LIHUE — The county’s 2014-2015 operating budget, to the tune of $179.2 million, has been set. All that’s missing is Mayor Bernard Carvalho Jr.’s signature. The Kauai County Council approved its revisions to the mayor’s budget, comprised of several tax
LIHUE — The county’s 2014-2015 operating budget, to the tune of $179.2 million, has been set.
All that’s missing is Mayor Bernard Carvalho Jr.’s signature.
The Kauai County Council approved its revisions to the mayor’s budget, comprised of several tax rate increases and about $2.3 million in cuts, by a 6-1 vote during their Wednesday meeting, where some officials said more must be done to keep the county on financially stable ground.
“This year’s budget reflected a desire for new beginnings,” Kauai County council members wrote in their budget message to Carvalho’s administration. “It has been referred to as a ‘reset’ year, where improvement in management and new ways to do business were encouraged in all areas of county government.”
Councilman Ross Kagawa, who cast the lone dissenting vote against the county budget’s approval, said county officials must continue to trim budgets in individual departments at a time when supplemental funding is scarce.
“I believe that cutting the budget is the way that we’re going to be sustainable, because we somehow need to get our expenditures less than our revenues, and we’re striving to that point,” Kagawa said. “I think, with these fee and tax increases, we actually did achieve that, but I was looking at not increasing fees and not increasing taxes. We’re still struggling — I mean, people out there … are not happy with these increases in taxes.”
A common concern raised by several council members was a need to improve the county’s recently downgraded credit rating by growing the county’s reserve fund and “become a sustainable and thriving jurisdiction in the future,” according to the County Council’s budget message.
“This has been the most difficult budget of the many budgets that I’ve sat through,” Councilwoman JoAnn Yukimura said. “We are treading in dangerous waters, so we need to sharpen our pencils and redo our strategies carefully, if we want not only to survive but also thrive as a community. Without the cost-cutting and revenue measures that we passed through this budget, we would be moving, in my opinion, toward Detroit’s fate, where no one wins and everyone loses, and none of us wanted that scenario.”
The county budget approved by the seven-member board included reducing health benefit contributions for current county employees over the next fiscal year by 5 percent and slashing overtime costs by 5 percent across all county departments, except for police and fire.
Those two departments, because of collective bargaining requirements, will experience a 5 percent reduction in discretionary overtime costs only, which is commonly used to manage special events and youth education programs.
Other significant cost-saving measures highlighted in the approved county budget include reducing travel budgets across all county departments by $113,004; reducing county electricity costs by $88,898, a 2 percent reduction in kilowatt hours used; and not funding a deputy county attorney position set aside in the Office of the County Attorney’s budget for a proposed litigation team.
For the first time, the council also approved a 10 percent reduction in annual health benefit contributions for retired county employees, amounting to $1.5 million — a cost that county officials will have to pick up in the future.
The seven-member board also approved the county’s real property tax rate increase by a 5-2 vote to balance the county’s budget. Councilmen Mel Rapozo and Ross Kagawa cast the votes against the measure.
Hotel and resort properties, along with vacation rental properties, would receive the largest increases, according to the new rate structure.
Real property tax rates for hotel and resort properties will jump from $9 to $10.85 per $1,000 in net assessed valuation, while rates for vacation rental properties will increase from $8 to $8.85 per $1,000.
Rates for residential class properties, those that are not owner-occupied, will also increase by 30 cents, from $5.75 to $6.05, per $1,000 in net assessed valuation, while commercial and industrial class properties will see a 10-cent jump, from $8 to $8.10, per $1,000.
Several other fee or tax increases outlined in the budget include increasing transient vacation rental renewal frees from $500 to $750; raising commercial solid waste tipping fees from $90 to $119 per ton; and increasing the motor vehicle weight tax from $0.0125 to $0.02 for passenger vehicles.
“No one recommended a balanced budget with cuts — no one — and I think we need to acknowledge that. Every budget that was discussed or approved at this table involved tax increases,” Councilman Gary Hooser said. “The tax increases that we’re voting on today, some of them reluctantly, I think are reasonable and responsible.”
Not everyone sees it that way.
In separate emails and letters, Sheraton Kauai Resort General Manager Chip Bahouth and five other Hawaii Lodging and Tourism Association Kauai chapter board members wrote that the property tax rate hikes “unfairly target the lodging industry at a time when we are seeing softness in the market for our island.”
“As business costs increase in a soft market, there are fewer resources available for wage increases, community outreach events and programs and other business needs,” the members wrote to County council members. “The visitor industry continues to be a vigorous economic engine for Kauai, however, we are constantly facing competition from our other visitor destinations, both overseas and domestically, who often have lower business costs. We have to ensure that our industry remains competitive.”
