County coffers contain an extra $40M

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Richards
Lisa Miura
Deanna Sako
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Hawaii County ended the last fiscal year with $40 million left over to be applied to the current budget, according to an Oct. 15 report to the County Council.

“This fund balance will be helpful in meeting next year’s budgetary needs,” said Finance Director Deanna Sako in the report. “Balancing the fiscal year 2021-22 budget will continue to be challenging given the current economic climate.”

Sako attributes a greater than anticipated fund balance to expenditures in several areas being lower than expected because the focus has been on dealing with the coronavirus pandemic rather than other county projects. Much of the coronavirus response has been paid by $80 million in federal relief funds, which have been used for everything from staffing to personal protective equipment and sanitizers to relief for individuals and businesses hard-hit by the economic slowdown.

Other factors, Sako said, are “careful spending” by county departments and pay raises approved later than anticipated, which pushed them into the new budget year.

County budget years run from July 1 to June 30, which means the new mayor — Ikaika Marzo or Mitch Roth, depending who wins the Nov. 3 runoff election — will inherit the second half of the current budget before a new one is inked.

Kohala Councilman Tim Richards, the lone no vote on the council’s budget earlier this year, sees the news that the county had more money left over as a mixed blessing.

“The good news is we have more cash in our coffers than we anticipated,” Richards said Monday.

Still, said Richards, who had pushed for a 15% cut in the $585 million budget, but was overruled by fellow council members, the approximately $10 million more in budgeted revenues is “paradoxically” about how much an added tax tier for more expensive second homes is slated to bring in.

The council created the second tier which tacked on an additional $2.50 in taxes for each thousand of property value over $2 million for second homes in residential districts, at the request of the administration.

The county generally budgets to allow more revenue to come in than is spent in order to keep a buffer for unexpected expenses and emergencies.

With the state facing as much as a $3.5 billion shortfall, the county’s anticipated revenues remain in doubt for the next budget year. The state earlier this year took away $19 million in transient accommodations taxes due the county in order to patch its own budget hole. It’s unlikely the county will see any of that money, collected from hotels and short-term rentals, next year either.

Richards said the status of the county’s general excise tax collection will tell the true story of the local economy.

The state’s report on county GET collections generally lags by several months, so it’s not yet known what that picture looks like.

“These are the numbers I’m going to be looking at,” he said.

Richards said the county’s gross domestic product is estimated at $8.5 billion annually.

The county had reduced its anticipated property tax delinquency rate from 8% to 7.2% and so far, that lower estimate has held true, said Real Property Tax Administrator Lisa Miura.

Some 7.1% of property tax revenues weren’t paid in the first installment in August. The second and last installment is due in February.

“We’re doing OK based on what we estimated,” Miura said.

Email Nancy Cook Lauer at ncook-lauer@westhawaiitoday.com.