things—every time we do the budget, when we have a grant, there's always the grant revenue and the grant expenditure. When the department is fairly confident that they're going to get that grant, we do put it in the budget. There may be times when they're really not sure if they're going to get it at all or the amount may be very up in the air. Then, we'll come back to Council during the year to do the supplemental appropriations. But the grants are always—the revenue offsets the expenditure, so they're never actually used to balance the budget. So, revenues equal expenditures. In this case, there is provision in the Charter that we could come back next year and balance the budget, but we would have to have additional revenues to appropriate or we would have to cut expenditures. And what we're saying or my opinion is we have the opportunity to fix it before we pass the budget because if this was something like Iselle, and we had the damage, and we're just in the clean-up mode, and we're fixing it, the conversation would be very different. This lava event could be ongoing and we don't know Page 87 Hawaii County Council-39 May 22,2018 CHR. POINDEXTER: Okay, so bottom line is we can come back after this to still do another amendment to that budget, correct? You just said that we could come back, right? We still can MS. SAKO: Yes. Right. And as I said, in the Charter, yes, that's true. CHR. POINDEXTER: So, in other words, should, say by the grace of God we have a special session and we get some money from the State, that warrants another budget meeting, correct? MS. SAKO: Well, I mean administration could bring forth an operating budget amendment, yes. CHR. POINDEXTER: Okay, so that's good. So, we're still not—I mean there are so many options out there, yet. I'm willing to sit at the table and talk about all the different options and lay it all out and look at what would be the best for everyone. Because we've heard our nine Council Members and where they're coming from. So, I'm willing to sit, go through that, I mean, give me a time next week that we can sit and just go through it. I'll get some dates from you But at this point, where I stand, like I said is I'm still not willing to support the GET as is, with the conditional expenses. I'm not willing to raise property taxes and looking at ways that we can cut here and there or whatever. But, it takes, again, sitting down and looking at the real numbers. I'd like to look at the real numbers and then maybe do a budget to looking at projections. But, when we do projections, not all grants come in that are offset by an expense because I think you can get some grants that can support some projects ongoing that can offset and credit some of the expenses that we have on the books already. MS. SAKO: A lot of the grants do not allow supplanting, which is to basically support your current expenditures. I'm not saying that's true of every single one, but most of the grants do not allow supplanting. CHR. POINDEXTER: Most of them, but some may. Okay, but at least some may, and we can look at that too. So, I'd like to look at what's out there as well. So, that's where I stand. Is there any other discussion? Okay. So, now we're going to vote to—we need to vote to move this Draft 2 to the second reading on June 6, 2018, to make it our Draft 3. Okay so—am I correct? It's still Draft 2. On second reading for June 6 and then at that point, it will become, when we vote that in, will become Draft 3 after that. Okay. Once it gets amended. Okay, so Bill 110, Draft 2, to send it to second and final reading on June 6, 2018, all those in favor say "aye." Page 88 Hawaii County Council-39 May 22,2018 Vote on Bill 110: The motion to pass Bill 110, Draft 2, on first reading was Draft 2 carried by the following roll call vote: (Approved) Ayes: Council Members Chung, David, Eoff, Kanuha, and Chair Poindexter—5. Noes: Council Members Lee