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HomeMy WebLinkAboutREP FC 131 2018/08/07 (2016-2018) REPORT OF THE COMMITTEE ON FINANCE DATE: August 7, 2018 Re: Comm. No. 997/Bill No. 169 PLACE: Council Chambers Hilo, Hawai`i TIME: 9:15 a.m. • Council Chair and Members Hawai`i County Council Hilo, Hawai`i 96720 Your Committee on Finance,to which was referred Bill No. 169, reports as follows: Bill No. 169, transmitted by Finance Director Deanna S. Sako, via Communication No. 997 dated July 20, 2018, amends Ordinance No. 18-68, as amended, the Operating Budget for the County of Hawai`i for the fiscal year ending June 30, 2019. This bill establishes General Excise Tax Surcharge revenue account and appropriates $10 million into this account as anticipated revenue, and establishes and applies these funds to two new General Excise Tax Surcharge Mass Transit expenditure accounts, as follows: Other Current Expense($4,412,145) and Equipment ($3,587,855). The remaining $2 million would be appropriated to the Transfer to Capital Projects Fund expenditure account to be used for bus shelters and road improvement projects, including Oneo Land and the Ane Keohokalole extension. Council Member Herbert M. "Tim" Richards, III, stated the recent approval of the 2.5 percent surcharge was to help balance the budget. He recalls the discussion was that the rough estimate of the shortfall in the budget was about $5 million and that the estimated income stream would be $10 million. From that $10 million, $5 million would balance the budget and the other$5 million would be held in a special Council fund for a period of time until the situation with the volcano is known. Mr. Richards feels the money would not be spent nor should it be spent at this point in time. Mr. Richards is supportive of taking $5 million to put into the budget to make sure there is a balanced budget but cannot support the bill as written. He previously agreed to the quarter percent and the $5.million being held in reserve. Deanna Sako, Director of Finance, feels that the Finance Department has been consistent throughout this process. When asked what the general excise tax revenue would be spent on, the response was always consistent, it would be spent on starting to implement the Mass Transit master plan. The funds would go towards more buses, bus stops and shelters, expansion of various programs, increasing routes, and improving the fare collection system. Council Member Karen Eoff recalls that the general excise tax surcharge can only be used for Mass Transit, so it is limited for now. Ms. Eoff stated, from what was previously discussed, Finance then created the General Excise surcharge account so the funds can be better tracked. FC Report No. 131 FC-131 Page 2 August 7, 2018 Ms. Sako then commented that the law states all funds have to be spent specifically on transportation and/or road operations and capital projects. However, Finance will continue going to the legislature to free up the uses and purposes. Ms. Eoff reiterated that the way it worked to help balance the budget was that it freed up $3.9 million that was going to transportation and put that money back into the general fund. The Council voted to increase the general excise tax so, in turn, it increases the revenue. Ms. Sako agreed. Ms. Sako explained that Bill 168 reduced the real property taxes by$3.9 million and expenditures by $3.9 million. Part of Bill 169 is to put $3.9 million back into Mass Transit, in addition to the expected funds that will come in from the general excise tax, in order to get it back up to the $10 million. Mr. Richards asked, if Bill 1.69 is approved, what would be the annual budget for the County? Ms. Sako replied it would be $6.1 million more than it is right now. Council Chair Valerie T. Poindexter is in support of this bill, and also recalls previously agreeing to funds not being in reserve,but going towards transportation and improving transportation services. Ms. Sako stated all that is being done is to show the general excise tax of$10 million as well as show where the expected expenditures will be appropriated. Finance is putting it in the same accounts as previously discussed. Council Member Jennifer Ruggles recalls, when voting on the GET, it was clear where the money would be spent, Mass Transit, a project in Hilo and two projects in Kona. If this account is created, would it require the County to raise taxes again? Ms. Sako responded that it would not. It will be the quarter percent, which was previously approved by the Council. Your Committee on Finance is in accord with the purpose and intent of Bill No. 169, and recommends its passage on first reading. dmm AYES NOES ABS EX Respectfully submitted, CHUNG X DAVID x COMMITTEE ON FINANCE EOFF X KANUHA X LEE LOY X I I I I -'�� O'HARA X !' POINDEXTER x MAILE DAVID, CHAIR RICHARDS X FC REPORT NO.: 131 RUGGLES X ADOPTED: AUG 2 2 201