Salaries, benefits eat up county budget hike
It’s Mayor Billy Kenoi’s biggest budget yet, and a full $18.4 million in a budget increasing by $18.3 million is going for employee raises and added benefits.
Kenoi, presenting his budget Wednesday to the County Council Finance Committee, said the $412.6 million spending plan, 4.6 percent higher than last year, was accomplished without raising property taxes or user fees. That means money must come from other areas of the budget that were funded last year.
Still, rising property values, coupled with tax hikes in the 10 percent range last year, add an estimated $13 million to property tax revenues, a 5.9 percent increase. The number will be finalized later this month.
“Thankfully, we are finally experiencing a modest rising in our property tax values and therefore our property tax revenues,” Kenoi said.
The rising values, added to last year’s property tax hike, literally hit home for South Kona/Ka‘u Councilwoman Brenda Ford, who said her own taxes are up 15.9 percent.
“I think all the (new) money in this budget came from my property taxes,” Ford told Kenoi.
“You must have a real nice house,” Kenoi shot back, to laughter from the room crowded with agency heads and employees.
The committee began its work evaluating the agency program plans and budgets, a process that will continue through Friday at council chambers in Hilo. The public can speak on budget items at the beginning of the day’s meeting.
After the council scrutiny, Kenoi will present a final proposal May 5. Once amended and approved by the council, the budget goes into effect July 1.
Property taxes are by far the biggest source of revenue for county government. The county’s share of the transient accommodations tax, a surcharge on hotel rooms and short-term rentals, is second. The county also brings in revenue from state and federal grants, interest and user fees.
The council voted 7-2 last year to raise property taxes, with Ford and Puna Councilman Greggor Ilagan voting no. Ilagan said he had opposed the tax hike, but he still appreciated the work the administration does for the county.
“Even though we differ on different things, I know we will be helping our community in the end,” Ilagan said.
Kona Councilman Dru Kanuha said he hadn’t wanted to raise taxes last year, but his constituents have told him they’re seeing results.
“It was a difficult situation and we were kind of forced to raise taxes,” Kanuha said. “The projects are getting done and will continue to get done.”
Most of the employee costs are governed by union labor negotiations and collective bargaining at the state level. The county has a policy, through an executive order signed each year by the mayor, to follow the agreed-upon union raises for nonunion and exempt managerial staff.
The county Salary Commission has meanwhile been raising salaries of top department heads and Cabinet officers. The Salary Commission last year added from $10,218 to $17,598 to salaries of 12 top officials.
Firefighters account for $5.8 million in wage and benefit increases in the proposed budget and police account for $4.5 million, according to figures provided by Finance Director Nancy Crawford.
“I’ll make sure that I’m the last to accept any increases,” Kenoi said. “It’s not about pay and benefits; it’s about the humbling opportunity to serve.”
In addition to covering salaries, the county has added $1.9 million for employee health expenses and an additional $1 million into the GASB 45 post employment health benefit account, bringing that figure to $4.2 million.
The money has to come from somewhere. Public Works Director Warren Lee noted that his overall budget has decreased, if the increased cost of salaries, wages and fringe benefits isn’t taken into account.
“We took the scalpel to the budget,” Lee said. “We actually cut it if you compare it to the FY13-14 budget.”