LIHU‘E — The last time the state paid the county its cut of the transient accommodations tax was in April 2020.
The suspension of the TAT distribution to the counties due to the pandemic, a $14.935 million contribution to Kaua‘i’s budget each fiscal year, will continue for an unknown amount of time moving forward.
That’s a loss of nearly $16 million the county worked around in fiscal year 2021, and will be reflected in the 2022 fiscal-year budget, county Finance Department Director Reiko Matsuyama explained Thursday morning to the Kaua‘i County Council.
Earlier this month, the administration proposed a $243-million operating budget and $24.3-million capital improvement projects budget for the 2022 fiscal year spanning July 1, 2021 to June 30, 2022, with no proposed raises in property taxes.
Compared to FY21, the county has cut $7.4 million, or 3.1%.
County revenues remained “mostly flat” compared to last year, Budget Administrator Ken Shimonishi said Thursday, with a slight, 0.4% increase of $923,843 that’s attributed to real-property-tax money coming in and no significant delinquencies.
The general fund saw a 0.8% increase, or about $1.5 million, mostly due to real-property tax collections totaling around $180,910,190.
The county is currently in a payment cycle, which is due in April, but Matsuyama reported that the top 10 taxpayers, mainly hotels and resorts, have already paid.
“We don’t have cash-flow problems because we’re still seeing payments come in,” Matsuyama said.
However, the county projects to see the highway fund decrease about $510,000, due to downward projections of the franchise tax ($250,000), motor vehicle weight Tax ($110,000) and bus fares ($150,000).
The county’s liquor fund will take the biggest hit, a projected 31.4% decrease.
In an attempt to “alleviate pressure,” the administration is proposing one employee move from the Office of Liquor Control to the Office of Boards and Commissions to maintain operations, county Managing Director Michael Dahilig said.
The administration proposed a balanced budget, but is expecting reserves below the targeted 30% by June 30, Shimonishi said. Current projections place the county about $5 million short. FY20 ended with reserves exceeding the target, with $51.5 million.
Already, the county has reallocated and moved money around for its current budget period.
In December, the county revealed it had a $1.63 million shortfall due to retroactive raises, COVID-19 operations and the loss of TAT funds. In March, the county reallocated funds to cover a $250,000 shortfall within the golf fund, citing low play due to the pandemic.
The federal American Rescue Plan Act, which passed earlier this month, is expected to bring an estimated $14 million to the county over the next two fiscal years, Dahilig said. The county is awaiting final determinations by the federal government to determine how that $7 million can be spent in the upcoming year’s plans.
Monday, the council will have a budget review with the Department of Public Works, which retains the largest department costs.
Mayor Derek Kawakami, in a short video address Thursday, noted that this proposed budget distinctly focuses on infrastructure maintenance amid a hiring freeze, restricted business travel and continued COVID-19 operations.
“Doing more with less will be a difficult battle, as there are many needs that deserve to be prioritized,” Kawakami wrote in the budget submittal.
“However, this year will define our county’s fiscal outlook for the years ahead, and we must stay vigilant in our endeavor to rebuild what we have lost. These reasons form the foundation of our FY22 budget proposal, which remains focused on addressing sorely-needed infrastructure upgrades and deferred maintenance, without raising taxes or fees.”
Sabrina Bodon, public safety and government reporter, can be reached at 245-0441 or email@example.com.