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Home My WebLink AboutCOM 0117.025 2018-2020 Harry Kim •oJN•`-°`"•• w '•• Deanna S. Sako Mayor ° /- =' Director ` �: Steven A. Hunt +ss • Deputy Director County of Hawaii Finance Department 25 Aupuni Street,Suite 2103 • Hilo,Hawai`i 96720 (808)961-8234 • Fax(808)961-8569 Zr? CO el � s May 22, 2019 N -� N C3 Aaron Chung, Council Chair and - >rn Members of the Hawaii County Council cry y Hawai`i County Council 25 Aupuni Street .c Hilo, Hawai`i 96720 Re: Finance PowerPoint Presentation—Special Council Meeting Enclosed is a PowerPoint production to be presented during the FY2020 Budget Special Council Meeting(s). If there are any questions, please do not hesitate to contact the Finance Department at 961-8234. 0---P A� Deanna S. Sako Director of Finance Comm. No. 116 • 2-9 Ref. To: 994fl(,i I MKT 22019 Hawaii County is an Equal Opportunity Employer and Provide,Ref. Date i 1 i , 1 Whyas t e ou nt s \ , Operating \ , ,. _, beenh• e Co _ unty , _.,,,,. _ , , ,_ ,, _, ,,... . AAAA .. . / 1 \,,i PRIMARY REASONS FOR A GROWING BUDGET 1 . Increasing cost of employees, both past and present, related to Collective Bargaining Raises, _ a. Retirement Contributions, and Health Insurance Premiums 2. Debt Service increasing from new capital projects and converting bond anticipation notes to actual bond issuances 3. New or enhanced services - expanding Mass Transit, e tt more road resurfacing, new wastewater treatment plants, etc. 4 4. Receiving and expending grant monies 2 County of Hawai`i Operating Budget ($ millions) General Funds Other Funds Total Change ($) Change (%) 1\\, FY19 $419.43 $98.57 $518.00 $27.19 5.54% FY18 $406.76 $84.06 $490.82 $27.84 6.01% FY17 $378.13 $84.85 $462.98 $24.19 5.51% FY16 $355.40 $83.39 $438.79 $21.88 5.25% FY15 $340.17 $76.74 $416.92 $22.60 5.73% li Total $123.69 Using FY14 as the base year for comparison, when the total operating budget was $394.32 million, the budget had grown by $123.69 million through FY19. $100.62 million (or 81 .4%) of that $123.69 million increase is \` attributable to "uncontrollable" expenses (from all funds) that are tied to collective bargaining contracts, revised state statutes on retirement and health insurance contributions, and debt service. 3 Year-Over-Year Change in Uncontrollable Expenses ($ millions) - All Funds Y :' ;I' ,4:44-4'4 --:' Salaries (CB) Retirement Health/OPEB Debt Service Total FY19 $9.80 $4.41 $7.43 $0.10 $21.74 FY18 $2.62 $4.90 $6.43 $5.27 $19.22 FY17 $8.13 $3.74 $6.01 $7.12 $25.00 FY16 $12.55 $4.32 $1.97 ($1.89) $16.95 ,m FY15 $10.88 $4.30 $3.80 ($1.27) $17.71 Total $43.98 $21.67 $25.64 $9.33 $100.62 Year-Over-Year Change in Uncontrollable Expenses ($ millions) - GF Salaries (CB) Retirement Health/OPEB Debt Service Total FY19 $8.23 $3.99 $7.24 ($0.13) $19.33 � FY18 $1.89 $4.71 $6.07 $5.27 $17.94 FY17 $7.02 $3.24 $6.46 $7.12 $23.84 v \ ',, FY16 $11.27 $3.96 $1.75 ($1.89) $15.09 FY15 $9.34 $3.80 $3.61 ($1.27) $15.48 � 4 Total $37.75 $19.70 $25.13 $9.10 $91.68 4 j The General Fund (GF) portion of the Operating Budget had grown by $99.88 million between FY14 and FY19, going from 1 i $319.55 million to $419.43 million. During that same timeframe, the GF uncontrollable expenses grew by $91 .68 million. That's 91 .8% of the GF operating budget increases being solely attributable to the �rt uncontrollable expenses (aka obligations). ` Removing the uncontrollable expenses from the budget growth, here's the remaining budget increases (all funds): Fiscal Total Budget Uncontrollable Other Budget Other Budget Year Increase Increases Increases Increases FY19 $27. 19MM - $21 .74MM = $5.45MM 1 . 11 % FY18 $27.84MM - $19.22MM = $8.62MM 1 .86% ,I , FY17 $24. 