By NANCY COOK LAUER
By NANCY COOK LAUER
Stephens Media
Mayor Billy Kenoi’s $365.1 million budget moved forward with few changes Monday, but it’s likely to face many more amendments when it comes up for a final vote May 31.
The County Council approved the budget on first reading 6-1, with Hilo Councilman Donald Ikeda and North Kona Councilman Angel Pilago absent, and Council Chairman Dominic Yagong of Hamakua voting no. The annual spending plan doesn’t raise taxes, but it relies on monthly worker furloughs and deferring $20 million in future retirees’ benefits to balance the books.
“I’m jumping out of my skin here,” Yagong said, referring to the administration’s plan to postpone for the second consecutive year setting aside $20 million into an account for future benefits for retirees, a category known as GASB 45.
“It’s like smoke and mirrors here. … I really believe we haven’t been open and honest and upfront with the people of this county,” Yagong said. “We’re digging a hole that’s just going deeper and deeper.”
County Finance Director Nancy Crawford assured the council that postponing GASB 45 payments won’t hurt the county’s credit rating or propel it toward bankruptcy.
“We definitely understand the importance of funding this,” Crawford said, adding the administration took “a reasoned approach.”
“We have a multitude of priorities and this was a difficult choice that was made,” Crawford said.
While Yagong flat-out declared, “I do not agree with the budget right now,” South Kona Councilwoman Brenda Ford put a name to the elephant in the room.
“This administration might not be here,” Ford said. “Some other administration is going to end up taking the heat.”
Yagong, who is running for mayor against Kenoi, said the county currently is “not willing to live within our means.”
Kohala Councilman Pete Hoffmann has indicated he’s willing to defer some portion of the GASB 45 payment. In fact, he reminded council members, he’d suggested it himself two years ago in order to avoid a property tax increase recommended by Kenoi. That increase went through when the council couldn’t muster the six votes needed to overturn Kenoi’s budget veto.
“I was summarily dismissed,” Hoffmann said. “I was somewhat beaten on the head and shoulders when I thought … (it) would have saved the taxpayers a tax increase.”
Ford noted that the selected rate increases fell disproportionately on West Hawaii taxpayers that year. She said the county now has only two choices: Raise revenues or cut expenses.
On the revenue side, if the county were to impose a special tax to catch up on its future obligations to county retirees, each of the 140,196 parcel owners would be charged an extra $285 this year and $143 annually after that, said Ford.
On the expenses side, the county could save an addition $3.5 million annually for each furlough day it added to workers’ schedules, Ford said.
But Hilo Councilman Dennis Onishi questioned why the council had to cut the budget at all. He noted that the City and County of Honolulu hasn’t set aside an estimated $220 million for GASB 45 and the state hasn’t paid on $2.2 billion. Maui, he said hasn’t set aside $95 million, while it is budgeting $23 million this year for nonprofits, compared to Hawaii County’s $1.5 million.
“I’m not saying it’s OK, I’m just pointing out what the different counties are doing,” Onishi said.
Only two members of the public attended a public hearing later that evening on property taxes. Michael Reimer, speaking from Kona, acknowledged that West Hawaii will likely continue to carry the brunt of the property tax burden. What’s important, he said, is to ensure infrastructure is kept up, with the appropriate funding moving into the districts.
“We must be careful not to starve your golden goose,” said Reimer. “It appears by all measures that it is not in balance.”
Tim Rees, testifying from Hilo, questioned why the homeowner rate is so much lower than rates for conservation land, saying it would serve to promote development at the expense of conservation.
Email Nancy Cook Lauer at ncook-lauer@westhawaiitoday.com.