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HomeMy WebLinkAbout021113_CCC Minutes_Approved 1m(cz)(tt) (2)COUNTY OF KAUAI Minutes of Meeting OPEN SESSION Board /Committee: I COST CONTROL COMMISSION Meeting Date February 11, 2013 Location Mo'ikeha Building — Liquor Conference Room Start of Meeting: 1:30 p.m. I End of Meeting: 3:03 p.m. Present Chair Sandi Sterker; Vice -Chair Arryl Kaneshiro; Members: Dirk Apao, Lawrence Chaffin Jr., and Glen Takenouchi (left the meeting at 2:48 p.m.) Also present: First Deputy County Attorney Amy Esaki; Boards & Commissions Office Staff. Support Clerk Mercedes Youn; Administrative Aide Teresa Tamura; Council Chair Jay Furfaro; and Council Services Review Officer Scott Sato. Excused Commissioner Laurie Yoshida Absent SUBJECT DISCUSSION ACTION Call To Order Prior to the meeting being called to order, Administrative Assistant to the County Council Eddie Topenio officiated the Oath of Office for Commissioner Dirk Apao to a 2nd term. Chair Sterker called the meeting to order at 1:30 p.m. Approval of Minutes Regular Open Session Minutes of January 14, 2013 Commissioner Chaffin moved to approve the meeting minutes as circulated. Commissioner Takenouchi seconded the motion. Motion carried 5:0 Communications CCC 2013 -04 Memorandum dated 1/4/13 from Council Chair Jay Furfaro to Chair Sandi Sterker and Members of the Cost Control Commission, relating to o a request for deferral relating to the financial position of the County of Kauai as it relates to Departmental Expenditures versus budget amounts. (Deferred on 1/14/13) CCC 2013 -05 Memorandum dated 1/9/13 from Council Chair Jay Furfaro to Chair Sandi Sterker and Members of the Cost Control, regarding additional information for the Commission's consideration a list of all vacant positions in the County of Kauai as December 31, 2012. (Deferred on 1/14/13) Cost Control Commission Regular Meeting - Open Session February 11, 2013 Page 2 SUBJECT DISCUSSION ACTION Council Chair Furfaro began by presenting an overview of the County's annual budget for Fiscal Year 2013 -2014. He asked the Commission for their assistance in exercising a few of their skills, which the Commission is authorized to do, in getting the County to begin its new fiscal year with a healthy start. He expressed his opinion that the State of Hawaii is continuing to find themselves in a difficult financial position and that their wish list might exceed a billion dollars more than their previous budget. Chair Furfaro expressed his concern about the County's fiscal position. He explained that by State Charter, monies that are allocated to the various counties would end. He indicated that the State is now taking 44% of the TAT (Transient Accommodation Tax) to fund the Hawaii State Convention Center, an act that he has never heard of before because convention centers are usually the municipality's responsibility, however, the Hawaii Convention Center is funded by the State. He stated that a year ago the TAT was distributed by percentage to the county governments with 45% going to City & County of Honolulu, 22% to Maui County, 21% to Hawaii County, and 14.5% to Kauai County which amounts to 16 million dollars. Today, the State has placed a three year cap on the TAT distribution to the county governments, from which Kauai County would receive 13 million dollars as compared to 16 million dollars in the previous years. Council Chair Furfaro indicated that the movement is not part of a trend but more like pent up demand because people who used to travel on a yearly basis have stopped coming, however, he felt that the economic doldrums have somewhat improved and the tourists seem to be traveling more. Council Chair Furfaro shared with the Commission that the County would be seeing a 1.5% increase in resort growth per year based on an Cost Control Commission Regular Meeting - Open Session February 11, 2013 Page 3 SUBJECT DISCUSSION ACTION amendment to the Charter in 2011 allowing the Planning Commission to approve 98 units per year which includes transient accommodations. He indicated that based on the amendment, the Planning Commission is now allowed to quantify five (5) years of growth in any one permit which means that four- hundred and seventy units can be approved for each project. Commissioner Chaffin stated that as a former Planning Commissioner, he has never heard of such a thing. Council Chair Furfaro explained that the amendment was based on a petition initiated by members in the community who approached the Charter Review Commission with enough signatures to place it on the ballot that was voted upon in 2010, and implemented in 2011. Council Chair Furfaro stated that he felt it was important that he share this information with the Cost Control Commission because in part, he wanted the Commission to understand the type of activities that influence the County's operational costs and potential revenues. Council Chair Furfaro suggested that the Commission request to have the Purchasing and Budget Director Ernest Barreira attend a future meeting to do a budget presentation for fiscal year 2013 -2014. He indicated that the presentation is a preview of the budget which the Administration would be submitting to the County Council for consideration. Council Chair Furfaro stated that it would be good business sense for the Cost Control Commission to know what the budget process is all about, especially because there are some people in the community who feel that the County is being flushed with its money, which he disagrees. Council Chair