LIHUE — The Kauai County Council has finalized its changes to the mayor’s proposed budget for the next fiscal year.
The only question now is which version — the one proposed by Mayor Bernard Carvalho, Jr. or the one modified by the Kauai County Council — will be adopted and serve as a guideline for decisions countywide over the 2014-2015 fiscal year, which begins on July 1.
“A budget, for all of the time that I’ve been in corporate roles, is actually a forecast for something that is obtainable and reachable and that’s what we put out here,” Council Chair Jay Furfaro said about the County Council’s revisions to the county administration’s proposed budget.
Among the most noticeable differences between the two budgets, according to budget documents approved by the Kauai County Council Wednesday, include a $3.7 million increase in real property tax revenues — $107.3 million in the council’s revised version compared to $103.6 million in the mayor’s proposal.
Though the mayor’s proposal calls for increases in real property tax rates for hotels and resort properties from $9 to $11 per $1,000 in valuation, the County Council opted to spread the increases across most property classes except for homestead, agricultural and conservation classes.
These proposed real property tax rate increases range from 30 cent increases for residential class properties to $1.85 increases for hotel and resort class properties.
The County Council’s move to increase revenues and propose nearly $2.3 million in cuts primarily avoided a proposal by the mayor’s administration to lower the amount of real property taxes allocated to the Public Access, Open Space and Natural Resources Preservation Fund from 1.5 to 0.5 percent.
This would have, in turn, reduced allocations to the fund for public access and open space projects by $849,805 and diverted the taxpayer money to the county’s committed reserve fund to be used during emergencies or disasters.
Although the County Council completed its revisions to the budget last week, some members still had concerns.
“I believe raising revenues and not cutting expenses enough is scary for the future,” Councilman Ross Kagawa said before casting the lone vote against approving the budget changes. “We need to tighten the belt, not let the leash go and let the departments be in control of their own budgets. This wouldn’t even have a effect on the public because some of these departments have that fat in their budgets, so they can make administratively wise decisions to not perform certain things that aren’t necessary and just do what is essential.”
Councilman Mel Rapozo and Council Vice Chair Mason Chock, Sr. were absent and did not vote on approving the final changes.
Councilman Gary Hooser said he agreed with Kagawa but added that not enough cuts were made to stave off fee and tax increases.
“No proposals for cuts of significance came that would allow us not to raise revenue,” Hooser said. “No one proposed sufficient cuts and the mayor didn’t propose cuts that were sufficient. Many of us, as we looked at areas to cut, realized the danger of heading down the road to cut services, such as lifeguards, fire, safety, bus transportation, or facilities or infrastructure that we built up as a county.”
Other council members, however, said they were satisfied with the cuts, reductions and revenue enhancements made.
Furfaro said he was pleased with the council’s version of the budget, noting that millions of dollars in transient accommodations taxes were diverted to the state government after the Legislature imposed a cap on the amount of those revenues allocated for the state’s four counties three years ago.
“I think under those other conditions, where potential revenue is no longer potential revenue — it’s gone — and we find ourselves having to deliver on promises, such as expanding the bus, taking better care of parks and recreation and what we’re going to do with our opala (waste), I think we did a pretty good job with this budget,” Furfaro said.
Carvalho, however, was critical of moves made by council members to propose and approve about $75,000 in budget earmarks for new Office of Economic Development projects, when they also proposed to decrease the county’s annual health benefits contribution for retired employees to 90 percent.
Carvalho’s budget proposal, submitted in March, called for those contributions to be reduced to 73 percent.
But a move by state lawmakers to temporarily raise the amount of transient accommodations tax revenues allocated to all four counties in the state from $93 to $103 million over the next two years increased Kauai County’s proportional share from $13.5 to $14.9 million.
The mayor’s administration, in turn, readjusted their budget proposal earlier this month and primarily used the influx in revenue to fully fund their annual health benefits contributions for retired county employees.
If the County Council approves their changes to Carvalho’s budget, it would mark the first time that the county will not fully fund those obligations.
This proposal, Carvalho said, would free up $1.5 million but may place the county budget in a more difficult position next year, when the county must pay those obligations and the annual contributions scheduled for the next fiscal year.
“I believe we should meet our financial obligations before committing to additional spending in the form of new projects,” Carvalho wrote in an email.
The County Council, according to the County Charter, must approve their changes to the mayor’s budget by June 7. If that does not happen, the version of the mayor’s budget that was submitted to the seven-member board in March will be enacted as the 2014-2015 fiscal year budget.