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HomeMy WebLinkAbout010912_Minutes_APPROVED_1 COUNTY OF KAUAI Minutes of Meeting OPEN SESSION Board/Committee: COST CONTROL COMMISSION Meeting Date I January 09, 2012 Location Mo'ikeha Building—Liquor Conference Room 3 Start of Meeting: 1:31 p.m. I End of Meeting: 3:15 p.m. Present Chair Dirk Apao; Vice-Chair Lawrence Chaffin Jr., Members: Sandi Sterker, Arryl Kaneshiro, Glen Takenouchi, and Laurie Yoshida. Also First Deputy County Attorney Amy Esaki; Board& Commission's Office Staff. Support Clerk Mercedes Youn; Administrator Paula Morikami; Lowell Kalapa, Tax Foundation of Hawai'i; and Council Chair Jay Furfaro. Public testifiers Dennis Tanimoto, President of the Hawai'i Credit Union League; Scot Tsuchiyama, Manager of the Kekaha Federal Credit Union; and Melvin Chiba, President of the Kaua'i Community Federal Credit Union. Excused Member: Brant Fuchigami Absent SUBJECT DISCUSSION ACTION Call To Order With a quorum being present, Chair Apao called the meeting to order at 1:31 p.m. Approval of Regular Open Session Minutes of December 12, 2011. Ms. Sterker moved to approve the minutes as Minutes circulated. Mr. Takenouchi seconded the motion. Motion carried 6:0 Business CCC 2012-01 Memorandum dated 12/15/11 from Council Chair Jay Furfaro, requesting agenda time at the January 09, 2012 Cost Control Commission's meeting to provide a briefing on the County's Staffing Guidelines, Comprehensive Annual Financial Report(CAFR), and the Council's new Travel Policy. Chair Apao called for a motion to receive item CCC 2012-01. Ms. Sterker moved to receive. Mr. Chaffin seconded the motion. Motion carried 6:0 Council Chair Jay Furfaro conveyed his sincere thanks to the Commission members for their service to the people of Kaua'i. He acknowledged Paula Morikami as the new Administrator for the Office of Boards and Commissions. Chair Furfaro extended his appreciation to John Isobe for all of the years of service in the County. Cost Control Commission Open Session January 09, 2012 Page 2 SUBJECT DISCUSSION ACTION Chair Furfaro began by expressing the importance of having clarity and understanding when it comes to the terms "must" and"shall"which are mandatory and that the term"may" is permissive. Chair Furfaro explained that Section 19.14 of the charter states "Any unappropriated surplus and any unencumbered balances of any appropriations in any fund at the end of any fiscal year shall be available for appropriation for the succeeding fiscal year. The mayor shall certify to the Council the amount of any inappropriate surplus or unencumbered balances by January 1 following the close of the fiscal year." He said that the Cost Control Commission should ask the Finance Department for that information and he stressed how important it is for the Council to be clear on what the reserves are. Chair Furfaro also shared information on the County's housing agency's operating projection for the Kalapa Village (Phases 1 and 4) and Paanau Village rental projects. Mr. Chaffin asked whether the housing agency had budgeted for ongoing maintenance for the projects. Chair Furfaro said yes, and suggested that the Commission invite the housing agency to a future meeting. Chair Furfaro referred to the summary report that showed 44 County vacancies for the positions that were approved in the budget as well as 31 Kaua'i Police Department vacancies. The vacancies represent $3.4 million in unused funds. He said that he is not concerned with the amount identified with the Police Department because until they have filled those vacancies, the Council has kept the Police Department's overtime line compressed. He expressed his concern with the process in which the administration can use the funds allocated for the positions outside of the Police Department and submit new positions in the County without first going through Council. He said that there needs to be stronger control mechanisms because the administration can use a vacancy, recode the osition and staff a new position which was not approved and budgeted Cost Control Commission Open Session January 09, 2012 Page 3 SUBJECT DISCUSSION ACTION for. Ms. Sterker said that it was her understanding that any unfilled vacant position that is on the list is supposed to be eliminated after a certain period. Chair Furfaro expressed his discontent with the DPS (Department of Personnel Services) summary report because the administration has never shared it with the Council. If you read the charter it states that at the end of the day one of the main functions of the Council is to review the budget and identify the revenues and the appropriated services for the County. He said that he had recently asked the administration for other survey information but still needs to massage his request. He explained that the responsibility of the Cost Control Commission is to review personnel costs, real property taxes, travel budgets, contract procedures, and although the Commission does not make the polices, the Commission can make recommendations which should be done semi-annually. He pointed out that according to the charter the Commission shall prepare and advertise a written annual report summarizing its recommendations prior to the end of each calendar year. He asked the Commission to consider placing on future agendas the four issues relating to housing, summary of the police recruitment issues, medical benefit calculation, and the staffing guidelines. Another concern he raised related to the benefit calculation for medical coverage, he felt that the structure was not evenly tiered. He explained that there are secretarial positions that earn less than $45,000 a year who are taking a$108 hit on their medical premium, compared to an engineering position that earns $83,000 a year that pays the same amount. Chair Furfaro felt that current structure seems unfair and that the payments should be tiered based on earnings and that the structure should be re- evaluated. Cost Control Commission Open Session January 09, 2012 Page 4 SUBJECT DISCUSSION ACTION Chair Furfaro provided the Commission members with a copy of the 2010 Kaua'i Planning &Action Alliance Report and advised the