HILO — Mayor Billy Kenoi on Wednesday defended his $365.3 million budget before a County Council largely skeptical about whether the administration has trimmed the size and cost of government as much as he’s said.
The 2012-13 spending plan is a scant 0.5 percent less than this year’s budget and 9.4 percent less than when Kenoi took office in 2008. It’s based upon a projected decrease in property taxes of $8.8 million, or 4.2 percent. The county is expected to get updated tax revenue figures later this week, and the mayor will present an amended budget in early May. The budget goes into effect July 1.
Kenoi’s status quo budget holds the line on property taxes, maintains monthly employee furloughs and eliminates the West Hawaii golf subsidy.
“When people talk doom and gloom, we have our challenges, but we have a healthy, safe county here,” Kenoi told the council.
The council Finance Committee will continue department reviews of the budget today and Friday in Hilo.
One sticking point for the council is Kenoi’s continued postponement of GASB-45, the advance payments on retiree health care, which defers about $20 million annually this year and next. Kenoi stressed that the administration is making current payments, it’s just stopped making the advance payments.
Council Chairman Dominic Yagong said the deferrals are worrisome because it could become a habit. He cited his conversations with municipalities that face bankruptcy saying stopping their GASB-45 payments was the worst decision they ever made.
“It becomes an out,” Yagong said. “I hope we’re not on that track.”
Kenoi bristled at the suggestion that one had anything to do with the other. He said Hawaii County is the only government in the state that was making the GASB-45 payments and there is currently $61 million in the account.
South Kona Councilwoman Brenda Ford, chairwoman of the Finance Committee, wanted assurances the county would start paying again soon. She asked for the county’s current projected balance and was told the information wasn’t yet available.
“When will we know?” Ford said. “What plan do you have?”
Kohala Councilman Pete Hoffmann recounted how Finance Department staff in 2010 warned him that suspending even a part of GASB-45 could hurt the county’s financial condition and its bond rating. He asked what had changed that the county can now forgo payments two years running. The difference, he was told, is that the county now has four year’s payments under its belt, and bond rating agencies have continued to look favorably on the county, even after it stopped payments last year.
Kenoi invited the council to find the money in the budget to make the payments.
“It’s got to be taken from somewhere,” he said. “If you find $20 million you would like to convert to GASB … I’d be happy to sign that budget.”
Another sticking point is whether Kenoi has cut employee positions and costs to the level required to not have to raise property taxes, the county’s primary revenue source.
Yagong produced a spreadsheet showing the proposed budget contains 3,123 positions at a cost for salary and wages of $135.4 million, not including benefits. That’s a 0.7 percent increase in positions and a 7.2 percent increase in salaries since 2008, when the mayor took office.
In light that the overall budget has decreased, that means employees are taking up a bigger chunk, hardly a decrease in the size of government, said Yagong, who is challenging Kenoi for mayor in this year’s election. He asked the mayor how he justifies his claim that his administration has cut 222 positions.
Kenoi said the county has unfunded vacant positions, but he’s never abolished any.
“We’ve never abolished positions. That’s a whole ‘nother thing,” Kenoi said. “It sill counts as a position,” even if the funding has been cut.
Yagong has proposed a charter amendment that would require all new positions to be created by a council resolution, rather than just have new positions inserted into the operating budget. That would bring better transparency to the process, he said. The bill for the charter amendment will be discussed at the council’s next meeting, he added.
Deputy Finance Director Deanna Sako noted that the county has generally been able to come in under the budgeted amounts for employees. But circumstances beyond the county’s control, such as state-led negotiations with police and firefighters that gave them four consecutive years of 4 percent and 5 percent raises, increase the cost of employees.
Council members also stressed the need to increase revenues, particularly from tourism, develop energy and agricultural self-sufficiency and become more efficient through technology. They also suggested new facilities, such as a world-class concert hall, professional-quality baseball field and other amenities to increase tourism on the island.