LIHU’E—The county has received “A” ratings from two bonding companies that evaluated proposed general obligation bonds amounting to $27.5 million. Mayor Maryanne Kusaka, in a written statement from her office yesterday, announced that the “A”rating means the county’s financial outlook
LIHU’E—The county has received “A” ratings from two bonding companies that
evaluated proposed general obligation bonds amounting to $27.5
million.
Mayor Maryanne Kusaka, in a written statement from her office
yesterday, announced that the “A”rating means the county’s financial outlook is
stable.
The bonding agencies, which include Standard & Poor’s, said the
rating reflects Kauai’s stable tourism base, very low debt burden and
satisfactory financial operations.
The agencies’ evaluation reported the
following analysis:
In spite of the economic weakness suffered in Asia,
Kauai’s visitor count has risen annually since 1993 with visitor activity
dominated by North American and European tourists. As of September 1999, the
average daily room rate has risen 16 percent to $157 and occupancy is at 74.3
percent.
While dominated by tourism, the economy is experiencing some
significant diversification. Kaua’i’s major agricultural products include
sugar, cattle and other livestock, fruits, flowers, corn and coffee. While the
sugar industry has shrunk on Kaua’i as in the rest of the state, revenues from
unprocessed cane was $46.5 million compared to $51.8 million in 1998.
The
next largest crop is coffee, with 1998’s crop valued at over $10.4 million.
Private sector high-technology companies are working with the on-island U.S.
Navy Pacific Missile Range Facility and film work also boasts a growing
industry,
Despite Kaua’i’s flat property value trend, the county has been
able to maintain healthy reserves. Year-end unreserved general fund balances
have averaged 10. 3 percent of expenditures between fiscal years 1996 and
1999.
The county ended fiscal 1999 with a solid total general fund balance
of almost $8 million, or 17.4 percent of expenditures, and an unreserved
balance of $6.2 million (13.7 percent of expenditures).
The adopted budget
for fiscal 2000 is austere with minimal capital improvements and a conservative
small equipment budget.
Kaua’i’s finances show sound general fund year-end
balances despite operating losses in three of the last four fiscal years.
Recently, operations have been challenged by the state’s reduction in hotel tax
distribution to local counties. To counter this action, the county increased
property taxes in fiscal 1999 by 31 cents per $1,000 AV and again in fiscal
2000 by 50 cents per $1,000 AV to offset losses in TAT and to pay for statewide
negotiated pay raises.
The county will raise two other rates effective Jan.
1, which along with continued economic development should result in balanced
positive operations.
Due to declining revenues, the county has reduced
expenditures over the past three years. General fund expenditures were $48.1
million in fiscal 1997 compared to fiscal 2000 budgeted $43.1 million, a 10.4
percent decrease.
The county eliminated vacant positions and restructured
departments to reduce costs. One example of its successful reduction of costs
is with its workers’ compensation program. The county reduced paid losses to
$79,660 in fiscal 1999 (with an average claim cost of $1,106) versus $476,363
in fiscal 1993 (when the average claim cost was $5,438.)
Education and
focusing attention on workplace safety has helped the county save money through
its Risk Management Program.
Along with the tax rate increases, strong
management is indicated by the county’s success in having a $15 million Federal
Emergency Management Agency (FEMA) loan reclassified as a grant, and the
recognition of (Ho’olokahi) volunteer work as the required local match for
federal highway funds and other county grants.
Kaua’i’s outlook is stable.
The county’s continued prudent financial management in conjunction with its
recovering economy, provides stability to its rating.
“The challenges over
the past five years have required stepping outside from the boundaries of
‘doing business as usual’ to a broader scope of management and fiscal
efficiency,” said Kusaka.
“Just as I am grateful for an administration who
rose to address the challenges with innovative problem solving, I have our
community to thank for its tremendous support and service with outstanding
volunteerism. I believe we have a proven record of community teamwork – a
genuine partnership between government, the private sector and community at
large which has truly served to strengthen us all.”