Loy, O'Hara, Richards, and Ruggles —4. Absent: None. Excused: None. CHR. POINDEXTER: Okay so, Bill 110, Draft 2 moves to second reading. Okay now we are at, Mr. Clerk, Bill 111, the capital budget. Bill 111: RELATES TO PUBLIC IMPROVEMENTS AND FINANCING THEREOF FOR THE FISCAL YEAR JULY 1, 2018, TO JUNE 30, 2019 From Mayor Harry Kim, dated March 1, 2018, transmitting the proposed Capital Budget for Fiscal Year 2018-2019, and the Capital Program for the next six years from Fiscal Year 2018-2019 to 2023-2024, which includes 39 projects requiring a total appropriation of$190.9 million. Approximately $114.6 million are intended to be funded in whole or part by bonds, $75.2 million to be funded by the State Revolving Loan Fund or State Capital Improvement Projects, $0.16 million to be funded by federal funds, and $1 million to be funded by Fair Share Contributions. Reference: Comm. 756 Intr. by: Ms. David (B/R) Approve: FC-110 and Comm. 756.1: From Mayor Harry Kim, dated May 4, 2018, transmitting Bill 111, Draft 2. Draft 2 proposes 46 projects requiring a total appropriation of$205.1 million. Bill 111 RELATES TO PUBLIC IMPROVEMENTS AND FINANCING THEREOF (Draft 2): FOR THE FISCAL YEAR JULY 1, 2018, TO JUNE 30, 2019 Proposed Capital Budget for fiscal year ending June 30, 2019, requires a total appropriation of$205.1 million, of which approximately $126.1 million are intended to be funded in whole or part by bonds, $77.3 million are to be funded by the State Revolving Loan Fund or State Capital Improvement Projects, $380,000 are to be funded by federal funds, $65,000 are to be funded by private grants, and $1.25 million are to be funded by Fair Share Contributions. Intr. by: Ms. David (B/R) Comm. 756.2 From Council Member Eileen O'Hara, dated May 10, 2018, transmitting (Memo No. 1): proposed amendments to add the Parks and Recreation Department's Hawaiian Paradise Park District Park project in the amount of$500,000. Page 89 Hawaii County Council-39 May 22,2018 ; and Comm. 756.3 From Council Member Eileen O'Hara, dated May 10, 2018, transmitting (Memo No. 2): proposed amendments to add the Parks and Recreation Department's Ginny Aste Skate Park—Flat Track Course in the amount of$300,000. ; and Comm. 756.4 From Council Member Eileen O'Hara, dated May 10, 2018, transmitting (Memo No. 3): proposed amendments to add the Parks and Recreation Department's Isaac Kepo`okalani Hale Beach Park Water Line Repair project in the amount of $250,000. ; and Comm. 756.5 From Council Member Valerie T. Poindexter, dated May 10, 2018, transmitting (Memo No. 4): proposed amendments to re-appropriate the Parks and Recreation Department's Honoka`a Park Tennis Courts Improvements project in the amount of$500,000. ; and Comm. 756.6 From Council Member Valerie T. Poindexter, dated May 10, 2018, transmitting (Memo No. 5): proposed amendments to re-appropriate the Parks and Recreation Department's Honomu Park New Playground Equipment project in the amount of$500,000. ; and Comm. 756.7 From Council Member Valerie T. Poindexter, dated May 10, 2018, transmitting (Memo No. 6): proposed amendments to re-appropriate the Parks and Recreation Department's Papa`aloa Park Repairs & Improvements project in the amount of$750,000. ; and Comm. 756.8 From Council Member Valerie T. Poindexter, dated May 10, 2018, transmitting (Memo No. 7): proposed amendments to re-appropriate the Parks and Recreation Department's Honoka`a Track and Field and Stadium Improvements project in the amount of $1.5 million. ; and Comm. 756.9 From Council Member Valerie T. Poindexter, dated May 11, 2018, transmitting (Memo No. 8): proposed amendments to re-appropriate the Parks and Recreation Department's Laupahoehoe Swimming Pool Solar Heating System project in the amount of $750,000. ; and Comm. 756.10 From Council Member Valerie T. Poindexter, dated May 11, 2018, transmitting (Memo No. 9): proposed amendments to re-appropriate the