Aloha! Once again, it is time for the monthly update from our office.
BUDGET FOR FISCAL YEAR 2019 – 2020
Budgets. (approx)
2016-2017 $463 million
2017-2018 $491 million
2018-2019 $518 million
2019-2020 $583 million
The process for developing the budget for the County of Hawai‘i is complex. The draft budget is presented to the County Council the for the first time during the first week of March. In it is the budget request from each department based upon an estimate of the funding the County will receive. A second draft of the budget comes out the first week of May. In that budget, the values of the real property tax have then been certified so the real property tax revenues is accurately projected. This also is a time for the administration to re-draft and re-allocate funding for the departments. Classically, the departments are asked for next year’s budget, and then a supplemental budget that they may or may not be including in the second draft of the budget.
In March, once we received the first draft, we started working as a Council on gathering information to validate the request. By law, we must have a balanced budget approved and in place for the start of the next fiscal year, which starts July 1st. Practically speaking, this means we must have the budget approved by approximately the third week of June, so as to have time to deal with it in the event the mayor were to veto the Council’s approved budget. Through the months of March and April, individual meetings were held by the council members with the different departments to listen to, investigate, and understand the departments’ needs and requests. You can imagine that this means for any department head, nine separate meetings must be held in order to speak to all council members. Many, many hours are consumed by this process. Towards the end of April, special meetings for the finance committee were held to have public meetings with each department, and collectively with the whole Council. During this time, additional information concerning our different departments was sought. A different twist to this year was our Council Chair, Aaron Chung’s request for supplemental budgets from all departments so we could ask questions going forward, which he received. The value of this information from the budgeting process was immeasurable. Though, initially, the administration wanted to hold this information back, it was eventually released for our review. For our budgeting process, these supplemental budgets helped to not only give the County Council insight into the different departments’ needs, but also their direction and vision for their future. Through this hearing process, problems and challenges were identified in more than a few departments.
On May 3, the County Council was delivered draft two of the proposed budget. In the March draft, the proposed budget was approximately $573 million. This is up from the current year’s budget of $518 million; approximately a 10% increase. The second draft/May version, was $10 million higher at $583 million. This is over a 12% increase from last year. In this, approximately 100 new employment positions were created; 40+ of those positions being for the police.
So where are we now in the process? We are now in the second week of May, and the budget presented to us has grown substantially. Invariably, there will be numerous amendments proposed by the different council members to address concerns on this budget. Unfortunately, none of the amendments will be in concert with each other as we are not allowed to discuss them collectively going forward, unless we are in a public forum. This means the next time we can have this discussion will be in two weeks. The proposed amendments will come before the Council and as their acception or rejection may or may not work in congruence with each other. This will then create further problems and trying to address budget concerns will become more difficult. If we are unable to come up with a cohesive and unified direction for the second draft, the budget will fail, at which point the budget for the next year will be the first draft/March version.
Our budgeting process is gravely flawed. We get the final draft of the budget with such a short timeline to effectively deal with the intricate details that thoughtful process is unable to be thoroughly performed. The ultimate loser is the County and constituency.
For the last two years I have been an advocate of establishing an ad hoc committee to help us with the budget process. Last year I did not have the support. This year, in a ruling from the office of information practices, they determined our scope was too broad as proposed. Though some misunderstand the function of an ad hoc committee, its purpose is to allow further exploration of a non-majority voting block of the Council. Statements that it was an effort to create deals behind closed door were misleading and, frankly, absurd. (By definition these focus groups must be less than a majority so as no deal can be struck.) The intent was to look at needs across the departments cohesively, and to be in contact with each other so as to produce a thoughtful budget in the end. Unfortunately for the County, we have not been able to do this as of yet.
Now the task at hand is to individually review these budgets and, hopefully, end up with some measure of cohesiveness at the end of our next meeting.
As your councilman, I am not happy about the massive increase in our budget. With the increases proposed for the number of employees, so comes the liability of the pension funds we must also carry for them. Currently, the County’s pension fund is, as I have been told, underfunded by approximately $2 billion. These are the bills that the next generation are going to be saddled with unless we do big things to make a difference.
Is it possible to fix our budgeting process? Yes, but it will take a change in how we do things. One possible solution is change our fiscal year to start in October rather than June. This would give us three more months to go through the process. Additionally, going to a biennium budget cycle may increase our efficiency, as we only go through the process every other year. Finally, having focus groups/ad hoc committees permits us to do part of the investigation and thereby increase our efficiency by making good decisions with good information from the collective wisdom of the councilmembers would also improve budgeting for our county.