Furfaro informed the Commission that in spite of what is being portrayed, the County does not have 44 million dollars in any shape or form. He asked that the Commission review the County Auditor's Cost Control Commission Regular Meeting - Open Session February 11, 2013 Page 4 SUBJECT DISCUSSION ACTION report which would show that since June 30, 2012, the County still has some outstanding bills that haven't been called on for payment but instead have entered into a contractual agreement in which the County would submit a substantial portion of what is owed. Council Chair Furfaro was joined by Council Services Review Officer Scott Sato, who distributed a copy of the County of Kauai Fund Balances, Government Funds Report for the last ten fiscal years explaining the actual unassigned funds ending in fiscal year 2012. Mr. Sato pointed out that a significant portion of the ending amount went to balance future budget shortfalls, as well as to pay for encumbrances that were set in fiscal year 2012 -2013. He explained that the expenditures were close to the revenues that were brought in and for the past year, at one point, have even exceeded the amount of revenues. Mr. Sato indicated that the trend the Administration wants to place emphasis on is that if the County does not control its costs or do something about its revenues it could be faced with a bleak financial outlook. He noted that although the County is currently okay with its fund balance, and the fact that it has been able to use the fund balance from the previous year to remain financially stable, he predicted that the County would soon be seeing a big change in the upcoming budget session in terms of decreasing its costs and by using revenue enhancement measures. Chair Sterker asked what the acronym CIP stood for. Mr. Sato said Capital Improvement Projects. Council Chair Furfaro stated that the CIPs are an area in which the Cost Control Commission could make suggestions or recommendations to tightening the budget. He explained that when the County borrows money it floats a bond, and that the typical rule of thumb is whatever amount is loaned out it should be used towards all CIP projects and that the money should be expended in the first three (3) years. Cost Control Commission Regular Meeting - Open Session February 11, 2013 Page 5 SUBJECT DISCUSSION ACTION He noted that the County should not use the money to pad itself or draw interest to earn more dividends, which is the general rule. Council Chair Furfaro pointed out that last year the County had put a substantial amount of CIP money for something as simple as benches for the County's bus stops. He stated that there are ninety -eight (98) bus stops on the island, and that he had hoped to have at least fifty percent (50 %) fitted with sitting benches and a covered shelter. He voiced his concerns that seven (7) months into the year, the Council was informed by the Transportation Department that they have not built any comfort stations for the bus stops because they are still in the state of planning, and that they are using a portion of the CIP money to conduct a study on what the shelter would look like and whether or not to use pre- fabricated shelters. Council Chair Furfaro voiced his concern that the Council had appropriated a million dollars in fiscal year 2012 -2013 for the project and that the funds is still sitting in the account because to date, there are no architectural plans in place to build the shelters until sometime next year which meant that the money would not be spent within the year for the year. Chair Sterker asked whether it would have been appropriate for the Council to grant the approval of the CIP funds after a study had been completed to show the specifics of the plans. Council Chair Furfaro voiced his concerns about the amount of time that has passed and still there are no plans for the bus stop shelters which, to him, is quite bothersome. He reminded the Commissioners that based on the Charter the Cost Control Commission has the authority to ask the Administration for an evaluation of all CIP plans. Cost Control Commission Regular Meeting - Open Session February 11, 2013 Page 6 SUBJECT DISCUSSION ACTION Chair Sterker asked if retro - fitting for stadium lights fall under the CIP. Council Chair Furfaro replied yes, and as a former Planning Commissioner, the Planning Commission would receive updates on all CIP plans from the Planning Department that match the General Plan but unfortunately, that practice no longer exists due to the changes in Planning Department. However, through much dialogue between the County Council and the Planning the Director, that practice may once again exist which is helpful because the CIP projects do provide a forecast on some the County's cash flow. Commissioner Kaneshiro asked whether the 3.9 million dollars that was transferred from the General Fund into the CIP General Fund was just for fiscal year 2012 and did it include other projects within that five (5) year period. Council Chair Furfaro stated he could not provide a definitive answer because unfortunately, the County Council does not get enough detailed information from the Administration. He suggested that the Commission request the information from the Administration. Mr. Sato distributed a chart explaining the General Fund balance rolled forward and forecast ending on 9/30/12. He pointed out that the ending balance in the CIP General Fund reflects the projects that were either cancelled or re- directed in which the funds go right back into the General