Parks and Recreation Department's Haina Park New Comfort Station and Improvements project in the amount of $750,000. and Page 90 Hawaii County Council-39 May 22,2018 Comm. 756.11 From Council Member Karen Eoff, dated May 14, 2018, transmitting proposed (Memo No. 10): amendments to add the Public Works Department's Ane Keohokalole Highway Phase III–Hinalani Drive to Kaiminani Drive project in the amount of$9.2 million. Motion to Approve: Ms. David moved to pass Bill 111 and adopt Finance Committee Report No. 110 on first reading. Seconded by Mr. Kanuha. CHR. POINDEXTER: So, let's look at—okay, what I'm going to do at this point because I have so much of my—yeah, hang on one second. Pursuant to Article 10, Section 10-2a of the Hawai'i County Charter the Mayor has submitted an amended capital budget to the Council on May 4, 2018. If there's any discussion, because like the last bill, what we did was there was no discussion and we took it into Draft 2. So, is there any discussion? Okay, Ms. David, may I have a motion to amend Bill 111? Motion to Amend: Ms. David moved to amend Bill 111 with the contents of Comm. 756.1. Seconded by Mr. Kanuha. CHR. POINDEXTER: Now, before we start discussion, I'm just going to relinquish the chair to Council Member, Vice Chair Karen Eoff since I have a lot of communications on here. So, Council Member, Vice Chair Eoff Relinquish Chair: At this time, Chair Poindexter relinquished the chair to Acting Chair Eoff ACTING CHR. EOFF: I'm going to start with Ms. O'Hara. Ms. O'Hara, would you like to make a motion? I'd like to take a vote on amending Bill 111 to Draft 2. Any discussion? Seeing none, all in favor please say "aye." Vote on Motion to The motion to amend Bill 111 with the contents of Amend: Comm. 756.1 was carried by the following voice vote: Ayes: Council Members Chung, David, Kanuha, Lee Loy, O'Hara, Poindexter, Richards, Ruggles, and Acting Chair Eoff–9. Noes: None. Absent: None. Excused: None. ACTING CHR. EOFF: Now, I will ask Ms. O'Hara for a motion to approve Comm. 756.2. Motion to Amend: Ms. O'Hara moved to amend Bill 111, Draft 2, with the contents of Comm. 756.2. Seconded by Mr. Richards. Page 91 Hawaii County Council-39 May 22,2018 ACTING CHR. EOFF: Ms. O'Hara. MS. O'HARA: Needs little explanation. We're aware about this project, and we're just asking for enough money to get to the next phase, which is environmental assessment and engineering. ACTING CHR. EOFF: Okay, thank you. Any other questions? Discussion? Seeing none, all in favor please say "aye." Vote on Motion to The motion to amend Bill 111, Draft 2, with the contents of Amend: Comm. 756.2 was carried by the following voice vote: Ayes: Council Members Chung, David, Kanuha, Lee Loy, O'Hara, Poindexter, Richards, Ruggles, and Acting Chair Eoff—9. Noes: None. Absent: None. Excused: None. ACTING CHR. EOFF: Ms. O'Hara, motion to approve Communication 756.3. Motion to Amend: Ms. O'Hara moved to amend Bill 111, Draft 2, with the contents of Comm. 756.3. Seconded by Ms. David. ACTING CHR. EOFF: Discussion? MS. O'HARA: I just ask for your support on this. It's still needed in spite of all that's happening in my district. This is still a big need, so I just ask for your support. ACTING CHR. EOFF: Okay, thank you. Any other comments? Seeing none, all in favor please say "aye." Vote on Motion to The motion to amend Bill 111, Draft 2, with the contents of Amend: Comm. 756.3 was carried by the following voice vote: Ayes: Council Members Chung, David, Kanuha, Lee Loy, O'Hara, Poindexter, Richards, Ruggles, and Acting Chair Eoff—9. Noes: None. Absent: None. Excused: None. ACTING CHR. EOFF: Communication 756.4. Page 92 Hawaii County Council-39 May 22,2018 Motion to Amend: Ms. O'Hara moved to amend Bill 111, Draft 2, with the contents of Comm. 756.4. Seconded by Ms. David. ACTING CHR. EOFF: Ms. O'Hara. MS. O'HARA: Again, this is a project that current activities have not