Too busy to spend money: County crises boosted budget savings

HILO — Hawaii County departments were so busy with natural disasters this year, they didn’t get a chance to spend all their budgets.

That’s according to Finance Director Deanna Sako, who told the County Council Finance Committee on Thursday that the county had almost $12 million left over from the fiscal year that ended June 30, plus another $15.3 million budgeted for the current year.

That’s much better than the $88,000 fund balance that was available in June 2017, Sako said. A low fund balance could hurt the county’s bond rating, resulting in higher interest rates on future borrowing.

“The departments didn’t have time to spend their budget and that pretty much benefited us,” Sako said. “We plan to utilize that to help us balance the next year’s budget.”

County employees’ usual work was redirected first during a lava emergency from the Kilauea eruption followed by a flooding emergency from Hurricane Lane.

Sako said after the meeting that she didn’t think county services suffered because of the spending shortage. Projects and equipment purchases may have been delayed, but departments are picking up where they left off.

Kohala Councilman Tim Richards, who keeps a weather eye on county spending plans, said he still had questions on how the fund balance works, and how much should be kept as a buffer during a budget year. He noted that the annual budget has increased 13 percent or more during his two years on the council, and he questions how much of the increase was needed.

Richards said he hasn’t noticed a decline in services, and hasn’t heard too many complaints from his constituents.

“We need to spend money but we need to spend it wisely,” Richards said. “I don’t mind spending the money, but I want it managed.”

County administration last month estimated $35.1 million in new costs to fix East Hawaii roads and bridges, following the Hurricane Lane deluge that dumped about 50 inches of rain over a four-day period, said Sako.

While the Federal Emergency Management Agency is expected to reimburse 75 percent of the hurricane expenses, the county still needs to come up with 25 percent, she said.

The flooding costs come atop loss of taxable income of about $4 million from homes and properties lost or devalued by the lava flow, in addition to more costs incurred from the lava flow.

Gov. David Ige gave the county $12 million in lava relief, of which about $6.9 million has been spent. State legislative leaders balked at holding a special session to address recovery after the lava consumed more than 700 homes and overflowed roads, cutting off communities, but the Legislature is expected to take up recovery funding in the regular session that starts in January.

Next year’s county budget, which is currently being hashed out in meetings with department heads, will still be tight, Sako said. The county is faced with state mandates to sock away more in retirement benefits, following big increases in retirement accounts last year.

Retirement accounts for police and fire employees are going up 5 percent next year and other employees’ retirement will increase 3 percent, she said. In addition, unions representing the Fire Department and the Hawaii Government Employees Association are currently in collecting bargaining as their contracts will end next year.

Employee retirement benefits are expected to climb from $43 million to $51 million, and post-employment benefits to rise from $39.8 million to $41.8 million, according to budget documents.

“There are a lot of unknowns yet,” Sako said. “Balancing the fiscal year 2019- 20 budget will continue to be challenging given the current economic climate.”

The county anticipates getting $10 million for the fiscal year that ends next June 30 and about $25 million the year after that from a one-quarter percent surcharge on the general excise tax. The GET can be used only for transportation, such as roads, bridges, mass transit and trails, but county officials hope the requirements can be loosened when the state Legislature next meets.