Kaua’i County Council Finance Committee FY 2025-2026 Budget Review – March 27, 2025
STREAMING COPY IN PREPARATION — RECORDING AVAILABLE FROM THE ORIGINAL SOURCE
Kaua’i County Council Finance & Economic Development Committee FY 2025-2026 Budget Review – March 27, 2025
On March 27, 2025, the Finance and Economic Development Committee convened at 9:00 a.m. in the Council Chambers to begin departmental budget reviews for Fiscal Year 2025-2026. The day covered the Administration’s budget overview, the Office of the Mayor, revenue forecasting, and the Department of Human Resources, including the March 15, 2025 vacancy report. No public testimony was offered. The meeting recessed at approximately 4:30 p.m. and will reconvene on March 28, 2025, with the Department of Public Works.
Administration’s Budget Overview
- Ken presented the Administration’s proposed operating budget of $284.7 million for the General Fund (77% of total operating revenue). Total revenues increased by $18.9 million (5.3%) compared to the current year. General Fund revenue rose by $11.7 million (4.3%), driven by real property taxes (+$5.9 million, +2.5%) and interest earned (+$4.6 million).
- Salaries and related expenses increased by $10.2 million (5.5%), with notable increases in Human Resources (25.7%), Economic Development (17.3%), and Fire (6.4%). Utilities saw a modest increase of $264,000 (3.9%).
- The affordable housing contribution shifted from the operating budget to the capital improvement budget: $33.125 million was transferred from the Housing Development Fund to the General Fund and then to CIP, split between two projects ($28.125 million and $5 million). This represents 5.8% of real property taxes, exceeding the 2% minimum policy.
- Other post-employment benefits (OPEB) increased by 8% to anticipate potential collective bargaining costs. Temporary hazard pay ($11.1 million from the current year) is not included in the FY26 proposal.
Office of the Mayor
- The Mayor’s budget moved one position to the Office of Economic Development and requests a new Early Childhood Coordinator position. A CIP coordinator position was added with no General Fund cost (funded from CIP sources).
- Grant-in-aid funding is proposed to double from $100,000 to $200,000 due to increased applications.
- A vacant E71 Commission Support Clerk position (vacated March 4, 2025) will be filled as soon as possible; an emergency hire is being used for minutes in the interim. Council members praised the office’s work filling previous vacancies.
Revenue Forecasting
- Stephen Hunt presented revenue projections. Gross property values increased 2.01% over FY25, driven by owner-occupied (+167 parcels) and vacation rental (+62 parcels) classes. Net values rose 2.57% due to fewer appeals.
- Appeal counts dropped 71% (from 1,335 to 387), and contested amounts decreased 51%.
- Vacation rentals account for 16.2% of assessed value but contribute 29.2% of property tax revenue, while owner-occupied properties represent 26.9% of value but only 7.5% of tax revenue. Council members expressed concern about the impact of non-owner-occupied residential taxes on workforce housing and services in high-cost areas.
- Interest earned revenue was budgeted at $8.1 million across funds, reflecting improved cash management. Council members noted the significant increase from prior years.
- Commercial property values declined slightly, attributed to vacancies and market softening.
Department of Human Resources
- Director Annette Anderson highlighted a requested $500,000 for a new “Wellness and Productivity Program,” intended to improve attendance and reduce absenteeism through incentives (e.g., sick leave buyback, lifestyle spending accounts). Councilmember Cowden strongly opposed the program, calling it “paying people to come to work” and urging discipline for abuse instead. Other members expressed support for wellness initiatives but not monetary rewards for attendance.
- A transfer of one timekeeping position from the Police Department to HR’s payroll division was noted, with no net budget impact. The goal is to centralize payroll; only Transportation and Water remain decentralized.
- HR’s vacancy rate improved from 16% (four vacancies) to one remaining vacancy (EEO/ADA Compliance Investigator), which has been difficult to fill due to specialized qualifications. Offers have been extended for three other positions.
- The internship program requests a $30,000 increase to expand from six to eights weeks and raise hourly compensation.