yet displaced, and if things calm down, this is going to be very much needed. So, I ask for your support. ACTING CHR. EOFF: Okay, all in favor please say "aye." Vote on Motion to The motion to amend Bill 111, Draft 2, with the contents of Amend: Comm. 756.4 was carried by the following voice vote: Ayes: Council Members Chung, David, Kanuha, Lee Loy, O'Hara, Poindexter, Richards, Ruggles, and Acting Chair Eoff—9. Noes: None. Absent: None. Excused: None. ACTING CHR. EOFF: Moving to Communication 756.5. Ms. Poindexter. Motion to Amend: Ms. Poindexter moved to amend Bill 111, Draft 2,with the contents of Comm. 756.5. Seconded by Ms. David. ACTING CHR. EOFF: Ms. Poindexter. MS. POINDEXTER: Know that for the public's information, there's no funding that is attached to this. What we're doing here is putting things back on what we call our wish list. Basically, it's just reappropriating it because after so many years it kind of falls off So, we want to make sure and put it there so that should we become lucky enough to have a lot of money and Deanna finds all the gold somewhere, that the administration can pick out some of these projects to get completed. So, I ask for your support to just get it on our wish list. Thank you. ACTING CHR. EOFF: Okay, any comments? Seeing none, all in favor please say "aye." Page 93 Hawaii County Council-39 May 22,2018 Vote on Motion to The motion to amend Bill 111, Draft 2, with the contents of Amend: Comm. 756.5 was carried by the following voice vote: Ayes: Council Members Chung, David, Kanuha, Lee Loy, O'Hara, Poindexter, Richards, Ruggles, and Acting Chair Eoff—9. Noes: None. Absent: None. Excused: None. ACTING CHR. EOFF: Communication 756.6. Motion to Amend: Ms. Poindexter moved to amend Bill 111, Draft 2,with the contents of Comm. 756.6. Seconded by Ms. David. ACTING CHR. EOFF: Discussion? MS. POINDEXTER: I'll just say one more time and then I won't repeat anything after that. For all the ones following this, the same thing like the first one that I did, no funding attached to it, putting it on the wish list should we ever become lucky enough to be able to address some of the projects. Thank you. ACTING CHR. EOFF: Okay, all in favor please say "aye." Vote on Motion to The motion to amend Bill 111, Draft 2, with the contents of Amend: Comm. 756.6.was carried by the following voice vote: Ayes: Council Members Chung, David, Kanuha, Lee Loy, O'Hara, Poindexter, Richards, Ruggles, and Acting Chair Eoff—9. Noes: None. Absent: None. Excused: None. ACTING CHR. EOFF: Communication 756.7. Page 94 Hawaii County Council-39 May 22,2018 Vote on Motion to Ms. Poindexter moved to amend Bill 111, Draft 2,with the Amend: contents of Comm. 756.7. Seconded by Ms. David and carried by the following voice vote: Ayes: Council Members Chung, David, Kanuha, Lee Loy, O'Hara, Poindexter, Richards, Ruggles, and Acting Chair Eoff—9. Noes: None. Absent: None. Excused: None. ACTING CHR. EOFF: Communication 756.8. Vote on Motion to Ms. Poindexter moved to amend Bill 111, Draft 2,with the Amend: contents of Comm. 756.8. Seconded by Ms. David and carried by the following voice vote: Ayes: Council Members Chung, David, Kanuha, Lee Loy, O'Hara, Poindexter, Richards, Ruggles, and Acting Chair Eoff—9. Noes: None. Absent: None. Excused: None. ACTING CHR. EOFF: Communication 756.9. Vote on Motion to Ms. Poindexter moved to amend Bill 111, Draft 2,with the Amend: contents of Comm. 756.9. Seconded by Ms. David and carried by the following voice vote: Ayes: Council Members Chung, David, Kanuha, Lee Loy, O'Hara, Poindexter, Richards, Ruggles, and Acting Chair Eoff—9. Noes: None. Absent: None. Excused: None. ACTING CHR. EOFF: Communication 756.10. Page 95 Hawaii County Council-39 May 22,2018 Vote on Motion to Ms. Poindexter moved to amend Bill 111, Draft 2,with the Amend: contents of Comm. 756.10. Seconded by Ms. David and carried by the following voice vote: Ayes: Council