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HomeMy WebLinkAbout06-09-14 CCC Minutes(CZ)(bd)(tt) approvedCOUNTY OF KAUAI Minutes of Meeting OPEN SESSION Board /Committee: Cost Control Commission Meeting Date June 9, 2014 Location Mo'ikeha Building — Liquor Conference Room Start of Meeting: 1:31 p.m. End of Meeting: 3:09 p.m. Present Chair Arryl Kaneshiro; Members: Dirk Apao, Sandi Sterker and Glen Takenouchi Also present: Board & Commissions Office Staff: Support Clerk Mercedes Youn; Administrator Paula Morikami; Administrative Aide Teresa Tamura; Finance Director Steve Hunt and Budget and Purchasing Director Ernest Barreira. Excused Commissioners Laurie Yoshida and Joanne Nakashima Absent SUBJECT DISCUSSION ACTION Call To Order Chair Kaneshiro called the meeting to order at 1:31 p.m. with four (4) members present to ascertain a quorum. Approval of Regular Open Session Minutes of April 14, 2014. Commissioner Sterker moved to approve the Minutes minutes as circulated. Commissioner Takenouchi seconded the motion. Motion carried 4:0 Chair Kaneshiro noted for the record under announcements the correct meeting date should reflect Monday, July 14, 2014 and not June 9, 2014. Commissioner Sterker noted that she is unable to attend the meeting in July. CCC 2014 -08 Memorandum dated April 16, 2014 from Chair Arryl Kaneshiro, requesting the presence of Director of Finance Steve Hunt and Budget and Purchasing Director Ernest Barreira, to provide an update of the FY 2014 -15 budget. The Commission was provided a copy of the PowerPoint presentation explaining the County's FYI Operational Budget that was submitted to the County Council on March 15ffi. In addition, the Mayor also submitted his Supplemental Budget for FY 15 on May 7"'. Cost Control Commission Regular Open Session June 9, 2014 Page 2 SUBJECT DISCUSSION ACTION Commissioner Sterker asked if the County covers the cost for the car insurance premiums (for the subsidized vehicles). Mr. Hunt stated the County pays a little over $900 a month per vehicle, but as the subsidized fleet grows they anticipate that the cost will go down because, typically, as the fleet of subsidized cars increases it lowers the premium. Commissioner Apao asked if there are limits to the mileage for the vehicles. Mr. Hunt stated he has not seen the details of the lease but understands that the police officers are responsible for the entire cost to maintain the cars, which he thought is a good idea because it takes it out of procurement, and all the County is responsible for is a monthly stiphen, which is reflected in their paychecks. Commissioner Sterker asked how much the County anticipates the Grants Coordinator position would save the County in the first year. Mr. Hunt stated the Grants Coordinator is working in conjunction with Civil Defense and the Police Department in reviewing literature dealing with funds available from other agencies. Mr. Barreira stated in the long run the position would pay for itself twenty times over. He gave an example of the Homeland Security Grant, which saved the County millions of dollars. Commissioner Sterker asked Mr. Hunt to give the Commission a perspective on the County's revenues and expenditures, and if there are areas that needed to be looked at more closely. Mr. Hunt stated in the last four years, the County increased its expenditures to about 3% a year while revenues have declined by 2.8% a year which clearly shows that the County's revenues are not enough to cover its expenditures. Commissioner Sterker stated the Cost Control Commission is charged with the responsibility to review and scrutinize personnel costs, real property taxes, travel budgets, and contract procedures with the intent of Cost Control Commission Regular Open Session June 9, 2014 Page 3 SUBJECT DISCUSSION ACTION eliminating, consolidating, or reducing overlapping or duplicate County services and programs. She pointed out that the Commission normally does not get to see the actuals to which Mr. Hunt agreed and suggested that they take a look at the County's 2013 CAFR Report, which can be found online on the County's website. Mr. Hunt explained the departments that have grown percentage -wise in recent years are the Office of the Prosecuting Attorney and the County Council. Commissioner Sterker asked if Police and Fire were part of the growth. Mr. Hunt stated the Police and Fire Department grew in terms of a dollar amount, and looking back as far as 2008 public safety in general has been the highest cost to the County. Mr. Barreira stated an analysis was conducted on the budget actuals, and that he will give a copy to the Commission. Mr. Hunt stated looking at the spending side when the Administration first looked at the budget versus actuals they decided to decrease its request by $8 million dollars relative to the prior year budget, but it never came into fruition because of collective bargaining and short funded items that needed to be addressed