- Council members discussed the county auditor position, vacant for nine years. The position is dollar-funded; if filled, a money bill would be needed to fund staff. Councilmember Cowden noted the charter mandates an auditor, prompting a possible charter amendment if the position cannot be filled.
- HR clarified that the proviso allowing departments to convert one full-time position into two part-time positions (Provision 16) is intended to offer flexibility for recruitment.
Key Outcomes
- No decisions or votes were taken; this was a review session. The committee recessed at 4:30 p.m. and will continue with the Department of Public Works on March 28, 2025, at 9:00 a.m.
- The committee will deliberate and make decisions on the budget on May 13–14, 2025. Council members will meet with budget staff between April 21 and May 2 to discuss proposals.
Meeting Transcript
Okay, good morning. I'd like to call to order the finance and economic development committee of the fiscal year twenty twenty-five, twenty twenty-six department for budget reviews. They're pretty much the same ground rules we usually always use. And we'll conclude today with a review of the budget for the Department of Human Resources and the March 15, 2025 vacancy report. Each day during the budget proceedings, we'll take public testimony at the beginning at 9 o'clock a.m. Is there anyone in the public wishing to testify this morning? Seeing none. For council members, we'll go through the ground rules. And you should have this in front of you also. So for our procedures for this year, the following is a summary summary of budget procedures. For more details, please refer to the budget expectations memorandum, data January 8, 2025 that you all received. The departmental budget reviews will follow the written schedule. If a department's review concludes before it's allotted end time, the next schedule review will be in immediately. This minimizes scheduling for budget callbacks. Prior to each departmental review, please review all materials and prepare any questions. Please contact council services budget staff to send questions to the admin in advance, especially questions unlikely to be answerable on the spot without prior notice. For example, questions that will require research or time to compile. This will help limit the number of written follow-up questions, and I believe the admin will be happy enough to have a lot of written follow-up questions. All questions must be directly related to the proposed fiscal year 2025-2026 budget. The admin has been asked to be prepared with key personnel to answer questions. Council questioning will commence after the respective department has finished its presentation. During all budget proceedings, the council rules will continue to be enforced, including rule number 6F regarding council members speaking. Decision making is scheduled for Tuesday, May 13, 2025, and Wednesday, May 14, 2025. Council services budget staff will meet with each council member between April 21st to May 2nd to discuss decision making proposals. Any proposals to add to the budget should identify the source used to account for the increase. Budget cuts are revenue sources. Four votes to reduce or remove an item, five votes to increase our ad. Decisions will be made department by department. The committee will then consider any revenue proposals thereafter if applicable. The committee will not revisit items after they have been addressed unless deemed absolutely necessary. So those are the rules. Next, I'd like to suspend the rules and call upon the admin to present their fiscal year 2025-2026 budget overview. Members, I do ask that we hold our questions until the end of their presentation. Any questions? If not. Welcome, Mary. You have the floor. And of course, we would like to say at this time that it's a great honor to continue to deliver services uninterrupted despite what's going on outside of our realm of control. We do all of this with our RISE philosophy, which is to be responsive, to be resilient, to do things with integrity, to work together under the banner of solidarity, and we take great pride in maximizing our effort as we inch towards excellence. So with that being said, our department heads are here to brief you on the budget to help provide information and answer your questions. And I have to say that this has been a wonderful council as far as diving into the details, providing the checks and balances, and at the end of the day, you folks have made some very tough decisions, and we appreciate that. So, Chair Council members, thank you very much. Thank you. Again, is a brief presentation like uh previous years to give the council and the public a general overview of the budget and uh various outstanding items, variances, and so forth. So with that, beginning on slide two. So our budget proposal continues to adhere to the elements of the long-term financial planning. Uh it's we stick to the structurally balanced budget resolution where recurring expenditures should be covered by recurring revenues. The estimated excess of reserves is approximately 3.7 million, and proposed in the FY26 operating budget is the use of 3.6 million for non-recurrent expenditures. I would want to point out that at this point we are using estimates again for fund balances as we continue as the county and finance continues to work towards finalizing the ACFA for fiscal year 24. Um, in keeping with that, hopefully by May 8th, we will have the fund balances finalized, and we can be more firm on that.
openpublica.com