members to get a copy of the surplus certificate in time for the February meeting. Chair Furfaro pointed out that a lot of attention will be on the TAT (Transient Accommodation Tax) and as far as he is concerned the County will not be seeing any growth in the TAT tax for at least three years. The net benefit will be seen by the State and not the County. Chair Furfaro briefly explained the basic requirements for travel. He mentioned that the Council is a separate legislative body and that the travel policies that are in place for the administration does not cover the Council. The Council directs its own operating budget and has its own policy. Ms. Sterker asked if it would be helpful to the Commission to see the previous travel policy and then compare them to the current travel policy. Chair Furfaro said that the biggest change to the Council's travel policy is that he requires an explanation on the rationale behind the travel and allocates monies to each Councilmember accordingly. He noted that he does not know what is in the administration's policy. Mr. Chaffin thanked Chair Furfaro for submitting the information, but felt that the information should have been provided to the members prior to the meeting. Ms. Sterker said that after hearing Chair Furfaro's reaction to the excess funds, she asked whether it would be worthwhile for the Commission to go back to see what the original Cost Control Commission's recommendation was and compare it to the present issue. Chair Furfaro said that County's Comprehensive Annual Financial Report, released on December 15, shows the administration ended fiscal year 2011 with a $51.36 million surplus. But after allocating money to other funds, debt service and a$23 million Cost Control Commission Open Session January 09, 2012 Page 5 SUBJECT DISCUSSION ACTION reserve provision, the surplus became a $2.64 million shortfall. The reserve fund approved last year by the Council during the budget review sessions was passed through a resolution, which created the fund as a policy only. Chair Furfaro stated that the Council should be able to work closely with the administration. He felt that the public should have the information so that they can understand what the County can fall back on and that having a reserve fund is wise for the County. Ms. Sterker asked where the reserve funds go. Chair Furfaro said that the reserve fund is broken down to see how it can be used and that he believes 15% is in the resolution. CCC 2011-08 Review and discussion of the County's real property tax exemptions and rate setting procedures. (Ongoing) (i) Communication dated 12/14/11 from Chair Sandi Sterker to Wally Rezentes, Jr., Director of Finance, regarding a request to update the list of exemptions to include the purpose and intent behind each property tax exemption and the date of enactment. Chair Apao called for a motion to receive communication(i). Ms. Yoshida moved to receive the communication. Mr. Takenouchi seconded the motion. Motion carried 6:0 (j) Communication dated 12/14/11 from Wallace Rezentes, Jr., Director of Finance, to Chair Sandi Sterker, requesting additional time to update the Ms. Sterker moved to defer the item to the list of exemptions to include the purpose and intent behind each property March meeting pending receipt of the list of tax exemption and the date of enactment. exemptions to include the purpose and intent behind each property tax exemption and the date Cost Control Commission Open Session January 09, 2012 Page 6 SUBJECT DISCUSSION ACTION Chair Apao called for a motion to defer item 0)to the March 12, 2012 of enactment. Mr. Chaffin seconded the motion. meeting and continue discussion. Motion carried 6:0 (k) Presentation by Lowell Kalapa, Tax Foundation of Hawai'i, relating to the City & County of Honolulu's Real Property Tax Advisory Commission schedule, decision making process, and report findings. Chair Apao called for the motion to receive the December 2011 Ms. Sterker moved to receive. Mr. Chaffin Preliminary Report of the Real Property Tax Advisory Commission. seconded the motion. (A copy of the report is on file with the Office of Boards and Motion carried 6:0 Commissions) Mr. Lowell Kalapa explained that the twenty-six page report was a result of a request from the City Council. The Tax Advisory Commission is made up of seven citizens whose task is to undertake an objective review of the City& County of Honolulu's real property tax system. Mr. Kalapa suggested that the Commission may want to consider some of the information and the Commission's recommendations that are in the report when they review the County's real property tax exemptions. He also suggested that perhaps the Cost Control Commission should do away with all real property exemptions and start from scratch. He also mentioned that non-profit, charitable organizations which do not have 501-c3 clearance should not receive tax advantages. Public testifiers Mr. Dennis Tanimoto, President of the Hawai'i Credit Union League, submitted written testimony, which is attached hereto. Mr. Tanimoto expressed opposition to repeal or reduce the real property tax exemption of credits. Cost Control Commission Open Session January 09, 2012 Page 7 SUBJECT DISCUSSION ACTION Mr. Scot Tsuchiyama, Manager/Treasurer of the Kekaha Federal Credit Union, submitted written testimony, which is attached hereto. Mr. Melvin Chiba, President of the Kaua'i Community Federal Credit Union, provided the Commission with an update on the status of the credit union financial report to include the percentage of taxes paid by the credit union. He noted that the report would be available in mid-January and that he would be submitting the report to the Office of Boards and Commissions for distribution to the Commission prior to the February 13th meeting. Announcements Next Meeting: February 13, 2012 at 1:30 p.m. in the Liquor Conference Room 3. Adjournment Ms. Sterker moved to adjourn the meeting at 3:15 p.m. Mr. Takenouchi seconded the motion. Motion carried 6:0 Submitted by: Reviewed and Approved by: Mercedes Youn, Staff Support Clerk Dirk Apao, Chair (X) Approved as circulated on 02/13/12. ( ) Approved as amended. See minutes of meeting.