Budget trimmed by $314K

LIHUE — The Kauai County Council wrapped up its decision-making process on Friday with a unanimous vote to cut $314,000 from the mayor’s proposed budget for the upcoming 2016 fiscal year.

And while councilmembers said the cut represents a positive step for a county government working to bring expenses in line with revenue, several expressed concern that they did not do more to reduce spending. The council’s cut only represents a 0.17 percent reduction from the mayor’s recently revised $182.2 million budget plan.

For comparison, the budget for the current fiscal year that ends on June 30 is $180.7 million.

“I’m a little bit disappointed,” said Councilmember KipuKai Kualii. “I thought we could have gotten a little bit further. We needed to get a little bit further so we can prevent more pain in the future.”

Even with efforts from the administration to rein in spending and the council’s additional cut, the county will still need to use $1.4 million of its reserve savings in order to balance the budget, largely to cover increased costs due to ratification of recent public employee collective bargaining agreements.

More worrisome, the county anticipates an $8 million budget hole looming ahead in the 2017 fiscal year, again due to collective bargaining agreements that will raise wages and benefits for public employee unions.

Throughout the two-day decision-making process, Council Chair Mel Rapozo continually reminded members about the need to stay focused on the bottom line and make tough decisions to cut the budget.

“Don’t complain about the spending and keep saying we need to fix it, but then vote to support it. We need to send a message,” Rapozo told members.

Despite moments of heated discussion and contentious votes, the council generally agreed on the overall need to reduce spending, even if there were clear differences about how to achieve that goal.

Most of the cuts came from eliminating funding for vacant positions that will remain unfilled.

County support for the Keiki to Career program was also cut, but that program may remain unaffected as it is slated to receive state funding for an amount larger than what was cut. Members who opposed the cut said it was not clear whether the state would actually follow through on its commitment.

The largest individual cut, $180,000, was to eliminate funding for the North Shore Shuttle, which terminated service on Friday.

Perhaps the boldest move came from Council Vice Chair Ross Kagawa, who proposed cutting OPEB funding by $1 million. OPEB is a long-term liability for other post-employment benefits (not including pensions) such as retiree health care. The idea behind Kagawa’s maneuver was that cutting OPEB would pressure the administration to find other places within individual departments to cut fat and save money during the course of the year, so that it could then use those savings to fully fund the OPEB liability.

The gambit almost worked, but Budget and Finance Chair Arryl Kaneshiro provided the swing vote against it. Kaneshiro said relying on the departments to find additional savings to make up for the cut was too much of a risk.

“I understand what he was trying to do and I could have gone either way, but being more conservative, I wasn’t comfortable with it,” said Kaneshiro, who is serving his first year on the council.

Kaneshiro’s vote came somewhat as a surprise, as he voted to support most of the proposed cuts.

Even if Kagawa’s motion had been successful, Mayor Bernard Carvalho Jr. said he did not believe it would have been responsible, and would have had to strongly consider using his line-item veto authority to block the cut. Kauai is the only county in the state that has fully funded its OPEB liability.

The council added funding to some areas of the budget, such as $30,000 for the Ho’olokahi Program so that money will be available to purchase supplies if volunteer groups want to get together and provide the labor to make park improvements on the Westside. The council voted unanimously to provide the funds because the Waimea District was the only one on the island that did not have funds previously allocated to it.

The council also unanimously approved a combined total of $40,000 for the YWCA’s family violence shelter and its sexual assault treatment program.

A proposal by Councilmember Gary Hooser to reduce property taxes was defeated. He argued that even though the property tax rate is staying the same, homeowners will end up paying more due to higher valuations. Hooser argued that the council could help by reducing the tax rate in order to offset the valuation increase.

The proposal seemed to briefly draw genuine consideration from councilmembers after Hooser pointed out that the overall share of property taxes paid by those classified as a homestead increases next year relative to hotels and other vacation properties. But it ultimately failed, with only Hooser voting yes due to the $1.3 million the proposal would have added to the deficit, which would have meant dipping even further into the county’s unassigned reserve funds.

Property owners who are classified as homesteads still pay a lower share of property taxes than hotels and other vacation rentals.

The mayor, who attended both days of budget hearings, said even though the county is still running a deficit and relying on unassigned reserve funds to balance the budget, as it has for the past several years, the budget is responsible.

“We really dug deep,” he said. “We did our best to try to cut while still keeping services running.”

At a public hearing Wednesday night, only about a dozen people showed up to voice their opinions.

Diane Zachary, president and CEO of the Kauai Planning and Action Alliance, was one of them.

“I think people understand it’s a very difficult budget year with tough decisions to be made,” Zachary suggested as one reason for why so few people showed up. But she also offered an alternative theory: “I guess people didn’t have much to say.”

The budget will go before the council for final approval before it takes effect July 1.

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