Even with a $4 million hit from Puna property tax revenues swallowed by the lava flow, the County Council is about to approve a bill effectively setting the annual budget at a historic high, thanks to a general excise tax surcharge.
The 2018-19 budget, anticipating a $10 million infusion after the quarter-cent surcharge takes effect Jan. 1, now stands at $524 million, about $6.1 million more than the $518 million budget proposed by Mayor Harry Kim.
The County Council is scheduled to approve Bills 168 and 169 on first reading Wednesday. The bills shuffle money out of the general fund to put into the transportation fund for mass transit and roads, while creating a special fund where money from the GET will be deposited once collections begin.
The budget doesn’t take into account $12 million already provided by Gov. David Ige out of state administrative funds, or any amount from the $680 million disaster recovery package Kim is requesting from the Legislature.
But adding — and spending — the entire extra $10 million coming from the new county share of the general excise tax is rubbing Kohala Councilman Tim Richards the wrong way.
Richards, who opposed the tax but finally relented one day before the deadline to pass the measure, said he never intended for all the money to be spent. He said he understood the $5 million in excess funds would be deposited into a special account and kept in reserves.
“This is not what we discussed previously when we discussed the GE tax,” Richards said during an Aug. 8 Finance Committee hearing. “That money is not going to be spent, but it should not be appropriated now either. … That’s not what I signed up for; that’s not what my constituents signed up for.”
But Finance Director Deanna Sako and several other council members said they understood all along the money was going to be spent.
“I think we’ve been very consistent throughout,” Sako said. “We’re doing our best to tell everyone how we’re going to use it. … We’re being consistent. We said all along where we’re going to be spending the money.”
North Kona Councilwoman Karen Eoff said she appreciated the creation of the special account because it increased transparency.
“We can watch it better. I thought that was a way we can keep tabs on it,” Eoff said. “Understanding the budget process … we raised that tax. … We don’t have to spend it, but we do have to at least create expenditure line items because we do have to create a balanced budget.”
Hamakua Councilwoman Valerie Poindexter and Puna Councilwoman Jen Ruggles said they also understood the money would be spent.
Richards remained unmollified. He noted the council and mayor already raised property tax revenues by about 6 percent. Richards was the sole no vote on Bill 169 in committee.
“My understanding is everybody’s good for increasing taxes again. That’s what we do with increased expenditures,” he said. “I’m very disappointed.”
The $10 million from the GET must be used for transportation and mass transit related expenditures, under state law. But because the county currently pays about $4 million for mass transit from the general fund, that amount will be moved to the new special fund, making up for property tax revenues lost to the lava flow.
Also coming out of the general fund are small amounts from cutbacks in the Information Technology, Research and Development and Planning departments, as well as less money being transferred to the Public Access Open Space Preservation funds because the loss of property tax revenues means the percentages are applied to a smaller base.
Of the $10 million in the new GET fund, $3.8 million covers the mass transit costs formerly in the general fund, $1.8 million will buy new buses, $1.6 million will create additional bus routes, $700,000 will go for technology improvements in the Hele-On bus system, $500,000 will go for bus shelters and $100,000 for bus stop signs.
The remaining $1.5 million is slated for improvements on two Kona roads: Oneo Lane and the Ane Keohokalole extension.
Email Nancy Cook Lauer at ncook-lauer@westhawaiitoday.com.
