LIHU‘E — The Kaua‘i County Council unanimously approved on first reading last week a bill that would create a permanent reserve fund for the county, to be used to cover budget shortfalls and stabilization and initial disaster response, among other
LIHU‘E — The Kaua‘i County Council unanimously approved on first reading last week a bill that would create a permanent reserve fund for the county, to be used to cover budget shortfalls and stabilization and initial disaster response, among other things.
But in case the county has to touch the reserve fund, the bill leaves an open door to establish surcharges on county fees to help replenish it to appropriate levels.
Bill 2457, introduced by Council Chair Jay Furfaro on Oct. 24, proposes “to establish a clear financial policy of maintaining a reserve fund within the General Fund in the range of 15 to 20 percent of the previous year’s actual operating General Fund expenditures, encumbrances and General Fund transfers to other funds, as identified in the most recent Comprehensive Annual Financial Report.”
Each year the county’s operating and Capital Improvement Project budgets carry over a surplus of unused funds. Last year the council passed a resolution which created a reserve fund for the first time.
But when the next council formation resumes its work on Dec. 1, the resolution sunsets. An ordinance would make the reserve fund a permanent fixture.
Furfaro’s proposal would allow up to 50 percent of a newly created reserve fund to be used for operations cash flow and working capital.
Additionally, up to 25 percent of the fund would be allowed for budgetary stabilization, up to 15 percent for initial disaster response, and up to 10 percent for risk management losses for the county, such as non-insured losses.
Taxpayers’ collateral
In the event the funds are appropriated, the council and the administration “shall” propose and approve a financial plan to replenish it to appropriate levels, according to the proposed ordinance.
The bill in its current form states that an effort “shall” be made to restore the funds within one year, and in the event of one third or more is used, a longer replenishing plan, up to three years, may be considered.
Strategies to replenish the reserve fund could include accessing budget surpluses, reducing expenditures and “adoption of revenue enhancement measures,” the bill states.
It is the “revenue enhancement measures” language in the bill’s current form that may leave an open door to a fund-replenishment backed by taxpayers.
“Revenue measures may include but are not limited to: Long- and short-term financing; adjusting real property tax; fuel taxes; vehicle weight taxes; and other various established county fees for services,” the bill states.
The council scheduled the bill for public hearing on Nov. 28, and referred it to its Committee of the Whole.
Visit www.kauai.gov for more information.
• Léo Azambuja, staff writer, can be reached at 245-3681 (ext. 252) or lazambuja@ thegardenisland.com.
