LIHU‘E — The County of Kaua‘i ended Fiscal Year 2011 on June 30 with a budget surplus of $57.26 million, according to the Comprehensive Annual Financial Report released Dec. 15. The County Charter states the surplus “shall” be available for
LIHU‘E — The County of Kaua‘i ended Fiscal Year 2011 on June 30 with a budget surplus of $57.26 million, according to the Comprehensive Annual Financial Report released Dec. 15.
The County Charter states the surplus “shall” be available for appropriation for the succeeding fiscal year. But does “shall” mean it is mandatory?
Heated discussions at the County Council Chambers in September ended with a Salary Commission resolution becoming law, even though the commission missed by almost five months a deadline set in the charter to send the resolution. At the crux of the matter was the meaning of the word “shall” in the charter.
“The commission’s salary findings shall be adopted by resolution of the commission and forwarded to the mayor and the council on or before March 15,” states Section 29.03 of the charter.
After the resolution became effective Oct. 5, council members Mel Rapozo and KipuKai Kuali‘i filed a Fifth Circuit Court complaint against four of their peers seeking a declaratory judgment of “shall.” Judge Randal Valenciano dismissed the case on Dec. 27.
“I don’t want you folks to get confused with the recent issue in the courts,” County Council Chair Jay Furfaro told Cost Control Commission members at a meeting Monday.
Furfaro said the court did not really pursue the merit of the case, it simply ruled the plaintiffs did not have a standing, which is a big difference, he said.
Quoting the charter, Furfaro said Article 2 states that “the terms ‘must’ and ‘shall’ are mandatory. The term ‘may’ is permissive.”
Furthermore, Section 19.14 of the charter states: “Any unappropriated surplus and any unencumbered balances of any appropriations in any fund at the end of any fiscal year shall be available for appropriation for the succeeding fiscal year. The mayor shall certify to the council the amount of any unappropriated surplus or unencumbered balances by Jan. 1 following the close of the fiscal year.”
From surplus to shortfall
On the first day of FY2012, the surplus was down to $47.61 million, following appropriations of $5.41 million for committed encumbrances, $3.74 million for self-insurance and $490,000 for landfill closure costs.
Projected revenues of $101.88 million against $111.87 million in expected expenses depleted the surplus nearly $10 million further.
Other expenses took an even larger bite out of the surplus, including: $396,436 for the Public Access Fund, $4.04 million for the bond debt service, $12.31 million for fund transfers, $126,000 for capital improvement projects, and a resolution-established budget reserve fund of $23.38 million.
If all projected expenses are met, at the end of the fiscal year the county should have a budget deficit of $2.64 million. But according to Councilman Tim Bynum, the county has had a budget surplus of at least $16 million in unused funds each fiscal year for the last 10 years.
Even if the county ends the fiscal year with a deficit, there is now a resolution-established reserve fund that should represent between 20 and 25 percent of the budget. Per Resolution 2011-77, the $23.38 million in the fund can be used by the administration as follow:
• Up to 50 percent for cash flow/working capital operations.
• Up to 25 percent for budgetary stabilization.
• Up to 15 percent for initial disaster response.
• Up to 10 percent for non-insured losses.
The reserve fund, however, is not set in stone. A resolution is only valid during the term of the council that passed it. With the elections coming up in November, the reserve fund resolution will die in December.
“For this resolution to continue beyond the next election cycle, we need to put it in an ordinance, which has not happened,” Furfaro said Monday at the Cost Control Commission meeting.
‘Shall’ goes to court
Per the charter, the Salary Commission “shall” send the council a resolution setting salaries of certain county officials and employees on or before March 15, if the resolution is to be considered for the upcoming fiscal year, which for the county runs from July 1 to June 30.
But the commission sent the resolution on Aug. 5, almost five months past the deadline.
The resolution froze salaries of several county official and high-ranked employees. Those salaries had been allowed a raise in the current fiscal year, but the raises — an added $173,000 in combined expenses — were not included in the budget.
The resolution was first rejected on Sept. 7, then reconsidered on Sept. 21.
Heated debates ensued at council meetings, with the meaning of the word “shall” highlighting many testimony.
Some of the council members saw the resolution as a mechanism to control salary raises for the administration’s top-level employees at a time when rank-and-file employees took a blow after a supplemental union agreement.
By not rejecting the resolution, other council members interpreted it would represent a violation of the charter, punishable as a misdemeanor.
After the reconsideration, a 3-3 vote on Sept. 27 (Bynum missed the vote for personal matters) pushed back the decision another week, causing the resolution to become effective Oct. 5 after crossing a 60-day deadline for council action.
Rapozo and Kuali‘i then petitioned a court case against Council members Bynum, JoAnn Yukimura, Dickie Chang and Nadine Nakamura. The case sought declaratory judgment on the word “shall.” Furfaro stayed out of the case.
On Dec. 27, Valenciano, a former council member, dismissed the case, saying it would be up to the electorate to decide on the merits of the council’s actions.