19MM - $25.00MM = ($0.81 MM) -0. 19% FY16 $21 .88MM - $16.95MM = $4.93MM 1 . 18% 7 FY15 $22.60MM - $17.71 MM = $4.89MM 1 .24% 5 } t. mac, ' --t...,4,,, r, , s RISING COSTS — BUT MUST PAY OBLIGATIONS FIRST ; ;f: 4f-47 ' Keeping up with other operational increases such as higher utility costs, fuel costs for county vehicles, inflationary pricing in vendor contracts, software licensing agreements, REtM for facilities, equipment repairs, etc. has been a � � - challenge when our uncontrollable expenses take the lion's share of the increased revenues. Add to this, the challenges of dealing with homelessness, a -,,,%,,,,, , opioid addiction, lack of affordable housing, a mass transit system that had been in disrepair, roads that needed -, repaving, and greater demand for police officers - all of which require more revenue to support - and well, you get the picture. I: Enter FY20 and a new revenue source, the General Excise Tax t v (technically in FY19 amended budget for a half-year) 6 $} z •,3, ;_ County of Hawaii Operating Budget ($ millions) 33 � 3 a s h • '' 9� ; , ,�3 33£ , � General Funds Other Funds Total Change ($) Change (%) f- 3 �; FY20 $443.33 $140.52 $583.85 $65,85 12.71°/n _ FY19 $419.43 $98.57 $518.00 $27.19 5.54/0 ,, Change in Uncontrollable Expenses ($millions) - All Funds , Salaries (CB) Retirement Health/OPEB Debt Service Total FY20 $9.17 $12.93 $5.04 $3.66 $3080 ', The FY20 operating budget shows an increase of $65.85MM over FY19 from all funds. Comparing this to the approved FY19 budget isn't entirely a fair comparison, however. At that time, the FY19 operating budget did not include , any GET revenue (est. $10MM for 6 months at 1/4%), nor did it include the $22MM in immediate disaster grants or the subsequent $20MM in grants from the State ,,, 3 Legislature, all of which becomes part of the amended FY19 budget. —,1,--;:2-- Additionally, the GET surcharge automatically increases for FY20 since it will 1 3 '. now be calculated for an entire year the at 1/4% rate (est. $25MM). And, the k � recent GET surcharge increase to 1/2% for 6 months brings the total budgeted amount to $32MM for FY20. For FY21 , the GET revenue is likely to approach $50MM. i' 30 Finally, the increase in uncontrollable expenses was $30.8MM or nearly 7 ,€ ,; ti€ half of the $65.85MM total budget increase for FY20. 3 �rvi; �' t RECEIVING AND EXPENDING GRANTS FY20 $78.60MM FY19 $75. 50MM FY18 $67.47MM FY17 $67.47MM FY16 $65.05MM FY15 $61 .94MM The amount of federal and state grants awarded to the `I County of Hawai`i has increased by approximately �5 $16.66MM since FY15. While grants are often viewed as 'ti gifts to the County, they do increase the size of the ' operating budget and often come with requirements for securing a county match. V ;4 ,alt _ BREAK DOWN OF FY20 REVENUE INCREASES ` � 3 Amount of Percent of Total „. y Source of Revenue Increase Budget Increase General Excise Tax $32.00MM 48.6% Real Property Taxes $13.70MM 20.8% Fuel Tax $5.66MM 8.6% Fund Balance $5.61MM 8.5% State and Federal Grants $3. 12MM 4.7% Sewer Fees 82 MM 2.8% $1 . _ Es Short-Term Vacation Rental $0.85MM 1 .3% Miscellaneous Taxes Et Fees $3.09MM 4.7% Total $65.85MM 100% \ g _,,,,,.„.01 , , : _ ''''''l 9 HOW DO THE TAXPAYERS BENEFIT? e ` • Increasing investment in our Mass Transit system - more buses, routes, and shelters , u • Repaving more miles of County roads „ E • Increasingpolice and officer safety, presence y and focusing on homelessness - 44 new r �k� positions • Adding additional staff to drivers licensing and vehicle registration to better serve g E growing demand - 3 clerks • Addresses funding the underfunded liabilities 4'74 of current and future retirees 1' € "*4 44a. f£ 3 QUESTIONS ? . \` , .,. 11