Fund. He pointed out to the Commission that Council Chair Furfaro wanted to place emphasis on the Transfers Out and the General Fund because it supports all of the other funds as well. Council Chair Furfaro pointed out that three (3) years ago, the County received a little over 93 million dollars from real property tax collections. This year it is forecasted that the County would receive only 78 million dollars for the new fiscal year which means a shortfall of 14 million dollars. He indicated that it became quite clear to the County Council that Cost Control Commission Regular Meeting - Open Session February 11, 2013 Page 7 SUBJECT DISCUSSION ACTION by not raising taxes, and the decline in property value including a decrease in its share of the TAT, that the County would fall short 12 to 14 million dollars in revenues for fiscal year 2013 -2014. Council Chair Furfaro mentioned that two (2) years ago, he introduced a reserve plan to the Finance Committee, however, the committee has not yet developed a plan because he believes there is not enough understanding, but at the same time the committee is making plans on how they are going to re- distribute the reserve, which worries him; he may actually remove his reserve ordinance. He indicated that the real property values have decreased and that the County is using 11 million dollars a year of its operating surplus to cover its current expenses, and that in two (2) years that surplus may dwindle as it is illustrated in the Comprehensive Annual Financial Report. He indicated that this time around it would not hurt the County to wait until the budget process is completed because according to the County Auditor's Report on fund balances there is really only 15.3 million dollars of unassigned funds left in the General Fund account. Chair Sterker pointed out that it is known that the Commission, at one time, had reviewed the County's real property tax exemptions to determine whether the various tax exemptions should be maintained, revised or eliminated, which would have lessened the work load for the Real Property Tax Division staff. Council Chair Furfaro reaffirmed his beliefs that if the Finance Department felt that they were being overwhelmed, they should hire more people to help with the workload. Council Chair Furfaro referred to a copy of a report on the General Fund Comparisons of the actual expenditures for fiscal year 2010/11 and 2011/12 for various departments. Cost Control Commission Regular Meeting - Open Session February 11, 2013 Page 8 SUBJECT DISCUSSION ACTION He voiced his concern that the report shows that the County Auditor's Office is 30% off of their forecasted budget. Council Chair Furfaro also referred to a communication dated January 30, 2013 from the Administration, regarding fiscal year 2014 budget assumptions on various issues such as labor negotiations, electricity and other utility cost increases, fuel consumption increases and forecasted costs, and increases in employment benefits. Chair Sterker stated that the Commission is currently looking into energy efficiency measures, and have been in dialogue with the County's Energy Coordinator, Ben Sullivan, about a possible recommendation to implement a design in future plans to include Photovoltaic system (s) for the County facilities. Council Chair Furfaro shared with the Commission that there are many reasons to consider utilizing photovoltaic solar cells to generate electricity. However, there are other considerations to take into account about solar power as well. For instance, the production costs and daylight - dependent nature of photovoltaic cells can be prohibitive. Solar cells can only generate maximum power when the sun is shining, which means another supplemental power source is usually required during the night hours and cloudy days. According to his resources, KIUC (Kauai Independent Utility Corporation) can only generate, on an average, 168 megawatts and that peak demand is at night when solar doesn't function. He explained that KIUC had to cap their solar power to 28 megawatts, which they only have 24 megawatts. In his opinion, KIUC cannot contribute more than what was capped. Council Chair Furfaro suggested that the Commission look into other energy savings alternatives. Chair Sterker stated that she would like to discuss the County's employment benefits on whether the County's benefits were as good as the private sector. Cost Control Commission Regular Meeting - Open Session February 11, 2013 Page 9 SUBJECT DISCUSSION ACTION Council Chair Furfaro stated that the County's employment benefits are superior to others. For example, an employee in the County during his or her first month of employment earns four (4) hours of vacation time, which is a liability for the County. In the private sector, an employee must work 2080 hours before he or she can qualify for any vacation time. In comparable industries, an employee who earns over 100 hours of vacation time will lose that time because the employee cannot accumulate more than 100 hours. Commissioner Chaffin asked whether it would be appropriate for the Commission to make a recommendation to the Administration to conduct an audit on the County's accrued vacation time, and implement a computerized payroll system in the Human Resources Department. Chair Sterker requested to Staff to place this matter on the next month's agenda for continued discussion. Council Chair Furfaro suggested that that the Commission invite Purchasing and Budget Director, Ernest Barreira, to a meeting to give a presentation on