LIHUE — For the past several months, some county officials admit that they have heard their share of complaints from residents who called upon them to cut costs and not raise taxes.
But choosing one or the other, some officials say, is no easy task.
“It’s no secret that the election was on Tuesday, and in the preceding months, both the administration and the council has been pounded repeatedly about raising taxes, why we’re not cutting costs and all these things,” Kauai County Councilman Gary Hooser said. “It’s not easy just to slash and burn, but at the same time, raising taxes are not the only option.”
For more than three hours on Thursday, the seven-member board’s Finance Committee met with Mayor Bernard Carvalho Jr. and his administration to strike that balance at a time other factors, such as the Great Recession, collective bargaining agreements and state legislation, is impacting the county’s budget.
“The significant challenge before the mayor and the council is to determine how to maintain an acceptable service level for the public, while keeping fees and taxes at a reasonable level,” County spokeswoman Beth Tokioka wrote in an email.
Possibilities for cuts
Though there has been a number of additions over the past four years, some county officials say there are still areas that can be trimmed or improved with better planning.
“As we reduce our costs, we need to be aware that it will affect our county services,” County Managing Director Nadine Nakamura said. “We need to be up front — we can’t make costs without impacting our service delivery.”
Eliminating county departments that are not specifically mentioned in the Kauai County Charter — including the Kauai Transportation Agency, Office of Economic Development, Kauai Housing Agency and Agency on Elderly Affairs — could save about $11.5 million, but come with serious risks, Nakamura said.
“I want to make it clear that the mayor is not proposing to eliminate any of these departments, but it is important for our residents and taxpayers to know how their dollars are being spent,” Tokioka wrote. “These are not ‘core’ functions of the county in the sense that the (County) Charter does not require them to be part of county government, so they could be eliminated without legal ramification. However, I think everyone in the room today recognized that they have become ‘core’ services that we provide, and to eliminate them would have huge consequences in our community.”
Another option, Nakamura said, is equally difficult — spreading $8.2 million in budget cuts across all departments agencies and offices in proportion to the total budget.
The mayor’s administration, Nakamura said, is also seeking to create a vacancy review committee that will be charged with reducing the size of government appropriately and re-describing vacant positions to create efficiencies.
The voter-approved Department of Human Resources, she added, is designed to help the county save money by implementing paperless initiatives and avoiding future litigation costs by training supervisors, branch heads, division heads and department heads.
The mayor’s administration has also created a motor pool pilot program that is expected to save at least $55,000 annually by taking 12 county vehicles out of service.
Instituting a potential hiring freeze and not filling about 83 fully and partially funded vacant positions, she said, could save the county about $4.7 million in salary and benefit costs.
Existing county employees, however, will have to pick up the slack, Nakamura said.
“That’s the kind of impact that we’re just going to have to accept as we go through this,” she said.
How it got here
Over the past four years, some county officials said the budgets for certain county services increased steadily while key revenue sources, including real property taxes and the county’s share of transient accommodations taxes took measurable hits during the Great Recession.
The county has an roughly $180 million budget.
County Finance Director Steve Hunt said actual expenditures from county operating funds increased by 13.6 percent from $127.4 to $144.8 million between 2010 and 2014 — nearly $13 million of which came from the general fund.
About 83 percent, or $14 million, of the increase is attributed to funding hikes in five county departments: the Kauai Police Department, Kauai Fire Department, Department of Public Works, Kauai Transportation Agency and the Office of the Prosecuting Attorney.
The largest spikes in funding, Hunt said, was seen in the Kauai Police Department and Kauai Fire Department, which received $4.9 million and $4.4 million, respectively.
The Department of Public Works and Kauai Transportation Agency, meanwhile, received $1.8 million each, and the Office of the Prosecuting Attorney received $1.6 million.
As a part of previously negotiated collective bargaining agreements, Kauai Fire Department employees received a 5 percent annual increase in salaries between 2008 and 2011. During that same time, Kauai Police Department employees received a 6 percent annual increase in their salaries.
Meanwhile, while areas within the county were growing, revenue sources to support that growth were not.
Between 2010 and 2012, the amount of real property taxes collected fell from $116.7 to $103.5 million due, in part, to no tax rate increases and declining property values during the Great Recession, Hunt said.
The amount of real property taxes collected later rebounded in 2013, when county officials collected about $104.5 million. About $118.5 million was collected during the 2014 fiscal year, Hunt said.
The another key revenue source that’s shared among the state’s four counties, the transient accommodations tax, which is imposed on the gross rental income collected by short-term accommodations providers, was capped by state lawmakers in 2011 amid the economic downtown.
All told, Hunt said this move amounted to a nearly $30 million loss in revenue for the County of Kauai.
While revenue sources declined, the county’s payroll increased.
Between 2010 and 2013, a total of 103 new positions were created, including 17 in the Kauai Transportation Agency; 11 each in the Council Services Division and Kauai Fire Department; 10 in the Department of Public Works; and nine in the Office of the Prosecuting Attorney.
“This workshop is not in any way about making decisions — it’s about starting a conversation and we certainly don’t want it to be a back-and-forth or finger-pointing exercise,” Council Vice Chair Mason Chock Sr. said. “We want this to be collaborative exercise where we can just start to discuss possible solutions in moving forward so we can be proactive in making some solid decisions in the future.”