Maui County Council Budget, Finance, and Economic Development Committee Meeting – March 17, 2026

The Budget, Finance, and Economic Development (BFED) Committee of the Maui County Council met on March 17, 2026, beginning at approximately 9:00 AM and adjourning at 12:18 PM. The meeting focused on the Hawaii Employer-Union Health Benefits Trust Fund (EUTF) update, administration and management of grants, and preparation for the proposed fiscal year 2026 budget. Chair Sugimura presided, with members Batangan, Cook, Johnson, Lee, Paulton, Rollins Fernandez, O'Hara, and others present. Due to the recent storm, members and staff reported ongoing power outages, road closures, and recovery efforts in East Maui.

Consent Calendar

• No items were considered under the consent calendar.

Public Comments & Testimony

• Josiah Nishita (Managing Director): Provided an update on two outstanding grants under the administration's management: the Montakuji Mission Shoreline Mitigation Project ($500,000, $380,823.88 reimbursed) and the Lahaina Community Land Trust ($5 million, no reimbursements to date). Expressed appreciation for council assistance during the storm response.
• Christopher Salem: Testified that the mayor's proposed budget must include revenues from developer deferral agreements, which he claims have been omitted for decades in violation of the county charter. Stated he is prepared to file a restraining order if the budget does not comply with law. Urged an independent audit of these agreements.
• Johan Lal (on EUTF item): Raised concern that declining health benefits for county employees may hurt recruitment and retention compared to the private sector.
• Additional testifiers: One speaker on the budget item questioned the use of a white figure (George Washington) on U.S. currency in Hawaii and advocated for Hawaiian sovereignty. Another speaker highlighted the importance of benefits for public service recruitment.

Discussion Items

1. Hawaii Employer-Union Health Benefits Trust Fund (EUTF) Update

• Donna Tonaki (Assistant Administrator, EUTF): Presented updates including: online open enrollment (62% in 2024, 67% in 2025); closure of HMSA HMO and 9010 plans due to low enrollment/high premiums; County of Maui's 100% premium coverage for active employees in HMSA 7525, Kaiser Standard, Vertiguard supplemental, and dental/vision plans (effective July 2025, except for bargaining units 11 and 15 still in negotiation). Reported that Maui County's OPEB (Other Post-Employment Benefits) is 93.7% funded and projected to be fully funded by FY2028, significantly ahead of the state (projected 2040). The annual required contribution (ARC) for FY2026 is $38 million, dropping to about $14 million after full funding.
• Council Member Batangan: Questioned the equity of covering only certain plans (7525 and Kaiser Standard) while employees needing more coverage (e.g., 9010) received no subsidy. Director Razel Porter (Personnel Services) explained the decision was made quickly to match Kauai County, and supplemental agreements were signed with limited time. She noted the 9010 plan is being closed. Council Member Batangan requested an analysis of costs to provide a stipend or similar benefit to employees on other plans.
• Council Member Johnson: Asked how EUTF benefits compare to the private sector. Tonaki responded that the 7525 plan is less prevalent in the private sector, where 8020 or 9010 plans are more common, but retirement benefits remain a strong lure.
• Council Member Rollins Fernandez: Inquired about the rationale for choosing the 7525 plan over helping those in higher-coverage plans. Razel Porter reiterated time constraints and that the 7525 was most prevalent. Discussion also covered the need for collective bargaining agreements for units 11 and 15.
• Council Member Cook: Requested total cost of the 100% premium subsidy and average cost per employee (to be provided in writing).
• Council Member O'Hara: Asked for a cost estimate to provide a stipend to employees in the 9010 plan (similar to the $200 stipend for employees not using county health insurance). Razel Porter agreed to provide the estimate.

