LIHUE — Kauai Mayor Bernard Carvalho Jr.’s budget recommendations for the 2015 fiscal year include a $4 million increase to pay for employee raises. To help pay for the increase, the mayor is proposing to raise some taxes and fees.
LIHUE — Kauai Mayor Bernard Carvalho Jr.’s budget recommendations for the 2015 fiscal year include a $4 million increase to pay for employee raises.
To help pay for the increase, the mayor is proposing to raise some taxes and fees.
“This year’s proposal continues efforts to improve our quality of services and assets in the most cost-efficient way, while modestly increasing revenues,” Carvalho wrote in his 20-page proposal delivered to the Kauai County Council on Friday.
The county works with seven collective bargaining units. The pay raises would be spread across all county employees.
Increased costs from several of the collective bargaining unit raises were integrated into the 2014 fiscal year budget, but those associated with agreements with three of the labor unions were not, said Finance Director Steve Hunt.
The proposed $4 million increase would pay for all the raises in both fiscal year plans agreed to through the collective bargaining agencies.
“Part of it was that we didn’t know what to budget, and if we put money in there, it kind of shows your hand a little bit for negotiations,” Hunt said. “Often it’s a sort of cat and mouse game in terms of we know what’s coming and we anticipate having lapsed funds from the prior year to cover this but we can’t show it because it weakens our bargaining position when we go in and try to hold a line on costs. There was a real cost that now has to hit us, so we have to readjust our current budget.”
The raises make up a majority of the $4.6 million in spending increases proposed for the $180.6 million 2015 fiscal year, which begins July 1.
To help generate revenue for the county, Carvalho’s proposal calls for raising the hotel and resort class real property tax rate from $9 to $11 per $1,000 of valuation, a move expected to bring the island’s tax rates closer to the state average and generate about $4.3 million during the 2015 fiscal year.
Although Carvalho wrote that the increase is responding to “dramatically improved economic conditions and a sharp increase in visitor arrivals for the past two years,” Kauai Chamber of Commerce President Randy Francisco disagreed.
Recent figures released by the state Council on Revenues, Francisco pointed out, show that state tax revenues, particularly those collected through general excise taxes and visitor spending, have declined.
What’s also concerning, Francisco said, is that local hotel officials are projecting moderate to mild growth in visitor stays for the spring season.
“I think they really need to re-think this budget, especially because, while they feel we should be on par with the other counties since we are the lowest, we have also the smallest of all the islands in terms of our resort and hotel inventory,” Francisco said. “It’s still the first review and we’re going to take a look at it, but I think that they should reassess the increase because we’re still in recovery — our recovery is still lagging from Oahu and Maui.”
The budget proposal also asks the County Council to raise the county’s solid waste tipping fees from $90 to $119 per ton; the vehicle weight tax by $0.005 for commercial vehicles and $0.0075 for all others; and the annual transient vacation rental renewal fee from $500 to $750.
“This was necessary in large part because of a failure over a period of years to make such adjustments to keep up with inflation, the cost of delivering services and maintaining parity with state averages,” Carvalho wrote about the increases in tax rates and fees implemented last year. “We must commit going forward to make such adjustments incrementally as appropriate to the cost of services.”
Among the cost-savings initiatives highlighted in the proposed budget are establishing a litigation team within the Office of the County Attorney to handle more lawsuits without special counsel services and reducing the county’s annual employee health benefits contribution for the first time from 100 to 73 percent.
Full funding for the county’s health benefits contribution, however, may be reinstated, if the Legislature lifts the cap on the county’s share of transient accommodation taxes, a tax imposed on visitor accommodations.
“This is not our preferred scenario and is being pursued only as a temporary measure while we put into place longer-term revenue enhancement and expense reduction measures,” Carvalho wrote on the health benefits contribution reduction.
Although many departments, Carvalho wrote, “have demonstrated a valid need for additional personnel,” a moratorium placed on new county positions last year will continue into the next fiscal year — for the most part.
“Our fiscal situation has not changed,” Carvalho said. “Therefore, for next year, we are asking departments to again do without, with a handful of exceptions.”
Those exceptions include filling three positions within the Wastewater Division of county’s Department of Public Works; hiring a grants coordinator with the Kauai Civil Defense Agency; and hiring an enforcement specialist in the Office of Economic Development to carry out Ordinance 960-related functions.
About $4.9 million in additional costs, Carvalho wrote, have been accrued since the 2014 fiscal year budget was passed last June — nearly 68 percent of which were due to collective bargaining increases for government employees and related costs.
Other significant expenses, he pointed out, included $575,000 allocated for special legal counsel services; $500,000 in Kauai Police Department overtime costs; and $100,000 to kick start the county’s Environmental Public Health Impact Statement on pesticides use on Kauai.
Carvalho will discuss the budget proposal during his State of the County address beginning at 8:30 a.m. Monday in the Moikeha Building courtyard.
• Darin Moriki, county government reporter, can be reached at 245-0428 or dmoriki@thegardenisland.com. Follow him on Twitter at @darinmoriki.