the Mayor's operating budget before he submits it to the County Council for consideration, which is after March 15t'. Chair Sterker stated that she would like to hear more about the status on the removal of the asbestos in the Pi'ikoi Building. Council Chair Furfaro stated that the biggest problem with the Pi'ikoi Building is that it has been sitting empty for two (2) years, which equals to a loss of $236,000 in revenue for the County. He voiced his concern that a more thought out plan on the part of the County should have been considered because the loss of revenue is very bothersome to him. Chair Sterker commented that she heard that the space was going to be used to archive old County records. Commissioner Cost Control Commission Regular Meeting - Open Session February 11, 2013 Page 10 SUBJECT DISCUSSION ACTION Chaffin voiced his concern that the idea to use the space to archive old records is not the best use for that facility. Chair Sterker agreed. Council Chair Furfaro suggested to the Commission to invite the County's Space Planner to make a presentation on the planning for the Big Save space in conjunction with the remainder of the vacant areas at Pi'ikoi. Commissioner Apao asked if there were other departments whose offices are not located within the Lihue Civic Center. Council Chair Furfaro voiced his concern that the County Auditor is renting office space outside of the Lihue Civic Center in which the County is paying $34,000 per year in rent. He indicated that legal issues are being discussed to relocate the County Auditor to where the Kauai Historical Society is currently being housed, which is on the first floor of the Old Historic Building. Chair Sterker inquired about the vacant positions. Council Chair Furfaro indicated that he has many concerns regarding the issue of the vacant positions. He suggested that the Commission should get the County Auditor involved by putting a request in writing for information regarding reconciling the payroll benefits, and taxes related to paid vacations and sick leave. Also, request that the Administration ask the departments to provide a real rational on why they need a position that has been vacant for seven (7) years. Commissioner Chaffin stated that Chair Furfaro's presentation was the best he has ever had. He thanked Chair Furfaro for enlightening the Commission on the issues and challenges the County is faced with. Chair Furfaro left the meeting at 2:45 p.m. Commissioner Takenouchi announced that he had to leave the meeting due to work related matters. At 2:48 p.m. Commissioner Takenouchi left the meeting. Cost Control Commission Regular Meeting - Open Session February 11, 2013 Page I I SUBJECT DISCUSSION ACTION Chair Sterker called for a motion to receive items CCC 2013 -04 and CCC Commissioner Apao moved to receive item CCC 2013 -05. 2013 -04. Commissioner Chaffin seconded the motion. Motion carried 4:0 Commissioner Chaffin requested that the Commission send a letter of appreciation to Council Chair Furfaro to thank him for his outstanding presentation. Staff acknowledged the request and would draft the letter, Commissioner Chaffin moved to receive item and with the Chair's approval forward the letter to Council Chair Furfaro. CCC 2013 -05. Commissioner Apao seconded the motion. Motion carried 4:0 CCC 2013 -06 Communication dated 1/29/13 from First Deputy County Attorney my Esaki, regarding a list of non -profit organizations paving more than the minimum tax. Chair Sterker called for a motion to receive item CCC 2013 -06. Commissioner Chaffin moved to receive item CCC 2013 -06. Commissioner Kaneshiro seconded the motion. Motion carried 4:0 Chair Sterker asked the reason for these non - profits to have to pay more than the minimum tax. First Deputy County Attorney Esaki stated that the non - profits are land lessee's and have facilities on the property. Chair Sterker suggested that the Commission continue discussion on the non - profit organization tax exemption. Staff acknowledged the request and would place the item on the next agenda. Cost Control Commission Regular Meeting - Open Session February 11, 2013 Page 12 SUBJECT DISCUSSION ACTION CCC 2013 -07 Email dated 1/25/13 from Energy Coordinator Ben Sullivan, responding to the Commission's inquiry on whether or not the CountX facilities, more specifically the Police Department was considered for implementation of a Photovoltaic system. Chair Sterker called for a motion to receive item CCC 2013 -07. Commissioner Chaffin moved to receive item CCC 2013 -07. Commissioner Kaneshiro seconded the motion. Motion carried 4:0 Staff indicated that they would contact Mr. Sullivan to request an updated report regarding the Photovoltaic system in the Police Department. Business CCC 2012 -16 Discussion on the County's special counsel contracts and expenditures to date. (On- going) Chair Sterker suggested that the Commission defer this matter for continued discussion at the next meeting. Announcements Next meeting Monday, March 11, 2013 at 1:30 p.m. at the Mo'ikeha Building, Liquor Conference Room 3. Adjournment Chair Sterker called for a motion to adjourn the meeting. Commissioner Chaffin moved to adjourn the meeting. Commissioner Apao seconded the motion. Motion carried 4:0 At 3:03 p.m. the meeting was adjourned. Cost Control Commission Regular Meeting - Open Session February 11, 2013 Submitted by: Mercedes Youn, Staff Support Clerk (X) Approved as circulated on March 11, 2013. ( ) Approved as amended. See minutes of meeting. Page 13 Reviewed and Approved by: Sandi Sterker, Chair