2. Administration and Management of Grants (BFED 12)

• Purpose: To understand how departments solicit, award, monitor, and close out grants, and to identify process gaps.
• Department of Agriculture: Deputy Director Anna reported 136 active grants, with challenges including upfront capital needs for farmers (reimbursement-based grants) and inconsistent reimbursement documentation requirements.
• Office of Economic Development (OED): Carrie DeCoy (via text) reported 150 active grants; 112 executed in FY26. Small organizations face difficulties with recent stricter enforcement of Maui County Code 3.36, causing confusion when documentation rules changed mid-grant.
• Department of Environmental Management (DEM): Deputy Director Mike Peterson and William G (EP&S) reported managing approximately 50-60 grants, with 77 currently in progress. Challenges include delays in executing agreements and hunting down proviso applications.
• Office of Recovery: Managing Director Nishita earlier highlighted similar reimbursement pain points.
• Administration's Plans (Chief of Staff Lalo and Budget Director Milner): Presented a countywide grants modernization plan for FY27, including: countywide administrative rules under Chapter 3.36 (with code amendment to allow one set of rules instead of department-specific); a new small grants program ($25,000 or less) with simplified application; countywide grants management software; a grants website and annual summit; standardized training; and updated general terms and conditions extending the documentation requirement for advancements from 30 to 90 days. Also proposed code changes to allow quarterly installment payments instead of a single 25% upfront disbursement.
• Council Member Batangan: Asked for clarification on the difference between a contract and a grant (scope of work on county property vs. general community service). Also requested that OED focus solely on economic development grants, with arts/cultural grants moved to another department. Chief of Staff Lalo confirmed that for FY27, community grants would be moved to a general grants group.
• Council Member Paulton: Expressed reluctance to support countywide rules in lieu of department-specific administrative rules, arguing that each department should have transparent, updated rules. Budget Director Milner clarified that countywide rules under HRS 91 would be accompanied by publicly available departmental policies and procedures.
• Council Member Johnson: Noted he had been working with the administration for over a year on a grant reform bill, but felt the administration was introducing its own bill without collaboration. Budget Director Milner assured him she would share corporation counsel-approved language with his office before any bill is transmitted. Johnson supported the summit and small grants program but questioned the $25,000 threshold.
• Council Member Rollins Fernandez: Raised the issue of rule changes midstream causing confusion for grantees. Chief of Staff Lalo attributed some changes to staffing transitions. Rollins Fernandez inquired about quarterly upfront payments under §3.36.190; Budget Director Milner confirmed this is being developed with Johnson's office.
• Council Member Cook: Sought clarity on how fiscal sponsors can assist small organizations with cash flow. Chief of Staff Lalo stated a fiscal sponsor policy is being created, along with a quarterly disbursement policy, to provide necessary structure.
• Council Member O'Hara: Emphasized the need for consistency and clear communication when rules change. Chief of Staff Lalo explained that changes are communicated via phone and email follow-up, and that the new grants website will include draft contracts to set expectations.

3. Proposed Fiscal Year 2026 Budget (BFED 1) & Budget Process

• Budget Calendar: Chair Sugimura noted that certain departments (Council Services, Prosecuting Attorney, Corporation Counsel, Liquor, OEV Resources, County Clerk, Auditor, East Maui Water Authority) will not present unless council members request otherwise. Members were asked to review the calendar.
• Council Member Johnson: Requested that the deadline for submitting budget amendments and priorities (April 14) be moved to after the district residency area meetings (scheduled through April) so community input can inform priorities. Chair Sugimura agreed to consider adjusting the deadline.
• Council Member Paulton: Suggested moving the Friday evening public hearing on April 17 to Thursday April 16 to improve attendance and allow earlier submission of priorities. Members expressed support.
• Council Member Paulton (continued): Asked for time during budget deliberations to discuss policy priorities (e.g., equitable health benefits for all employees) rather than just numbers. Chair Sugimura noted that countywide budget discussions begin April 1 and can serve as a forum for such policy discussions.
• The item was deferred to a future meeting, with a special BFED meeting scheduled for March 25, 2026 at 12:30 PM (after the mayor's budget press conference) to continue the grants discussion and finalize budget procedures.

Key Outcomes

• EUTF Update: Accepted for information. Council directed Director Razel Porter to provide written responses on: total cost of 100% premium subsidy, average per-employee cost, cost to extend a stipend to employees in the 9010 plan, and cost to provide similar support to those in other plans. The administration will also provide an update on bargaining units 11 and 15.
• Grants Discussion: Deferred to March 25, 2026 at 12:30 PM. The administration agreed to: (1) share corporation counsel-approved language for grant code amendments with Council Member Johnson before introduction; (2) provide written clarification on contract vs. grant distinctions; (3) provide data on the value of grants awarded but not fully paid in FY2022–2025; and (4) finalize and share the fiscal sponsor policy and updated general terms and conditions (30-day to 90-day documentation requirement).
• Budget Calendar: Chair Sugimura will consider moving the public hearing from April 17 to April 16 and adjusting the April 14 deadline for budget priorities to after district meetings. Committee members will confirm availability for the March 25 special meeting.
• Economic Outlook Item (BFED 2025): Cancelled due to presenter unavailability; will be rescheduled.