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HomeMy WebLinkAboutpc 2-26-13 sp mtng minutes KAUAI PLANNING COMMISSION SPECIAL MEETING February 26, 2013 A Special Meeting of the Planning Commission of the County of Kauai was called to order by Chair Katayama at 9:10 a.m., at the Lihue Civic Center, Moikeha Building, in meeting room 2A-213. The following Commissioners were present: Mr. Wayne Katayama Mr. John Isobe Mr. Jan Kimura Ms. Amy Mendonca Mr. Herman Texeira Absent and excused: Mr. Hartwell Blake Discussion of the meeting, in effect, ensued: CALL TO ORDER Chair Katayama called the special meeting to order at 9:10 a.m. PRESENTATION OF BUDGET BY MAYOR BERNARD P. CARVALHO JR., STEVE HUNT DIRECTOR OF FINANCE AND ERNEST BARREIRA BUDGET ADMINISTRATOR The Honorable Mayor Bernard P. Carvalho, Jr. welcomed the new Commissioners and thanked the Commission for their time and the work they continue to do. He presented an overview of the budget process. They are trying their best to address all of the different areas within the budget. With the support of the County Council they created a budget team with two budget analysts, Ken Shimonishi and Ann Wooton, who are working with Budget Manager Ernest Barreira, and recently appointed Director of Finance, Steve Hunt. The bottom line is providing services to the people knowing all of the challenges and tough decisions they have to make to address the entire budget and send it over to the Council by March 15. The game plan is in place and it is not easy, but they have a great team in place and he wanted to inform the Commissioners of where they are, what they are doing, and how they look at the continued budget. The State of the County address will be on March 18 when he delivers the message to the people of Kauai and Niihau as to how they will look at the budget and the challenge areas. Director of Finance Steve Hunt stated that in preparing for fiscal year 2014, the Finance Department and budget team have worked in collaboration with all the departments to gain a clear understanding of how they can go about reducing expenditures without impairing their ability to meet the core services that are expected. Rather than making unilateral budget cuts, each department was analyzed individually and if expenditure reductions were deemed 1 VA2013 Master Files\Commissions\Planning\Minntes\2013-2-26 Special Meeting Minutes MAR 2, 1 2013 warranted, it became the responsibility of the Department Head, not the budget analyst, to decide how those expenses could be trimmed. In the past, Kauai County has submitted budgets that have been higher than actual expenditures and during the economic downturn they have weathered that storm by utilizing unassigned fund balances and the surplus that had been accumulated from a number of fiscal years to balance the last three years' budgets. The practice of using surplus instead of raising taxes to balance the budget has kept them solvent and reduced unnecessary burden to the citizens. They no longer have a large unassigned surplus and the expenditures exceed what they currently anticipate in revenue. To address the imbalance, the team has focused their analysis on historical spending for fiscal years 2010-2013 and assessed what expenditures should be for 2014. Before considering any potential revenue enhancements it is crucial to ensure spending is under control and each Department's budget is a reflection on what they are anticipated to spend in the forthcoming fiscal year. The Budget and Purchasing Director, Ernie Barreira, conferred with the budget analysts and began instituting cost saving measures for the remainder of 2013 including highly scrutinizing non- essential travel, a hiring freeze for vacant positions unless duly authorized, and deferring all new projects where funding sources has not been identified outside General Funds. Initial budgets did not deviate from past practices so a second round was required. All Department Heads were given budget target amounts based on actual expenditures in fiscal year 2012 plus a 10% inflationary allowance. No new positions will be seen in the budget accept possibly one from Council. The majority of unfilled vacancies will be dollar funded and additional savings should be seen through eliminating associated costs of fringe benefits. Any position openings that occur will be required to have a 6 month lag before being filled. Reducing fiscal year 2014 budget to a level that will more closely mirror actual anticipated expenditures is an important step in submitting this year's budget. The gap cannot be bridged with cost cutting efforts alone without a significant impact on the level of services or reduction in staff. There are a number of Bills circulating on the State House and State Senate that attempt to alter the agreement with the State and Counties regarding transient accommodation taxes. Another Bill aims at franchise taxes received for public utilities companies by half. While Counties are fighting to retain our shares of these monies there are no assurances. The revenue received from TAT represents the County's second largest source of funds at approximately $13;4 million a year; 13% of the budget. Collective bargaining also looms in the future. Several units have already begun negotiations. Without greater detail to possible pay raises, changes in benefits, or period of time this may cover, it is difficult to quantify the financial impacts to the County. In addition to the collaborative efforts with the departments they have held a number of meetings with Council members and key staff to apprise them of the challenges that lie ahead. It has been a step by step process that will hopefully lead to a deeper understanding of where the resources are being spent and how they go about meeting the demands for public service. Commissioner Kimura questioned the Planning Department's budget cut in 2012. Mr. Hunt stated that there was a recommended cut. Commissioner Kimura questioned if they are expected to run at the same budget as 2012. Mr. Hunt stated that there would be a 10% allowance for inflation. Commissioner Kimura questioned how it would affect the hiring of more inspectors. 