County budget on the line: Chung calls for hiring freeze; Schatz to address council

  • Hawaii County employee Gordon Kang operates a roller at the Makaeo Pavilion parking lot at Old Kona Airport Park in 2017. (Laura Ruminski/West Hawaii Today)

County Council Chairman Aaron Chung is calling for a hiring freeze as the council begins working on a budget for the new fiscal year.

There’s more uncertainty than certainty in the county budgeting process this year, as the administration and County Council try to get a handle on how much of the county’s dwindling revenue stream will be available to spend in the fiscal year that begins July 1.

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Uncertainty about federal bailout money adds to the challenge and U.S. Sen. Brian Schatz, D-Hawaii, is expected to address the County Council remotely at its Wednesday meeting.

A drastic decline in tourists and closure of hotels and eat-in dining facilities, coupled with less travel on island roadways, is hitting two of the local government’s revenue generators: general excise taxes and fuel tax.

“At this particular point in time, we should implement some sort of hiring freeze until we know what’s going on,” Chung said Friday. “This thing is really up in the air and it’s really fluid.”

The county’s one-half cent GET surcharge was expected to bring in $50 million, while the fuel tax would have garnered $22.4 million, under the mayor’s proposed budget. Those revenues can be used only on roads, the Hele-On bus system and other transportation projects. The $25 million projected for licenses and permits is also likely to drop.

“We are still evaluating the various sources of revenues and trying to estimate what they will be for next fiscal year; many of course will be lower than originally expected,” Finance Director Deanna Sako said. “We are trying to determine how much lower.”

Chung said he’s not making a formal declaration, but he thinks hiring should be frozen and no new positions created. He’d probably exempt the police and fire departments from such an edict, however. Chung said he’s recommending deferral of two requested new positions on the council’s Wednesday agenda — a clerk III for the Department of Human Resources and a temporary legal clerk II in the Prosecutor’s Office.

South Kona/Ka‘u Councilwoman Maile David, chairwoman of the council’s Finance Committee, is also unsure how the budget process will go. She’s asked council members to submit questions to the county departments to her in writing, since there won’t be the customary three days of council briefings.

“Given the unique and unprecedented situation we face, our budget process is going to prove extremely challenging due to many unknowns,” David said. “We are facing an unprecedented deadly health crisis that requires everyone’s cooperation. The rest will depend on how effective we are in preventing further spread so our island communities can recover as quickly as possible.”

Property taxes, projected to be $343.5 million next year, accounts for the bulk of Mayor Harry Kim’s proposed $625.9 million operating budget, released Feb. 29. He’s scheduled to release an adjusted proposed budget May 5.

Currently property owners face a 3.9% increase in property taxes based on an increase in property values with no additional taxes levied. The council has until June 19 to adopt property tax rates, and it’s unknown if there will be a move to increase or decrease them.

Sako said the county is also looking at its options under the federal Coronavirus Aid, Relief, and Economic Security Act, known as the CARES Act.

That money is a huge question mark.

Under the CARES Act, local governments with populations of 500,000 or more are eligible for direct aid. The remainder of the federal money for government goes to the state, which is supposed to share 45% of that amount with the local governments smaller than 500,000 people, according to the Tax Foundation, a Washington, D.C. independent tax policy nonprofit that’s been around since 1937.

Of the $1.25 billion local government money Hawaii gets under the act, $387.18 million goes to the City and County of Honolulu, while the state gets $862.8 million, according to the Tax Foundation.

A distribution of Federal Transit Administration money announced Thursday by U.S. Sen. Mazie Hirono, D-Hawaii, is similarly vague as far as how much money might come to Hawaii County. The money comes from the third coronavirus relief package Congress passed last week.

The grants to support urban and rural transit service will help transportation providers respond to the COVID-19 pandemic by providing funds for operational expenses during this time of reduced ridership, boosting public health and safety efforts on public transit, and allowing the purchase of personal protective equipment, among other funding uses, Hirono said in a press release.

The City and County of Honolulu will receive $90.8 million, the County of Maui will receive $7.86 million, and the state of Hawaii will receive $8.9 million to spend on transit across the state.

Puna Councilwoman Ashley Kierkiewicz has lots of questions about federal money, and she succeeded in getting Schatz to address the council meeting at 9:30 a.m. Wednesday.

“I’m grateful for the leadership and information Senator Schatz has provided throughout this public health emergency, and am humbled he agreed to provide the County Council with an update on what’s happening at the federal level,” Kierkiewicz said.

Still, Kierkiewicz said, it bothers her to see no direct money for Hawaii Island.

“Because our state is made up of islands, each county is on the front lines of coordinating its own efforts to save lives and salvage the economy,” she said Friday. “The most efficient way to accelerate response and recovery activities is to get money into the hands of counties, regardless of population size.”

Under emergency COVID-19 rules, the public will not be allowed in the room. Satellite videoconference sites in Waimea, Kohala, Puna and Naalehu will be closed.

Live-streaming of the meetings on the County Council website and broadcasting afterward on Na Leo TV will continue.

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There will be no oral testimony. Instead, written testimony on items on the agenda will be accepted before noon on the business day before the meeting via email (counciltestimony@hawaiicounty.gov), fax (961-8912) or postal mail (County Clerk’s Office, 25 Aupuni St., Hilo, HI 96720).

Public testimony for the meeting will be posted at this site as it becomes available: https://www.hawaiicounty.gov/Home/Components/Calendar/Event/413/228.