County revising $261.1 million operating budget

LIHU‘E — Because of the combination of withheld state taxes and retroactive salary raises, the county is considering several steps to balance its $261.1 million operating budget.

The county must have a balanced budget to be in compliance with the Kaua‘i County Charter, and to do so, the Kaua‘i County Council will review several county-proposed budget amendments tomorrow.

An Oct. 8 memo from Finance Director Reiko Matsuyama to Council Chair Arryl Kaneshiro, sums up the predicament, noting the “ongoing economic impacts of COVID-19 continues to affect the state’s tourism industry” and Gov. David Ige’s suspension of the distribution of the transient accommodations tax has caused a budget shortfall

Historically, the county received about $14 million in TAT funds. In one proposed amendment, Proposed Draft Bill No. 2807, the sum of $7,467,500, or about half of what was expected, is moved from the unassigned fund balance to the state grant-in-aid fund, where the TAT usually goes.

“…[We] deem it necessary to take prudent measures…” another memo from Matsuyama said.

In two other amendments, Draft Bill No. 2808 and No. 2809, the county proposed defunding improvements for the Ho‘olako/Ka‘ana Parcel.

This project was in the county’s capital improvement project (CIP) budget, and would add $1.4 million into the general fund. Bill No. 2809 would revise $3.1 million from the Bond Fund for these improvements to the assigned fund balance.

Retroactive raises

Over 550 employees across 17 departments will receive raises as part of a Hawai‘i Government Employees Association collective bargaining agreement signed by the state. This resulted in a $1.63 million shortfall.

Only departments with HGEA employees were affected, Matsuyama said. That includes those in Bargaining units 3 (clerical), 4 (clerical supervisory), 13 (scientific and professional), and 14 (ocean safety).

The council had approved arbitration awards throughout the last year, in January, March, May 2020 and in November 2019. And, since the bill was not signed by Ige until this September, funding had lapsed for 11 grant-funded positions in the Office of the Presecuting Attorney, Planning Department and Fire Department.

“All negotiated contracts had an effective date of July 1, 2019 which resulted in the need to pay unbudgeted retro salaries for Fiscal Year 2020,” Matsuyama said. “The raises were already anticipated and so were budgeted accordingly in Fiscal Year 2021.”

The fiscal year 2021 budget had $2.229 million for these raises, but the additional $1.63 was unaccounted.

Projects, positions scraped

Some projects that had been cut were agriculture services from the Office of Economic Development.

The Kaua‘i Fire Department cut its public education/safety trailer, junior and keiki lifeguard program, which had limited applications or because of the ongoing pandemic.

“Each department identifies areas to make up the shortfall, with the most common being salary savings due to current or anticipated (i.e. retirements) position vacancies,” Matsuyama said. “This translates into hiring freezes or delays which are already in place.”

Departments were asked to make cuts in the third week of September, “which was basically as soon as the bill became law at the State level,” Matsuyama said.

Overtime reallocations

Additional amendments include Bill No. 2811 which proposes reallocating $2 million from the unassigned fund balance to the Kaua‘i Police Department, Fire Department and Kaua‘i Emergency Management Agency for regular overtime and other supplies.

The reasoning, Matsuyama writes in a memo, is to “provide funding necessary to continue the County’s protective measures efforts in mitigating and managing the impacts of COVID-19, once the Federal CARES (Coronavirus Aid, Relief, and Economic Security) Act funding ceases on December 31, 2020.

“These funds would be available January 1, 2021. While it is uncertain what, if any relief Congress will provide to state and local governments beyond December 2020, it is our intent to ensure continuity in the safeguarding our residents and community. Should Federal relief be provided, we will propose to offset County funds to the highest level allowable.”

New HR software

The county, which employes over 1,200 employees is also working on acquiring a new Human Resources Management Software. Proposed Draft Bill No. 2812 would reallocate $1.225 million from the CIP contingency fund ($127,411), land information management system ($1 million) and Salt Pond Wastewater Improvements ($97,589) for additional funding to procure this system.

About 80% of the county’s general fund budget is salaries, and “acquiring a state of the art system is crucial to improving efficiencies in the management of our most valuable and costly resource, our staff,” a memo to the council said.