2 VA2013 Master Piles\Commissions\Planning\Minutes\2013-2-26 Special Meeting Minutes Planning Director Michael Dahilig stated that given the budget restrictions that all departments are sharing, they are also restricted from hiring any new positions or filling any vacancies. They have not requested any new positions in the budget and all of the inspector positions are filled as of this time. Mayor Carvalho mentioned that there are current fiscal year restrictions, however he has been working with each Department head to work with what we have to provide the service that we need to provide in the upcoming fiscal year. Commissioner Texeira questioned how the proposed CIP impacts the current 2013 budget. Mr. Hunt stated that they have a CIP budget analyst, Keith Suga. They are trying to utilize bond fund money that can be used for the projects and as little of the General Fund monies for CIP projects. They are still analyzing all of the CIP projects, but there are some requests like the General Plan update that are in the CIP. Commissioner Kimura questioned the ADA accessible parks and if adjustments have been made to the budget to accommodate them. Mayor Carvalho stated that it is in the current budget and the Parks & Recreation Department is working diligently. Chair Katayama congratulated Mr. Hunt on his position. He noted that the County has the ability to fund CIP projects at very low rates of interest. He questioned if the County is planning on accelerating the funds to help the income projections, and how it is characterized in terms of revenue projections and whether they are conservative or aggressive. There seems to be a mismatch of revenues versus expenditures. He questioned how CIP spending was comprehended. Mr. Hunt stated that the bond fund exists and they are �aying interest whether the monies are employed or not. They are trying to get projects in the hopper so they can get them out. There is a little offset in terms of interest because the inonies are earning a slight interest but it is less than what they are paying out in interest. It helps the community, provides jobs, and advances the wishes of the Administration to getting the projects to come to fruition. He wouldn't call it conservative; it's a realistic forecast. Because this is the first year of having forecast revenue that is significantly below anticipated expenditures, they must look at sources of revenue enhancement. They are going through all potential revenue sources to the County and seeing where things can help bridge the gap. Commissioner Texeira questioned the decrease in revenue. Mr. Hunt stated that expenditures have been flat lined increasing, but revenues have had more of a bell shaped curve. There were a number of years where revenues were in excess of expenditures and they accumulated unassigned fund balances. Real property values have declined but the rates have remained stagnant. They accumulated the surplus when values were 3 V:12013 Master Files\Commissions\Planning\Minutes\2013,2-26 Special Meeting Minutes going up and the rates remained stagnant. Now the expenditure line has caught up and they need to look at preparing the budget balance and not relying on the surplus to carry them forward. Commissioner Texeira asked for clarification that real property values have been going down. Mr. Hunt stated that the peak revenue was in fiscal year 2009 at about $91 million. Last year it was $80 million, so there was about an $11 million decrease in real property tax revenue during that period. Values for tax year 2013, fiscal year 2014, seem to be slightly higher than in the previous fiscal year, but there have also been a lot of changes because they are using a tax on use philosophy where properties that had been in higher tax districts like agriculture and conservation that have single families have been moved in to a residential class. There is mixing of the two in terms of historical classing and the value, so they will have to look at a rate setting structure. Budget and Purchasing Director Ernest Barreira stated that the budget team was compiled in fiscal year 2012 when Mayor Carvalho and former Finance Director Wally Rezentes decided they needed a more comprehensive and analytical approach to preparing the annual budget. They have looked at conducting comprehensive analysis on budget numbers as well as actual expenditures that provide credible data to make present and future budget decisions. In compiling the team they actually saved money because two of the three members on the budget team were are already County employees. His existing function is to continue to be the Assistant Chief Procurement Officer for the County and he agreed to wear the budget hat to assist the Mayor in moving forward with the budget division. They have created the budget team with the savings of about $10,000 as compared to prior years. They met with all department heads after the close of the last budget process and invited open and honest dialog and communication as to how the process worked and didn't work. They were very candid in their complementary comments as well as criticism about what needed to be tweaked. As a result, they put together a critical path for fiscal year 2014 that made sure they met target dates from as early as September, until the budget is actually submitted on March 15 whereupon the supplementary budget is submitted on May 8 to the point where the Council actually enacts the budget for 2014. At the end of the process they will once again review and evaluate. Every credible process in government has to subject itself to that kind of analysis to make sure we are meeting the target dates. Ultimately as the Mayor stated, all of the efforts are directed to ensure they provide excellent public service to the people who rely upon us to deliver those services. Chair Katayama questioned if there is an incentive for department heads to be cost conservative. He felt two areas that are controllable are workers' compensation and litigation and they are proactively managed. Prevention is cheaper than the cure. Mr. Barreira stated that they have an aggressive risk management staff in place at the County level that explores those situations. There are no direct incentives. At the State level, employees who came up with innovative measures to save money could actually benefit from a cash payment. He was not familiar if the County has the same provision. The incentive for department heads is that the more aggressive we are at saving money and finding ways to become more efficient it helps us in terms of real dollars that are saved. It provides the Mayor with the tools we need to advance the initiatives that we want to undertake. The challenges are to maintain essential services. 4 V A2013 Master Files\Conrntissions\Planning\Minutcs\2013-2-26 Special Meeting Minutes There was no public testimony. ADJOURNMENT Chair Katayama adjourned the special meeting at 9:36 a.m. Respectfully submitted by: Duke Nakamatsu, Commission Support Clerk 5 VA2013 Master Files\Commissions\Planning\Minutes\2013-2-26 Special Meeting Minutes