Mayor Billy Kenoi yesterday submitted an operating budget for fiscal year 2013-14 to the Hawai’i County Council. Below is the message that accompanied the budget.

Dear Chairman Yoshimoto and Council Members:

As required by the Hawai‘i County Charter, the amended operating budget proposal for the County of Hawai‘i for the fiscal year ending June 30, 2014 is hereby submitted. This balanced budget includes estimated revenues and appropriations of $394,318,524 and includes the operations of eleven of the County’s special funds as well as the General Fund. This budget is $8,886,474 less than the budget in effect when this administration began in 2008.

OVERVIEW

I would like to thank each of the members of the Hawai‘i County Council for your support and assistance in formulating a budget to maintain core county services in the year ahead. Our first obligation is always to properly protect our residents, deliver services to the elderly and the needy, provide for positive recreational opportunities for our children and provide an array of other essential services to our growing community. We are proud of our record in fulfilling these obligations despite unprecedented challenges during the past four years. We are determined to again meet our obligations to our residents in the year ahead, and to position our county to serve the growing needs of our communities in the future.

This budget proposal is the culmination of the very challenging years that have become known as the Great Recession. During the years that followed the economic turmoil of 2007 and 2008, our county tax collections declined and this county was forced to engage in an unprecedented series of budget reductions. County tax collections declined from $225.9 million in the year we took office to $198.3 million in the current year, which placed enormous strains on county government. This administration responded by cutting the county budget for four consecutive years, from $403 million when this administration began to $365 million in the current budget year. This required that county government become more efficient in order to maintain core services to the public. We witnessed an extraordinary effort by our county employees, who managed to maintain core services for our community despite a shrinking budget.

Many more challenges lie ahead. We are emerging from this very difficult economic period with about 200 fewer workers on the county payroll than when this administration took office. However, the public worker furloughs that temporarily reduced salaries and wages to balance the budget in recent years will soon end. A series of new collective bargaining agreements have been negotiated on behalf of the state and the counties that will increase salary and wage costs. At the same time, expenses such as fuel, electricity, retirement and health care continue to increase.

Our departments in recent weeks have made it clear we now face deep cuts in core, essential services such as transit, parks and environmental management. This council urged us to take immediate action to prevent this, and we are addressing those concerns with this amended budget.

ADDRESSING COMMUNITY NEEDS

As our community grows, the needs of our residents also grow. Our police must have additional officers to protect public safety and to assure acceptable response times in rapidly growing rural communities such as Puna and Ka‘u. Our firefighters need additional resources and equipment to prepare them for the challenges of serving growing communities and the increasing demands of an expanding population. Demand for park space for our youth and our growing population is at an all-time high, which means the need for efficient park maintenance services is equally pressing. We are proud that the ridership on our Hele-On Bus system has steadily increased to record levels, but the skeleton staff of mechanics and support personnel that keeps our transit system running is now stretched to the limit.

These pressing needs cannot be addressed with another year of budget reductions. Therefore, this budget proposal seeks to build on the efficiencies that we have achieved during the past four years of budget cuts, and strategically invest resources into areas where our residents are now demanding improvement and innovation.

We will make these investments to better serve our communities while keeping the cost of government lower than it was at the start of this administration. We will collect less in property taxes next year than this county collected when we first took office four years ago.

Additional Police Officers

Police presence in the communities of Puna and Ka‘u has lagged behind the overall population growth in those communities. Growing populations in these communities have resulted in dramatic increases in calls for police assistance from the public. The Puna district alone encompasses 686 square miles, and residents and visitors made nearly 29,000 calls for service to police in 2012. Dispatchers prioritize calls in the interest of public safety, and the large distances our officers must patrol at times results in long response times for non-emergency calls. If this shortage of officers is allowed to continue, it could pose an unacceptable risk to public safety.

This budget proposes to add five police officers in Puna and another five officers in Ka‘u at a total cost of $588,688 for the coming fiscal year to address this issue. This proposed budget would also include $302,000 for police computer replacements to improve efficiency, and $158,884 in new funding for maintenance including investment in video surveillance cameras to protect public safety.

Fire and Ocean Safety

Additions to the Hawai‘i Fire Department budget will advance our efforts to improve fire staffing levels and modernize the equipment used by our first responders. That includes $168,000 for new front-line fire-pumper trucks for fire stations in Honoka‘a and Kea‘au. The replacement of both vehicles is a pressing need.

Also included in this budget request is funding for 12 new firefighters for the next fire recruit training class to fill longstanding vacancies within the department. The additional personnel will allow the department to reduce overtime costs, and will also make more manpower available for large incidents such as brushfires and natural disasters.

We are requesting $83,000 for salaries for two additional water safety officers at Punalu‘u Beach Park in Ka‘u. Currently this park is staffed with one water safety officer who works weekdays. The additional staff will significantly improve public safety at this increasingly busy ocean recreation area by ensuring an officer will be on duty each day, seven days a week.

