WAILUKU The coming months will result in the most difficult Maui County budget process in memory, Mayor Charmaine Tavares said Monday as she revealed her administration's fiscal year 2011 budget proposal.
Everyone - from department heads to office janitors to homeowners to the nonprofits that drive elderly people to the doctor - will have to make sacrifices, Tavares said in a somber presentation before County Council members.
Her proposal includes instituting the county's first-ever furlough days for nearly all its roughly 2,500 employees.
The Maui News / AMANDA COWAN photo
Mayor Charmaine Tavares presents the budget to a packed room Monday morning in the Mayor’s Lounge.
Tavares announced a $530 million fiscal year 2011 budget proposal, which begins July 1 and is $33 million less than the current budget. The bulk of the funding goes toward operating expenses, such as employee pay.
"This is unlike anything else the county has had to deal with before," Tavares said.
Tavares said about $83 million - $18 million less than this year - would pay for 72 capital improvement projects, such as $23 million to dig water wells and build reservoirs and $20 million for the South Maui police station.
Mayor Charmaine Tavares said she chose to focus what resources the county has available these days for nonprofits on "the essentials" of food, shelter and clothing. She said these decisions were not made lightly. Her executive staff already has put thousands of hours into developing the budget, she said.
The county did manage to attract another $51 million in federal grants and donations for capital improvements, bringing the fiscal year 2011 total to $135 million. She said the projects, like $10 million for road resurfacing and $4 million for new bridges, are integral to stimulating the economy while preparing for the future.
Overall, though, Maui County still faces a $53 million gap between what the county will have and what it would need to support programs and services in the manner that it does today, Tavares said. Her budget calls for a 6 percent decrease in operating and capital improvement spending from the current fiscal year, she said.
In addition, Tavares will push for hikes to several real property tax classifications and other increases, such as another $2 for a round at Waiehu Golf Course and some higher utilities fees and Maui Bus fares. (See related story.)
This is the third year in a row Tavares has reduced most departments' spending and contributions to nonprofits by from 5 percent to 10 percent, she said. She said she did so mostly by reining in overtime, travel and extraneous expenses.
Tavares said state-supported programs run by the Maui Invasive Species Committee and University of Hawaii Maui College lost the most, up to 25 percent.
"It was done very thoughtfully and carefully, a little bit done here and a little bit there," Tavares said.
But there's only so much cutting she can do before the county must raise revenue, the mayor said.
County Managing Director Sheri Morrison said although the administration has implemented a partial hiring freeze, the county does not have fewer employees today than in recent history. Some departments, such as police, are still hiring for essential positions, she said.
It looks as though many of Maui Economic Opportunity Inc.'s county contracts were cut by 12 percent or more, said MEO Executive Director Sandy Baz. MEO, with more than 90 programs, is the Valley Isle's largest private social service provider.
Baz expressed dismay over the cuts, such as more than $700,000 to transport the sick, disabled and elderly.
Tavares said she chose to focus what resources the county has available these days for nonprofits on "the essentials" of food, shelter and clothing.
She said these decisions were not made lightly. Her executive staff already has put thousands of hours into developing the budget, she said.
The County Council's nine members will begin assembling the budget bill Tuesday and are scheduled to approve the final version May 24. Not including the council meetings, which are all public, the council has scheduled eight public hearings on the budget.
After Monday's morning meeting, Tavares left for the state Capitol, where she would lobby a Senate committee not to grab Maui County's $17.5 million share of the transient accommodations tax, or hotel tax.
"This budget is going to be a real challenge if that happens," Tavares said.
Tavares said her proposal includes an agreement she and the other mayors negotiated with the Hawaii Government Employees Association and United Public Workers unions for the furloughs.
County union employees, except for firefighters and police who have their own contracts, will take off 12 days spread across as many months in order to slash operating expenses by $15 million, Tavares said. The furloughs will start July 1 and include managers, appointees and department heads as well.
With residents' property assessments down by as much as 25 percent due to the sagging real estate market, Tavares said her targeted property tax increases would probably wind up being a wash for most taxpayers.
"I think the mayor made a strong attempt to be fair, as far as balancing revenue enhancements and department cuts," said Council Member Mike Victorino. "These are minimal, not major major increases, but I still anticipate the real property tax increases to be a large point of contention."
Victorino said if the mayor is going to increase taxes, to be fairer, she should do it more across the board, including increasing hotel and resort taxes.
"Nobody is a sacred cow," he said. "If we are going to cut the nonprofits, everybody should be affected. Saying that, I don't disagree with her on much else."
That includes lowering the homeowners' exemption, Victorino and other council members have said.
"The mayor has considered amending the exemption amount . . . from $300,000 to $200,000," said Finance Director Kalbert Young. "However, this (ordinance) would need to pass before Dec. 31, 2010, in order to take affect for fiscal year 2012."
Tavares said she made the furlough agreements with the unions late last week. After the news conference, Tavares said Maui County could have decided to send most of its workers home as many as 24 days a year without pay but settled on a dozen so the economic impact on them wouldn't be too great. The furloughs represent a 4.6 percent pay cut for each county worker, she said.
The state has been involved in the controversial practice of furloughs for months now as Gov. Linda Lingle and lawmakers struggle with a $1.2 billion state budget shortfall. Tavares said the county is sort of "joined at the hip" with the state, and the furlough practice figured into the mayors' decision to go the same route.
HGEA Maui division head Alton Watanabe said Tavares confirmed that she could have ordered county employees to take two days off a month, like the state does.
While furloughs will be a challenge, one alternative was layoffs. That, however, is a budget solution she's taken off the table, Tavares said. Layoffs would be devastating to not only county workers, but also taxpayers and the local economy, she said.
When exactly the furlough days will take place will be decided in negotiations between the administration and the unions sometime before the new fiscal year begins, Tavares said.
Just before the news conference ended Monday, the mayor handed a copy of the 1 1/2 inch-thick document to council Budget and Finance Committee Vice Chairman Mike Molina.
"Good luck," she said.
* Chris Hamilton can be reached at email@example.com.