LIHU‘E — Wednesday, the Kaua‘i County Council unanimously authorized the county’s fiscal year 2022 budget which features a $243.3 million operating budget and a $24.8 million capital improvements project budget.
The budget plans no layoffs, furloughs or additional tax rate increases on residents and primarily focuses on deferred maintenance on bridges and the landfill, adds money toward housing and homeless initiatives and seeks wastewater solutions throughout the island.
“We’ve hit all the priorities the public asked us to take care of,” Council Chair Arryl Kaneshiro said before the vote.
Mayor Derek Kawakami submitted the fiscal year budget, which runs from July 1, 2021 to June 30, 2022, first in March and then a supplemental budget in May after weeks of presentations with individual departments in front of the council to address the budget.
“This budget is the second county fiscal plan that has been impacted by the volatility of COVID-19,” Kawakami said Wednesday. “There is always more need than ability when it comes to prioritizing taxpayer monies, especially in the present economic climate. The tough decisions really came as a consequence of focusing on maintaining services rather than adding or expanding services.”
FY21, which the county is in through June 30, also similarly faced uncertainty because of the then-emerging coronavirus pandemic, steep decline in tourism and spike in unemployment.
Comparatively, in this fiscal year, the county made-do with a $250,745,757 operating budget and CIP of $33,642,237. The drop in forecasted revenues for FY22 due to the pandemic was partially the reason for a tighter budget this upcoming fiscal year.
“Rather than new programs, we’re continuing to focus on taking care of what we have,” Kawakami said. “We have been able to maintain our level of effort with islandwide resurfacing, and addressing critical needs in wastewater and solid waste. These things may seem mundane, but they are core functions that need continued support and investment.”
A recent survey identified over $80 million in deferred maintenance costs, and the county is putting money toward repaving roads as well as infrastructure. Repairs on the Hanapepe Bridge are forthcoming, as well as for bridges in Kipu and Koloa. The CIP has $700,000 allocated for minor bridge repairs.
An additional $39 million in remaining Act 35 funds will support infrastructure projects related to the 2018 floods. Road and culvert repairs on Wainiha Powerhouse Road are in the works.
A vertical expansion of the Kekaha Landfill projected at $335,200 in the CIP seeks to add four years to the site’s lifespan. The county will continue negotiations with the state to site a new landfill near Ma‘alo Road in Kapaia. The estimated closing costs for the facility about $26.2 million, and the county has about $15.4 million saved away already. However, due to an accounting error found in a recent audit, the county needs to make up about $10.9 million. The budget presents $847,300 for the shutdown costs of the second cell in the Public Works Division budget.
The budget also allocates $2.6 million toward housing and homelessness efforts within the county’s Housing Agency.
Back in May, the council amended the supplementary budget by renaming a $150,000 “Cesspool Conversion Study as a Sewer Expansion Assessment, which would expand its flexibility during the procurement process of the study, according to officials.
The council also opted to move $81,371 for the resurfacing of the Kamalani playground resurfacing project to the Housing Agency’s other services account for a wastewater conversion program. The state expects to annually allocate $1.2 million in forgivable loans for individual wastewater systems, but the county would need to manage this program with homeowners and contract the construction. This funding sets that up.
Additionally, the council also changed a proviso that would increase the maximum number of Kaua‘i Police Department temporary officers from eight to 12. The proviso was requested by KPD.
As with last year, a review of the budget indicated continued restrictions on travel for conferences and some training.
The county’s share of the state transient accommodation tax, or hotel-room tax, an estimated $14.9 million, or 8.3% of the budget, is in limbo as Gov. David Ige is still suspending payments to the counties. Real-property-tax revenues, however, have remained consistent around $157.2 million, as has the county’s general-excise-tax revenue at $19.8 million.
The state’s legislature did send up a bill for Ige’s approval on House Bill 862, which states that in lieu of the TAT, counties may establish ordinances seeking up to 3% of gross transient rental proceeds, fair-market-rental-value taxable. Ige’s deadline for a decision is in early June. For Kaua‘i, 1% is projected to equate to $6 million.
“Making the recommendation to tap the reserve was difficult,” Kawakami said, “but largely prompted by state actions to limit or eliminate our share of the Transient Accommodations Tax.”
The county is continuing to lobby for missed TAT payments from the state, which stopped spring 2020.
To fill in where these monies would have gone, the budget will tap into the reserve. Kaneshiro expressed that this is the reason the county has a budget in the first place.
However, he expressed concern for tapping out the reserve in the future.
“Not collecting TAT will be a big impact on our county,” Kaneshiro said.