HILO — Mayor Harry Kim unveiled a proposed budget Wednesday that ratchets up county spending by $11 million, a scant 2.4 percent, but leaves open the possibility that expenditures could yet increase based on decisions outside his control.
The $474 million spending plan builds on a 5.5 percent increase last year. It assumes property taxes will increase $15.6 million, or 5.9 percent, not by raising the tax rate, but because of new construction and increases in property values.
It relies on cuts in overtime, County Council discretionary funding and the geothermal fund to achieve balance.
There are no increases in the property tax rate in the preliminary budget, but individual property owners should expect to pay more because of increased property values. Tax rate hikes aren’t totally off the table, but could be used as a last resort if spending cuts can’t achieve a balanced budget, Kim said.
“You can only speculate about this and that, but you have to plan for everything,” Kim said. “I don’t have a crystal ball to know what the state is going to do.”
Kim said he’s meeting with Gov. David Ige on Friday to plead his case for more state revenues, or at least no more cuts.
Still, Kim said, the county is on solid financial footing, as illustrated by a recent upgrade in its credit rating. And, he noted, Hawaii Island remains one of the most affordable places to live in the state.
“The continued increase in property values, low unemployment rates and steady hotel occupancy levels indicate continued economic stability,” Kim said in his budget message. “We remain optimistic that the county’s economic outlook will continue to improve, and believe that our efforts to promote renewable energy, agriculture, tourism and higher education are an investment in the future of our island.”
The preliminary budget doesn’t take into account, on the expenditure side, ongoing collective bargaining for all the state’s public worker unions. It’s also unknown how much more of the state employee pension fund the county might have to shoulder.
Currently, employees’ pension, retirement and health funds are estimated to jump by $11.7 million, or 12.7 percent. Together, they account for 22 percent of the budget.
“These costs reflect the lion’s share of the difference between last year’s budget and this year’s budget,” Kim said.
On the revenue side, the budget assumes the same share as last year of the transient accommodations tax, popularly known as the “hotel tax,” even though the amount hasn’t yet been settled by the state Legislature and could even be eliminated.
Another fixed cost, payment on the money the county has already borrowed through bond issues, is expected to increase to $48.6 million, a 10.9 percent increase.
Kim said he’s leading by example and de-funding one of his four executive assistant positions.
He’s also cut $810,000 the County Council gets for discretionary funding by each council member for his or her district and $700,000 from the geothermal relocation and community benefit fund. He’s cut $303,000 in police overtime and $2.1 million in firefighters’ overtime.
And, he’s accounted for $6 million less in carryover funds from the current budget year.
The budget adds four new positions: a grant-funded recycling specialist, a radio program manager for Civil Defense, a paratransit program manager required by the federal government and a county arborist.
Kim has continued the tradition of allocating $1.5 million for nonprofit grants, although the county charter requires just $1 million. That money is distributed for programs helping the less fortunate.
Kim and County Council Chairwoman Valerie Poindexter characterized the budget as very preliminary.
“Of course, this is a draft budget,” Poindexter said. “It’s the first draft, and we’ve got lot of time to work on it, hear from the departments and see where it goes from here.”
County Council members will undertake a department-by-department analysis of the budget April 11-13 as the individual department heads come before them to explain their program budgets. The mayor is scheduled to submit a final budget proposal in early May. The council has until June 30, the last day of the fiscal year, to amend and pass a budget or the mayor’s budget automatically goes into effect July 1.