Kenoi’s budget task

Declining revenues force tough decisions

By Erin Miller

West Hawaii Today

emiller@westhawaiitoday.com

Hawaii County’s next budget unveiling is just around the corner, but Mayor Billy Kenoi is still a bit coy about the plan’s likely provisions.

“We’ve got a bunch of decisions to make in the next couple of weeks,” Kenoi said. “Meeting reduced revenues with increased expenditures is tough.”

Kenoi said he’s holding the line on reducing the size and cost of government, a refrain he’s repeated at meetings and events for at least the last year. Since taking office, the county has 222 fewer positions, he said. A recent report showed the county had 22 fewer positions in June 2011 than June 2008.

“We’re tracking the amount of bodies, not full-time equivalents,” Kenoi said, referring this week to that report. “We’ve been able to hold that number.”

His administration has also seen property tax collections decrease — despite an increase for some property types in 2010 — in part because of declining home values, he said. Property owners in the homeowner class still pay $5.55 per $1,000 in property value, while other class rates, such as nonresident property owners, increased. Collections dropped from $225 million early in his administration to $207 million this year.

That’s going to continue next year, he said. His office is still finalizing its real property tax rate proposal.

The county needs to find a better way of verifying if people claiming to be using their property for agricultural purposes, which lowers their tax rate, are actual agricultural producers, he said.

“It’s difficult to verify,” Kenoi said, adding doing so would require more inspectors, and he doesn’t want to “grow the size of government.”

One day a month employee furloughs will continue next fiscal year, because the employees’ union agreed to a two-year furlough plan that saves the county about $2.1 million annually. Those furlough savings are directed into the county’s budget stabilization fund, he said.

Employees generally aren’t complaining, although they’re not enjoying picking up more work, with fewer employees, he said.

“There’s a recognition that it’s a difficult time for everyone,” Kenoi said.

Kenoi didn’t say whether the county would defer another year’s payments into GASB-45, or prepaid health care costs for retired county employees. But he did defend his decision to defer this year’s $20.1 million payment in his budget balancing efforts.

“We talked to our actuaries” about that deferral, Kenoi said. “They said ‘no problem.'”

No problem, he added, because not paying into the fund doesn’t affect the county’s credit rating or ability to float bonds to pay for capital improvement projects. The county does pay its health care bill, a $28.8 million bill this year, he said. And as he did last year when he first proposed the payment deferral, he noted the state has never paid into GASB-45.

Some County Council members have repeatedly criticized the payment deferral, claiming the county isn’t paying its bills.

The county is making progress in Americans with Disability Act upgrades, the mayor said. A recent review of the county’s progress thus far left federal officials “pleased with the progress we made,” he said.

Next month, the county will begin using its first electric vehicles, which will be charged at the solar-powered West Hawaii Civic Center, Kenoi said. He wants to see the county helping to drive down Hawaii’s dependence on fossil fuels, starting with a renewed push for geothermal energy. The county last fall entered a sister city relationship with Ormoc City, Philippines, which produces 770 megawatts of electricity with its geothermal plants. The plant in Puna is contracted to produce 38 megawatts.

“We could power our whole island with 180 megawatts,” Kenoi said. “Let’s get it done.”

He said he’s working with Sen. Daniel Inouye’s office to secure federal funds to “develop a path” that shows the regulatory hurdles and steps to increase geothermal production here.

“Everybody’s got to be supportive and in line to get us there,” Kenoi added.