HILO — Anticipating a slight rise in property values this year, Mayor Billy Kenoi on Thursday proposed a $370.8 million operating budget that holds the line on property taxes and eliminates the monthly unpaid furlough day for county employees.
The budget is $5.7 million, or 1.5 percent, higher than the current year’s budget that expires June 30. The bulk of the increase, $4.2 million, is for employee salaries for the extra 12 days due to the end of furloughs.
There are no position cuts or added positions, although two employees face transfers. The budget includes $1.5 million for nonprofit grants. The West Hawaii golf subsidy, worth $500,000, is again not funded in the new budget.
It’s the first budget increase since Kenoi took office in 2008, but it’s still $32.4 million, or 8 percent, less than the budget he inherited from former Mayor Harry Kim.
Real property tax revenues, by far the largest revenue source for county government, are expected to increase by 1.2 percent, or $2.4 million, to $200.6 million due to an estimated 1 percent rise in taxable values and a slight increase in interest payments.
“This proposed budget is the result of many months of cooperation and collaboration between all of our department heads and county employees,” Kenoi said in a statement. “We recognize that this budget represents another year of difficult choices for our community, and we look forward to working closely with the County Council as we seek to address both new and continuing demands for public services while also maintaining a balanced and responsible budget.”
He did not return phone calls for comment by press time Thursday.
The proposed budget now goes to the County Council, which will hold briefings April 10-12 for the departments to justify their budget requests. The mayor then submits his final proposed budget on May 5, which the council can amend prior to voting on it. The mayor can veto council changes and the council can override vetoes with a two-thirds vote.
“I support ending furloughs. I believe we need to provide more services to the public,” said Council Chairman J Yoshimoto. “We’re going to be examining the budget more thoroughly in the coming days, and I look forward to working with the council coming up with amendments, if necessary.”
The budget doesn’t put any money toward anticipated shortfalls in the county GASB 45 contributions, a retiree account to pay for nonpension benefits such as post-employment medical and long-term care benefits. It’s the third year the county has used the approximately $20 million annually for other purposes instead of putting it into the fund, which has about $60 million in it from previous years.
GASB 45 became a huge campaign issue for former Council Chairman Dominic Yagong, who lost his bid for mayor in the 2012 primary election. Kenoi and the county Finance Department have said withholding money from the fund won’t hurt the county’s financial status or bond rating.
Finance Director Nancy Crawford said Thursday that she had hoped there would be money to put into GASB, but it didn’t happen.
“I don’t anticipate any big problem,” about postponing payments again, Crawford said.
But Hilo Councilman Dennis Onishi seemed disappointed that again no money is going toward the fund. He said with a basically flat budget, it would have probably been better to continue furloughs another year and put $10 million into the fund, if possible.
“I think we should put at least some percentage into it,” Onishi said.
Increases in nondiscretionary expenses such as debt service, retirement system contributions and the new transfer to the Public Access, Open Space and Natural Resources Preservation Maintenance Fund were offset with other budget cuts, according to Kenoi’s budget message to the County Council.
The mayor also expects the public utilities franchise tax to increase by 9.5 percent, or $1 million. Increases of $400,000 in building permit revenue, $350,000 in liquor license fees and $200,000 for the vehicle weight tax also contribute to the revenue side of the budget.
The budget discontinues funding for recycling centers based at county solid waste transfer stations.
The state late last year put the counties on notice it would be cutting HI-5 funding, despite raising the administrative fee on recyclable bottles and cans.
That spells an additional $765,000 that would have had to be made up in the county budget for the county to continue HI-5 recycling centers at 10 transfer stations. The two full-time recycling employees funded by the state grant will be shifted to other duties at the county’s expense.
Recycling Coordinator Linda Peters said she’s hoping there will be sufficient money in the budget to keep the redemption centers open at the transfer stations. She said the county is working on a new bid to reduce costs.
“We want to keep some services,” Peters said. “We want to make it as convenient as possible for people to recycle.”
The budget also reduces county funding for soil and water conservation districts. It restricts overtime and out-of-state travel and cancels or delays vehicle purchases and the replacement of aging computers and software. In addition, employee training has been deferred or eliminated, Kenoi said in his budget message.