LIHU‘E — Decreased revenues, increased operating costs and a pile of uncertainty presented a year of “tough choices” and “sacrifice” for Mayor Bernard Carvalho Jr. and county department heads. The administration on Friday proposed a $154.09 million operating budget for
LIHU‘E — Decreased revenues, increased operating costs and a pile of uncertainty presented a year of “tough choices” and “sacrifice” for Mayor Bernard Carvalho Jr. and county department heads.
The administration on Friday proposed a $154.09 million operating budget for next fiscal year — a 2.5 percent reduction from the current year.
“Since taking office in December I have challenged my leadership team to dig deep and find new and innovative ways to continue to deliver services while reducing the cost of government,” Carvalho said in his budget submittal letter to the Kaua‘i County Council. “We look forward to working closely with you in coming weeks to discuss this proposal and craft a final budget that will allow us to weather the storm before us while continuing to meet the needs of our community.”
The administration remained committed to not raising real property taxes in order to balance the county budget.
“It is a budget that reflects a tightening of our belt, but still maintains core services and provides for external investments to stimulate our flagging economy,” the mayor said.
Kaua‘i faces challenges today which could never have been foreseen 12 months ago, the letters states. After several years of near-record economic growth, Kaua‘i’s economy reversed throughout 2008 to a point where it is now faced with business closures, job losses, a stagnant real estate market and a dramatic loss in visitor arrivals.
Kaua‘i’s unemployment rate, which was one of the lowest in the nation at the beginning of 2008, now stands higher than the national average.
The visitor industry has been perhaps most seriously impacted, the mayor said. As of December, Kaua‘i was down 20.4 percent in visitor arrivals compared to 2007. Currently, Kaua‘i is experiencing the largest decrease in arrivals amongst all the major islands.
“In addition to individuals canceling vacations or traveling to closer destinations, group business has begun to erode as corporate America shies away from business travel to Hawai‘i which might appear to be extravagant,” Carvalho said in the letter. “It is safe to say that there is not a person, business, nonprofit organization or government agency that has not been impacted by these dramatic developments. Layoffs, bankruptcies, foreclosures and personal financial crises have impacted all layers of our community and threaten to continue to do so for at least another 18 months.”
The mayor set a goal of reducing general fund expenses by 10 percent in addition to a host of other directives, including:
• All current programs were to be preserved
• Layoffs were not to be utilized for achieving the budget reduction goal
• No new positions were to be added, except those that could be funded via capital project monies
• Non-essential vacant positions were to be dollar-funded
• The approved raise for the mayor and appointees (effective Dec. 1, 2009) was not to be included in the FY10 budget
• No collective bargaining raises were to be incorporated except those previously approved for the Hawai‘i Fire Fighters Association and the State of Hawai‘i Organization of Police Officers
• All travel budgets were to be reduced by 50 percent from FY09 levels
• Equipment requests were to be kept to a minimum
• Take-home vehicles for county employees were to be re-evaluated and provided only for first-responders
“While not all departments could comply with all of these directives 100 percent, exceptions were relatively few,” Carvalho said.
In all, 33 positions have been either dollar-funded or eliminated for FY10, which represents a savings of roughly $2.5 million, according to the mayor’s budget submittal. The administration has not requested any new positions, although in a few instances existing positions were transferred between departments to meet shifting priorities.
“We were able to reduce the budget in spite of fixed cost increases for employee salaries and benefits of $1.5 million (primarily SHOPO and HFFA raises), retirement system increases of $268,488 and debt service increases of $2.14 million,” Carvalho said.
In order to balance the budget, departments’ non-fixed or operational costs were reduced from $52.6 million to $45.2 million, a $7.4 million or 14 percent reduction, the letter states.
The administration projects revenues will be down $6.3 million or 4.4 percent from FY09. Although not as bleak as originally projected, real property tax revenues are expected to drop some 3 percent in the coming fiscal year, the letter says.
“Sacrifices are being made in every household, every business and every nonprofit organization in our community. Likewise, it is time for government to share in this sacrifice,” Carvalho said in the letter. “It is time to learn to do more with less and to refocus on our commitment to serve our community with aloha and with excellence.”
To see the budget in its entirety, visit www.kauai.gov
