LIHU‘E — Visitor industry indexes may be up, but the recession still looms and the belt-tightening continues — for residents of Kaua‘i and for the administration. Mayor Bernard Carvalho Jr. released Friday the county’s proposed $158.51 million operating budget for
LIHU‘E — Visitor industry indexes may be up, but the recession still looms and the belt-tightening continues — for residents of Kaua‘i and for the administration.
Mayor Bernard Carvalho Jr. released Friday the county’s proposed $158.51 million operating budget for Fiscal Year 2014, which is $7.87 million less than the current fiscal year’s budget of $166.39 million.
Though Carvalho is proposing a reduced budget for next fiscal year, which starts July 1, the administration wants higher property tax rates and an increase in several county fees to balance the budget.
“This tightening of the belt is difficult, and it will challenge our departmental personnel to manage manpower and dollars with the utmost efficiency,” Carvalho said in his budgetary message. “However, they understand the overall picture, are dedicated to the goal and are ready for the task.”
Carvalho said difficult economic conditions in recent years have caused the administration to hold off on enhancing revenues, and have instead relied on using the county’s reserve to balance the budget.
Now, the county is at a point where the reserve is no longer able to close the gap between increasing costs and declining revenues, according to Carvalho, who is still using $11.58 million from the county’s Reserve Fund to balance the budget, leaving the fund with $2.6 million committed for disaster relief.
“We realize there is never a good time to raise tax rates; however, we feel that at comprehensive review and adjustment of rates is appropriate at this time,” he said in the message.
As a result, all classes of tax rates are being proposed to go up, with the exception of the homestead class, which would keep its rates at $3.05 for each $1,000 of assessed value.
The homestead class has a Permanent Home Use tax cap set by Honolulu’s Consumer Price Index. The cap protects those locked in at lower rates from a skyrocketing market, while still ensuring a small increase. Carvalho said the cap has created inequities and it’s time to consider lifting it.
The tax rate increases would add some $11 million to county coffers.
Since 2008, when the RPT revenues peaked at $90.74 million, falling real estate prices caused those revenues to shrink each year. The new tax rates would bring the revenues closer to the 2008 tax revenues.
Fee increases
Other proposed fee increases would bring approximately $3 million in FY 2014.
An increase to the Vehicle Weight Tax, which would go into effect Jan. 1, would bring more than $1 million to the county next fiscal year, and more than $2 million in subsequent years. Also, an increase in vehicle registrations would go into effect Jan. 1 and bring an estimated $208,343 to the county for the remainder of FY 2014.
A 2-cent raise in the gasoline tax would bring an estimated $569,000 annually to the county. Commuters who fill up a 15-gallon tank once a week would pay approximately $15 more per year on gas.
The Kaua‘i Bus monthly pass is being proposed to increase to $30 from $25, and the annual pass to $300 from $240, bringing an additional $60,000 in revenues.
An increase to $119 from $90 per ton in the Solid Waste Tipping Fee for commercial deliveries would bring $1 million in additional revenues.
A new structure in Planning Department fees would bring roughly $140,000 in new revenues.
Cost-saving measures
By putting a moratorium on new hires and converting 10 vacancies into dollar-funded positions, Carvalho said he was able to propose a 3.5 percent reduction in salaries and related costs in FY 2014.
Energy savings initiatives will result in a projected $160,000 decrease in utility costs, and reductions in travel expenses would save the county roughly $100,000.
Adjustments to vehicle replacement policy and subsidizing cars for police officers would bring additional savings.
A vertical expansion of the Kekaha Landfill, postponing a more costly lateral expansion, would save the county $8 million in the short run.
Carvalho said in the message that with a need to get a landfill expansion in operation as early as April, there might not be enough time to work with all the issues laid out by the state Department of Health.
However, “moving vertical” does not mean the administration is abandoning the lateral expansion; it’s just buying more time for the permitting process and deferring large costs associated with construction, according to Carvalho.
Budget more, use less
Carvalho is proposing a $49.17 million budget for capital improvement projects in FY 2014, while the CIP budget for FY 2013 was $64.2 million. But to date, the administration spent only $13.7 million from the current CIP budget, and another $6.4 million is pending awards on three projects.
Additionally, the operational budget has been considerably higher than what the administration has actually spent at the end of each fiscal year, according to the Comprehensive Annual Financial Report.
For FY 2012, Carvalho budgeted $185.84 million for operational expenses, but at the end of the fiscal year, on June 30, 2012, the county had $44.69 million left in the General Fund.
For FY 2011, the General Fund balance was $57 million, after a $147.61 million operational budget; and for FY 2010, the county ended the year with $9.79 million, after a $154.09 million operational budget.
The CAFR numbers for the General Fund balance for FY 2013 won’t be known until the report is released in December.
On Monday, Carvalho will deliver the annual State of the County address at 10 a.m. at the Mo‘ikeha Building in Lihu‘e.
Visit www.kauai.gov to view the entire budget.
• Léo Azambuja, staff writer, can be reached at 245-0452 or lazambuja@ thegardenisland.com.
