County debt rising

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Deputy Finance Director Deanna Sako said the apparent discrepancy is caused by the way the numbers are calculated. The CAFR uses full-time equivalencies, or FTEs, that compress the total number of employees, compared to how the Finance Department calculated the employee numbers used by the mayor, she said. In addition, Sako said, the number of employees increased between June and December 2008, before the decreases began under Kenoi’s leadership.

By NANCY COOK LAUER

Stephens Media

For years, Hawaii County government has been spending far more than it’s taken in. The number of employees has increased dramatically, and payments on debt now consume the biggest chunk of operating expenses in at least a decade.

That’s the sobering story told by the county’s Consolidated Annual Financial Report, a document released last week as the county administration gears up to present its annual budget March 1.

The CAFR is a set of audited financial statements reported in a standard format and used to compare a governmental entity’s financial status year-to-year. Like an annual checkup, it’s a snapshot of the county’s fiscal health on June 30 of each year.

Despite the glum budget picture, the county’s overall fiscal health is good, according to the CAFR, with $1.06 billion in assets, compared to $451.8 million in liabilities.

Mayor Billy Kenoi made headlines last year when he told the state Legislature, “The unavoidable truth is we now have a county government that we cannot afford.” And he’s consistently told the public his administration has reduced the size and cost of government in the three years he’s been in office.

But the county’s report on total revenues minus total expenditures shows annual expenditures have increased by $43.5 million — 10.8 percent — between 2008 and 2011, while annual revenues have increased only $12.9 million. Almost half of the increase in expenditures, $21.5 million, was principal payment on debt, according to the CAFR.

Kenoi has tried to balance the budget. He’s instituted employee furloughs, put a $1 bus fare into place, reduced employee travel and cut some positions. The $367.3 million 2011-12 budget reflects $121 million in budget shortfalls, Kenoi said.

“We have dealt with those combined shortfalls of more than $121 million over three years by engaging in a three-year program to roll back government, and to make it more affordable,” Kenoi said in his budget message last year to the County Council.

Kenoi said Friday that “everything’s still on the table,” as far as budget cuts, property tax increases or other ways to balance the annual spending plan. Currently, he said, the administration is finalizing projected tax revenues while county departments run what-if scenarios of cuts of 10 or 20 percent.

“We certainly anticipate a fourth year of property value reductions. We’ve been prepared for and are planning for a continued downturn,” Kenoi said. “It’s the time of the year when difficult choices need to be made.”

But some expenses, such as fuel costs, health care costs and employee benefits negotiated in collective bargaining agreements, are outside the mayor’s control.

Kenoi has said he’s cut 222 county positions, including 120 “warm bodies,” since he took the reins in December 2008. But the 2,390 employees in June 2011 reported on the CAFR are only 22 fewer than June 2008.

Deputy Finance Director Deanna Sako said the apparent discrepancy is caused by the way the numbers are calculated. The CAFR uses full-time equivalencies, or FTEs, that compress the total number of employees, compared to how the Finance Department calculated the employee numbers used by the mayor, she said. In addition, Sako said, the number of employees increased between June and December 2008, before the decreases began under Kenoi’s leadership.