The proposed budget also includes $300,000 for six new ocean safety towers to better protect both residents and visitors in our beach parks. The existing, aging wooden lifeguard towers were designed for a single water safety officer, but the current county system now calls for two lifeguards to be on site at many tower locations. The new towers will provide better work space for our officers, and improve visibility to increase public safety.

Transit Improvements

Our expanding public transit system provided a record 1.2 million rides island-wide last year. However, as more passengers ride, they require more service, which increases driver, maintenance and other costs. Our transit system has outgrown its existing staff.

Our Hele-On Bus system now has a fleet of 55 buses, and our transit system serves increasing numbers of riders in an area much larger than any other county. Our system now requires additional investment. This budget fortifies our Mass Transit Agency by adding $143,244 to fund an additional mechanic, a mechanic helper, and two clerks. This budget also increases funding for fuel and lubricants, and adds $122,170 to support a new Waikoloa shuttle route.

Our proposed staff additions will help address a backlog of vehicle maintenance that will make more vehicles available to enhance service, and will help the Mass Transit Agency keep pace with the ever-growing demands of increased ridership. These changes will allow us to continue to expand our Hele-On Bus service, including the new shuttle route to Waikoloa and the recently added service to Hawaiian Paradise Park.

We are proposing a bus fare increase from the current $1 per ride to $2 per ride for most passengers to raise an additional $637,500 in the year ahead. Fares for senior citizens, the disabled and students will be $1 per ride, and children under the age of 5 will continue to ride free. This continues to be an excellent value for our riders, since our projections show that our bus service will cost the county an average of more than $6.50 per ride in the year ahead. At a time when gasoline prices are at near-record levels, our Hele-On system continues to provide one of the most affordable transportation options in the state. We believe it is fair and appropriate to ask our Hele-On riders to contribute as we expand and improve their service.

Enhancing Information Technology

Information technology has the power to transform the way residents interact with their county government, allowing more people to access more services online such as bill paying, permitting, and reservations for licensing and other services. Our residents expect and demand that their government keep pace with the times by investing in information technology that makes it easier and more efficient for our citizens to do business with our county.

Building these systems requires a robust, resilient infrastructure, but our county’s current information technology network is underpowered and overextended. Our IT infrastructure is in need of immediate investment.

This budget includes $300,000 for critically needed new network equipment. The current design of the county’s network leaves it vulnerable to failure if just one or two pieces of legacy equipment fail. A redesigned network using modern equipment will increase the capacity, reliability, and speed of the network, which carries data ranging from everyday email to telephone calls to video conferencing in times of disaster.

Aging computers have also become a drag on worker productivity. Hundreds of the county’s computers rely on software that is so old that the manufacturer warns it will cease support of the obsolete operating system in April 2014, leaving those computers potentially vulnerable to cyber security threats. To keep our computer systems current and safe, we have budgeted $300,000 to lease 1,000 new computers to replace outdated, legacy equipment.

We are proud that our dedicated IT staff of 17 employees has kept our systems running with a bare-bones budget of $1.6 million, but our staffing levels are now far below national standards. National research shows a local government our size would be expected to have 93 employees in information technology, with a budget of $13.1 million.

Each of our existing IT personnel is responsible for supporting 152 employees, and we must provide them with additional support. We are proposing to add three new positions at a cost of $182,000, and are budgeting $28,000 for training to better equip our staff with the skills they need to keep pace with industry innovations.

We believe this is the time to overhaul and expand our information technology capacity to position ourselves to deliver the services that our growing community requires. We cannot delay these investments any longer.

Parks & Recreation

The Department of Parks & Recreation has overseen more than 60 construction projects during this administration while doing an outstanding job maintaining our park facilities and providing recreational services to our youth and seniors within our budgetary limitations. This proposed budget enhances the department’s capacity to maintain our growing portfolio of parks and facilities, and at the same time fulfill the ever-growing recreational demands of our community.

Seven new staff will be added to support operations, ranging from a new pool lifeguard to additional staff to work with our seniors. Parks positions that will be added or are being refunded after being left vacant in recent years are in Aquatics, Coordinated Services for the Elderly, Culture & the Arts, Ho‘olulu Complex, Administration, Parks Maintenance and Recreation.

The parks maintenance fleet will be enhanced in this budget, with $455,000 allotted for two pickup trucks with dumpers, a bucket truck, mini excavator, backhoe, tractor, and refuse truck. These tools will allow our maintenance crews to more efficiently maintain our parks and facilities, which are being used by more and more of our island families.

The popular Waipi‘o Ranger Program, which was first initiated in 2007, would also be re-established with $70,000 in this budget. The presence of the rangers will educate valley visitors about the history and resources of the valley, and provide a presence to enhance public safety. This budget includes $47,650 in additional support for our Elderly Activities Division to offset increased expenses including utilities and mileage reimbursements for our senior volunteers.

Investing in a Sustainable Economy

Our administration is committed to investing in agriculture and growing a healthy Hawai‘i Island economy. Investment that creates opportunities in agriculture is ultimately an investment in our working families and in preserving open space.

