LIHU‘E — In the next few weeks, Kaua‘i County Council will face the challenge of approving a budget for Fiscal Year 2013, balanced by Mayor Bernard Carvalho Jr.’s administration, using $10.75 million from the county’s reserve fund and $12.55 million in forecasted surplus from the current fiscal year.
“We need to keep in mind that county revenues and our ability to sustain an appropriate level will have a direct impact on the county’s bond ratings,” said Council Chair Jay Furfaro Wednesday, adding he was surprised to see how much was tapped from the $25.45 million reserve fund set aside by council resolution last year.
“It’s not sustainable at that kind of rate to tap that fund,” he said. To avoid this from happening again, he said the council should draft an ordinance with language restricting the use of the funds.
Last year, council had agreed on a reserve fund between 20 and 25 percent of the previous’ year operational budget, according to councilman Mel Rapozo. If Carvalho’s proposal is left unchanged, the new reserve fund will represent 7 percent of the budget.
The council cannot be tapping into the reserve fund year after year, because it’s a “really fragile” way of doing business, said Furfaro, adding he thinks the council will need to evaluate the county’s tax bases.
FY 2013, which starts July 1, will also see an increase in fixed costs, including 18 dollar-funded positions that Carvalho intends to fill. Meanwhile, property tax revenues, the county’s major source of income, will drop for the fourth consecutive year.
County Finance Director Wally Rezentes Jr. certified the March 30 Real Property Tax Roll, which balances out as a $78.33 million contribution to the General Fund. The total operational budget for FY 2013 is $161.21 million.
Giving his colleagues an overview of what to expect in the upcoming weeks as council scrutinizes Carvalho’s proposal, Furfaro said there is a need to reforecast the county’s fixed expenses, especially when it comes down to the growth of public transit.
“Be very careful that we don’t find ourselves over-promising and maybe under-delivering,” Furfaro said.
Other fixed expenses, he said, include fuel, electricity, labor, health benefits, insurance policies, the implications of the outcome of identifying Important Agricultural Lands, and repair and maintenance of county parks and recreational facilities.
Furfaro touched on the issue of finding compatibility with the administration in identifying and developing the council’s “wish list.”
There is “a lot of dialogue” about funding and improvements as it relates to Complete Streets — a plan to make the island more walkable and bicycle-friendly — and the growth rate of the Kaua‘i Bus, he said.
Sufficient staffing is an area that will need some attention, especially within the county Waste Water Management Division, according to Furfaro,
He also brought up funding for the Parks Master Plan, a 10-year proposal totaling $58 million.
“How far do we want to borrow on the intent of doing some things that bring recreation activities for our citizens?” he said. “It’s a wonderful family builder, because we don’t charge for the use of our pools and parks. It has a great sense of community value that can’t be measured in dollars.”
The council needs to address subsidies provided to the county’s enterprise funds, Furfaro said.
“How do we move forward toward self-sufficiency?” he said.
His concerns included County Housing Agency developments and associated ongoing operational costs, the solid waste fund and landfill costs, the sewer fund and the golf fund.
“I think the most important thing that is on our radar screen … is the golf fund,” Furfaro said. “It looks like we are going to be negative about $700,000 in that account.”
Wailua Golf Course is a municipal facility maintained by subsidies from the county, which collects green fees and leases some of its operations to different concessionaires.
“What is the strategy getting the clubhouse reopened?” said Furfaro, questioning his colleagues as to whether they want to make it a restaurant or an amenity focused on use by golfers.
“I think it should be much smaller, it should provide an amenity and that amenity should increase the number of rounds of golf, which ultimately should reduce some of our exposure there,” he said.
Funding capital improvement projects
Furfaro said the council needs to give County Engineer Larry Dill a chance to scrutinize road improvements, especially regarding repair and maintenance.
“I think we are all discouraged that we have fallen behind several meters in just our repaving, but it seems that we are back on track,” he said. “But we need to have that discussion.”
Furfaro said he is “very concerned” that there are a couple wastewater treatment plants on Kaua‘i that are below the state Department of Health levels. He said the council will need to infuse some money to meet state goals for improvements.
Some issues in Solid Waste facilities have been resolved, he said.
State highway repairs fall under the state Department of Transportation, but some of the damages the highways suffered during the recent storms may have been associated with a lack of maintenance on adjacent county property, according to Furfaro.
The county has other options for revenues rather than real property taxes, such as fees, other taxes, state and federal grants and community facility districts, he said.
“We need to make sure all the departments are pursuing grants, with our approval, and timely,” Furfaro said. Grants needs to be fully disclosed to make sure there are no attachments to it.
By balancing out all the revenue sources — including an assumed $13.48 million from state Transient Accommodation taxes (TAT) — and contributions to different funds, the total revenue in the General Fund for FY 2013 will add up to $113.8 million.
He also cautioned that the TAT is an uncertainty until the last day of the state Legislature. In 2010, state legislators fought hard for the counties to keep the TAT. The Legislature set a cap that year that is still in place, but it can be modified each year the Legislature reconvenes.
The council will resume budget review sessions on Monday at 9 a.m., when the county Civil Defense Agency will present their budget. The Kaua‘i Humane Society — a non-profit that receives county funding and provides county services — will come before the council at 10:30 a.m. Kaua‘i Fire Department will be the last department to make a presentation, starting at 1:30 p.m.
Visit www.kauai.gov for more information and the complete schedule for the budget review sessions.
• Léo Azambuja, staff writer, can be reached at 245-3681 (ext. 252) or lazambuja@ thegardenisland.com.