in the current fiscal year. He explained some positions had to be dollar funded and some vacant positions had to be short funded, which saved the County money but was not a budgetary fix. He noted that dollar funding a position year to year can benefit multiple fiscal years. Mr. Hunt stated the County now has a non - partisan committee to review the County's vacant positions, and discuss with the department heads what their needs are, and whether a position needs to be filled or re- classified to a lower osition that could be merged to do multiple functions in other Cost Control Commission Regular Open Session June 9, 2014 Page 4 SUBJECT DISCUSSION ACTION departments with similar needs. He stated the CIP projects that are non- bond eligible are done through the County's general fund however, the majority of the projects had to be cut, and now only a few projects remain. Mr. Hunt stated he is happy to report that the police department is making great strides in dealing with its overtime. He stated currently the department's budget for overtime is at 16% compared to 26% at its peak. He commended Deputy Chief Michael Contrades for monitoring the overtime in which he was able to reduce the overtime down to three (3) hours by pushing some of the workload into regular work hours. Commissioner Sterker mentioned the overtime that was spent on the demonstrations. Mr. Hunt explained in reality the Mana march demonstration did not create a substantial amount of overtime; in fact, the organizers paid in donations to the Council, which was received through the Department of Finance to pay the police officers overtime as well as the overtime for the roads division. Mr. Hunt stated another factor that creates overtime is the County's sponsored events, which they are considering giving grants through the Office of Economic Development to the organizers so that they can hire off -duty officers which will save the County from paying time and a half and fringe benefits. Chair Kaneshiro asked if 100% of the vehicle weight tax goes to the County. Mr. Hunt replied yes noting that the State also has its own vehicle weight tax and vehicle registration fees. Mr. Hunt explained that the Administration made proposals to increase the resort/hotel tax rate from $9.00 to $11.00 per thousand assessed, which would bring it closer to the State average of $11.23. However, Council reduced it to $10.85, but expended taxes in other categories which included Cost Control Commission Regular Open Session June 9, 2014 Page 5 SUBJECT DISCUSSION ACTION a sixty cent increase for vacation rentals from $8.00 to $8.60 per thousand; single family residence from $5.75 to $6.05 (thirty cent increase); commercial, industrial, Ag and conservation tax rate remained the same as did the homestead tax rate. Commissioner Sterker asked how long has the hotel /resort tax rate remained at $9.00. Mr. Hunt replied for about a year and explained that although it was one of the rates that was increased it will be done less gradually this year because rather than increasing it to a dollar the intent is to bring it up to the State average. He stated that the process was a little complicated because back then the County used bifurcated tax rates (land/building), which morphed to a single rate just this year. Chair Kaneshiro asked Mr. Hunt to explain what he meant about combining both building and land values. Mr. Hunt explained that the majority of tax appeals occur when the appellant believes that their assessment is in error, unreasonable or excessive. He further explained that the appraiser's report usually relates to one or the other component, and although the total value may be fine, the landowner can still complain that the rate cost is more than the construction. He gave an example such as a property valued at $6 million dollars for the land and $4 million dollars for the building in which the landowner could appeal one or the other component. He stated it can be somewhat challenging to defend a portion of it when the County uses market driven sales that only looks at the total price. He stated for every sale the County gets from a comp standpoint, it does not give a breakdown of the land or building it just provides the amount the property was sold for. Chair Kaneshiro asked prior to combining both components if the County used to have a building value and land value to which Mr. Hunt replied yes. Cost Control Commission Regular Open Session June 9, 2014 Page 6 SUBJECT DISCUSSION ACTION Commissioner Apao asked if there was a breakdown to which Mr. Hunt replied it is done internally and is not privy to the public. Mr. Hunt stated they are hoping to revisit the proposal in FYI but it depends on what the results show in FYI 5. He mentioned that he agrees with the Commission that having an in -house litigation team would save the County from having to hire top dollar attorneys to represent the County. Commissioner Sterker noted that the