This budget funds currently vacant positions in the Department of Research & Development, including an agriculture specialist and a sustainability specialist at a cost of $120,048. These positions will be staffed with strong advocates and skilled networkers who will work with their communities to implement recommendations contained in initiatives such as the county’s Agriculture Development Plan and the Food Self-Sufficiency Baseline Study.

This budget also advances our commitment to a sustainable future through a proposed $346,000 investment in agriculture support and development. These funds will be used to help grow the next generation of farmers and create jobs while reducing our dependency on imported foods. This proposal includes full funding for the six Soil & Water Conservation Districts on our island to encourage responsible and sustainable agricultural practices to protect our rural ecosystems.

REVENUE ADJUSTMENTS

The proposed budget adjustments described above will fund basic, core services that our residents deserve and expect. These proposals will allow the county to maintain essential county services for an expanding population in the face of escalating costs, but the county must have the necessary tools to meet our obligations to the public.

After four years of budget cuts, our per capita county operating budget today is the lowest in the state. County property tax collections have declined from $225.9 million in the year we took office to $198.3 million this year, and we must adjust property tax rates to provide the services our residents demand. Therefore, this budget incorporates a property tax adjustment that would allow the county to collect an estimated $219 million in the year ahead. That is nearly $7 million less than the county collected in 2008, when this administration began.

Our proposed tax rate adjustments have been structured to be affordable for every property tax class. For example, members of the homeowner class would pay on average an additional $8.59 per month under the new rates. Owners of agricultural lands would pay an additional $4.75 per month on average. These adjustments are affordable for our residents and businesses, but provide the revenue necessary to deliver essential services to our communities.

These adjustments are broad based because they will fund investments that will benefit our entire island community. Our proposed increases in police patrol officers in Puna and Ka‘u will benefit those communities, while our investment in mass transit will benefit the entire island. The Hamakua and Kea‘au communities will benefit from new fire equipment, while the recruitment and training of additional firefighters will enhance public safety for the entire island. Our residents and visitors will be better able to enjoy our shorelines in greater safety because of the additional lifeguards and more modern and functional lifeguard towers we have proposed. Our proposed investment in information technology will better safeguard county data, and will lead to more modern and enhanced services for our residents.

Significant Changes to March 1, 2013 Revenue Estimates

General Fund

• Fund Balance Carryover – Carryover projections have increased by $1,650,000, which represents an increase in current year expenditure savings as a result of restrictions on hiring, travel, equipment and other spending.
• County Vehicle Registration Fees – Additional revenue of $894,600 is based on a proposed fee increase, which will more accurately reflect the cost of issuing vehicle registrations and provide for improvements to the Vehicle Registration and Licensing Division operations.
• Real Property Tax – Revenue was adjusted to reflect an increase of $18,750,000, resulting from a proposed adjustment to tax rates to provide necessary revenue to meet core County responsibilities. The proposed rates are shown in Exhibit A.

Highway Fund

• Vehicle & Trailer Weight Taxes – Proposed increases to weight taxes generated an additional $1,881,000 to support transportation services.

Sewer Fund

• Transfer from General Fund – Additional revenue of $1,594,352 will be provided by general fund transfer to meet the critical operational needs of the Wastewater Division, including negotiated wage increases.

Significant Changes to March 1, 2013 Expenditure Estimates

General Fund

• Provision for Compensation Adjustment – Collective bargaining agreements have recently concluded for UPW and HGEA. A provision for wage increases was added to reflect this amount, estimated at $2,950,000.
• Post-employment Benefits – Funding in the amount of $3,150,000 was added in the expectation of making a contribution toward the County’s unfunded future health benefits (GASB 45).
• Health Benefits and Retirement Benefits – An additional $2,250,000 was put in the budget based on updated estimates of required payments.
• Transfer to Sewer Fund – Subsidy to the fund has been increased by $1,594,352 to add funding for critical operational needs of the division.

Highway Fund

• Mass Transit – Funding of $1,881,000 was shifted from the general fund to the highway fund, based on revenue from proposed vehicle weight tax increases.

Position Changes from March 1, 2013 Budget Proposal

CONCLUSION

Our core county government services must be maintained, and we must now make strategic investments in critical areas such as police protection, ocean safety, information technology and our mass transit system. These are appropriate and important areas where the county should invest resources to improve public safety and public services.

This administration has reduced tax collections and cut spending for four consecutive years. We appreciate the difficult decisions our departments made in this challenging environment to reduce costs while still protecting core services, and we are proud of our administration’s record of accomplishment.

These efforts have clearly made county government leaner and more efficient. Our county government is less expensive today than it was four years ago, and this proposed budget is $8,886,474 less than the budget in effect when this administration began.

We believe this budget represents a careful, thoughtful plan to better serve our growing population. It represents an investment in exactly those areas where the need is greatest, and where the benefits to our communities will be most important.

We welcome the opportunity to discuss this budget in further detail with you and to answer any concerns that you may have. Thank you for your consideration.

Aloha,
William P. Kenoi
MAYOR