Hawai‘i County’s Budget Crunch

May 31, 2018

Credit Flickr

The lava eruption in the Leilani Estates area of the Big Island’s Puna District is affecting the lives of many.  But the financial impact of this event will also affect County finances and all who pay county taxes. HPR Contributing Reporter Sherry Bracken has more on the story.

Hawai'i County Finance Director Deanna Sako says this event will have far reaching financial impact, starting with reducing the county’s primary source of income.

“We are gonna have a decrease in real property tax revenue in the Puna Area, at least $1.2 million, but other areas will be impacted, so our best estimate is probably $3 million dollars on the upcoming budget year. It could go as high as $6 million if a much larger area is impacted. “

On May first, Sako estimated the County budget for the July first fiscal year at $518 million dollars. But expenses, because of the lava, are already going up.

“A lot of it is in overtime; we have police, firefighters, our highway guys, Parks and Recs, it’s probably about $800,000 per pay period, around $1.6 million per month.”

President Trump has signed a disaster declaration.  That means the County should get reimbursed for 75 percent of disaster-related expenses.

“If we assume this event will last for all of next year, our 25% share would be roughly $4 million dollars. So the $3 million loss of revenue, $4 million expenses, $7 million total. The biggest impact on us is cash flow.”

Mayor Harry Kim
Credit Bill Adams & Moments Now Photography / Wikimedia Commons

Federal reimbursements flow through the state. Sako says the state is still holding $5 million dollars owed to the County from federal grants for the 2006 earthquake and 2014’s Hurricane Iselle and Pāhoa lava flow. 

Although Mayor Kim wants to increase property taxes and the General Excise Tax, Council Finance Vice Chair Karen Eoff says she believes the Council can submit a balanced budget without those increases.  The Council must return the budget to the Mayor by June 30. He can accept the Council’s revised budget, let it become law without his signature, or veto it, in which case the Council then can vote to override the veto.