original recommendation called for a two - member litigation team and one clerk position. Mr. Hunt stated although Council did not support the recommendation all three positions were proposed in the FYI budget; however, one litigation position and the clerk position were reclassified as dollar funded positions. Mr. Hunt shared with the Commission that the FYI budget that was submitted in May was reduced by $2.1 million dollars from an operational standpoint. He explained that although the Administration cut its budget proposal by $2.7 million dollars it was not a true cut because it was done in order to fund OPED. He further explained the actual budget that was submitted was about $600,000 higher than the March submittal bringing up the funding for the OPED to over $3.5 million dollars more than what was submitted in March; however, that submittal was cut by $2.1 million dollars of which $1.495 million dollars was the OPED cut that Council made. Commissioner Sterker stated all of the recommendations that do not make it through makes her wonder whether the Commission is just spinning its wheels. Mr. Hunt asked if she was referring to the litigation team and if so, he shares her disappointment. In regard to the credit unions there has been little movement to take out some of their exemptions. Cost Control Commission Regular Open Session June 9, 2014 Page 7 SUBJECT DISCUSSION ACTION Commissioner Sterker voiced her frustration that a lot of time has been spent looking for ways on how to cut costs, not to mention the Commission's recommendation to increase the golf course fees that seemed to have gone nowhere. Mr. Hunt stated it is his understanding that Council will be having a discussion tomorrow on whether or not it should give the Administration the ability to set the golf fees without having to go through Council. Commissioner Sterker asked Mr. Barreira if he had any ideas or suggestions on what the Commission should focus on. Mr. Barreira stated the vacancy review committee and the County's initiative to develop a five (5) year strategic plan are both very critical initiatives because the County has to look for ways to meet the continued demands for public service. He stated like any other business the County will see costs go up, which is why it is important to look at the size of government and continue to be proactive and with the new vacancy review committee it has to take a very significant step in that direction. Mr. Barreira stated 70% of all of the County's cost are vested into payroll and fringe benefits, which overwhelmingly is the majority of all expenses in any government. Mr. Hunt shared with the Commission that a report explaining the County's revenues, fees, rates, assessments and taxes was provided to Council earlier in the year. He stated that the report format is similar to the County of Maui, which gives a breakdown of each specific fee the County charges. He suggested the Commission take a look at both reports and compare fees because there are some fees that the County is not charging for which the other Counties are charging. Cost Control Commission Regular Open Session June 9, 2014 Page 8 SUBJECT DISCUSSION ACTION He stated he wants to make it clear that this is the Cost Control Commission and not a Revenue Commission. Chair Kaneshiro stated one thing to keep in mind is what it will cost if the County wants to do something, and whether it is costing them more than what the County is getting in return. Mr. Hunt suggested that the Commission might want to take a look into the incremental cost associated with a specific item and keep pace with it. Commissioner Sterker noted that is why the Commission made the recommendation to increase the service charge for returned checks. With no further discussion, Finance Director Steve Hunt and Budget and Purchasing Director Ernest Barreira left the meeting at 3:05 p.m. Commissioner Sterker pointed out to the Commission that it should also take a look at the Department of Parks and Recreation because she feels they are losing a lot of money because it's costing more in operational costs than what they are bringing in. Chair Kaneshiro stated if his guess is right the information on the budget versus actuals can be found in 2013 CAFR report, which is posted on the County's website. Announcements Chair Kaneshiro announced that the next meeting will be on Monday, July 14, 2014, at 1:30 p.m. at the Mo'ikeha Building in Liquor Conference Room No. 3. Cost Control Commission Regular Open Session June 9, 2014 Page 9 SUBJECT DISCUSSION ACTION Adjournment Chair Kaneshiro called for a motion to adjourn the meeting. At 3:09 p.m. Commissioner Sterker moved to adjourn the meeting. Commissioner Takenouchi seconded the motion. Motion carried 4:0 Submitted by: Mercedes Youn, Staff Support Clerk Reviewed and Approved by: ( ) Approved as circulated on: (x) Approved as amended. See minutes of the July 14, 2014 meeting. Arryl Kaneshiro, Chair