Members Chung, David, Kanuha, Lee Loy, O'Hara, Poindexter, Richards, Ruggles, and Acting Chair Eoff—9. Noes: None. Absent: None. Excused: None. ACTING CHR. EOFF: Communication 756.11. Motion to Amend: Ms. Poindexter moved to amend Bill 111, Draft 2,with the contents of Comm. 756.11. Seconded by Ms. David. ACTING CHR. EOFF: This is my amendment. There's not too much to say about except for it's so much needed, phase three of Ane Keohokalole Highway and this will just be to keep it moving for the future. Any further discussion? Seeing none, all in favor please say "aye." Vote on Motion to The motion to amend Bill 111, Draft 2, with the contents of Amend: Comm. 756.11 was carried by the following voice vote: Ayes: Council Members Chung, David, Kanuha, Lee Loy, O'Hara, Poindexter, Richards, Ruggles, and Acting Chair Eoff—9. Noes: None. Absent: None. Excused: None. ACTING CHR. EOFF: Communication 756.12. Vote on Motion to Ms. Ruggles moved to amend Bill 111, Draft 2, with the Amend: contents of Comm. 756.12. Seconded by Ms. David and carried by the following voice vote: Ayes: Council Members Chung, David, Kanuha, Lee Loy, O'Hara, Poindexter, Richards, Ruggles, and Acting Chair Eoff—9. Noes: None. Absent: None. Excused: None. ACTING CHR. EOFF: Communication 756.13. Page 96 Hawaii County Council-39 May 22,2018 Vote on Motion to Ms. Ruggles moved to amend Bill 111, Draft 2, with the Amend: contents of Comm. 756.13. Seconded by Ms. David and carried by the following voice vote: Ayes: Council Members Chung, David, Kanuha, Lee Loy, O'Hara, Poindexter, Richards, Ruggles, and Acting Chair Eoff—9. Noes: None. Absent: None. Excused: None. ACTING CHR. EOFF: Communication 756.14. Vote on Motion to Ms. Ruggles moved to amend Bill 111, Draft 2, with the Amend: contents of Comm. 756.14. Seconded by Ms. David and carried by the following voice vote: Ayes: Council Members Chung, David, Kanuha, Lee Loy, O'Hara, Poindexter, Richards, Ruggles, and Acting Chair Eoff—9. Noes: None. Absent: None. Excused: None. ACTING CHR. EOFF: Communication 756.15. Vote on Motion to Ms. Ruggles moved to amend Bill 111, Draft 2, with the Amend: contents of Comm. 756.15. Seconded by Ms. David and carried by the following voice vote: Ayes: Council Members Chung, David, Kanuha, Lee Loy, O'Hara, Poindexter, Richards, Ruggles, and Acting Chair Eoff—9. Noes: None. Absent: None. Excused: None. ACTING CHR. EOFF: Communication 756.16. Page 97 Hawaii County Council-39 May 22,2018 Vote on Motion to Ms. Ruggles moved to amend Bill 111, Draft 2, with the Amend: contents of Comm. 756.16. Seconded by Ms. David and carried by the following voice vote: Ayes: Council Members Chung, David, Kanuha, Lee Loy, O'Hara, Poindexter, Richards, Ruggles, and Acting Chair Eoff—9. Noes: None. Absent: None. Excused: None. ACTING CHR. EOFF: Okay, we are back on the main motion which is Bill 111, as amended to Draft 2, and then further amended with all of these communications. Any discussion? Seeing none, all in favor please say "aye." Vote on Bill 111: The motion to pass Bill 111, as amended to Draft 3, on first Draft 3 reading was carried by the following voice vote: (Approved) Ayes: Council Members Chung, David, Kanuha, Lee Loy, O'Hara, Poindexter, Richards, Ruggles, and Acting Chair Eoff—9. Noes: None. Absent: None. Excused: None. ANNOUNCE- The Chair directed the Council to proceed to the next order of business, MENTS: Announcements. (There were none.) Page 98 Hawai`i County Council-39 May 22,2018 ADJOURN- There being no further business, at 4:12 p.m., Ms. Poindexter moved to adjourn MENT: the meeting. Seconded by Ms. David and carried by the following voice vote: Ayes: Council Members Chung, David, Kanuha, Lee Loy, O'Hara, Poindexter, Richards, Ruggles, and Acting Chair Eoff—9. Noes: None. Absent: None. Excused: None. ACTING CHR. EOFF: This meeting is adjourned. JUL 1 0 2018 Council Approval: A.0 Ap COUN CLERK SM/jm Page 99