REVENUES BY SOURCE

The following table presents a summary of projected FY 2012-13 revenues from various sources and the changes from the current budget:

(Amounts in thousands)

REVENUE CHANGES

The major changes in projected revenues are as follows:

Real Property Tax. Real property tax revenues are expected to decrease by 4.2%, or $8.8 million, due to an estimated 4.0% decline in taxable values.

Fuel Tax. Fuel tax revenue is expected to increase by 14.5% to $7.7 million, as fuel consumption has increased over anticipated levels.

Public Utilities Franchise Tax. Increased public utility revenues are expected to result in an increase of $1.2 million, or 13.2% in franchise tax revenue.

Revenue from Use of Money and Property. Interest earnings are expected to continue to decrease for next fiscal year by $0.5 million, due to the low yield on investments, which is still reflective of the current economy.

Fund Balance Carryover. The higher projection of carryover savings is attributed to the cumulative effect of successful cost cutting measures for the past several years and additional spending restrictions in the current year.

EXPENDITURES BY FUNCTION

The following table presents a summary of projected FY 2012-13 expenditures from various sources and the changes from the current budget:

(Amounts in thousands)

EXPENDITURE CHANGES

Major changes in projected expenditures are as follows:

General Government

• General savings in the proposed budget were achieved through many sacrifices across all administrative departments, from further reduction of travel, training and contracted services to reductions in supplies and continued postponement of equipment purchases. Fuel and utility costs continue to fluctuate, and the oil market will be monitored and budget items adjusted if necessary prior to the May submittal. Corporation Counsel’s special counsel account was significantly reduced, as was funding for Property Management land acquisition related services. Research and Development was able to eliminate some costs from the current year budget for APEC-related activities. The reductions in General Government expenditures touched all departments in this classification.

Highways and Streets

• Highways. The Department of Public Works is earmarking an additional $500,000 for work on roads-in-limbo, increasing the budget from $1.5 million to $2.0 million. Additionally, Highway Maintenance division is budgeting approximately $1.0 million for new and replacement equipment for road maintenance and resurfacing.

Health, Education and Welfare

• Social Services. Despite declining revenues and reductions in spending, the county’s budget for non-profit agencies will remain at $1.5 million in fiscal year 2012-13. We have protected this funding despite three years of budget cuts because of our commitment to the non-profit organizations that support the most vulnerable in our community.

Culture and Recreation

• Parks and Recreation. The Lava Viewing program at Kalapana is being phased out, resulting in a savings of $300,000. Discontinuation of the West Hawai‘i Golf Subsidy program will provide a budget reduction of $500,000.

Sanitation and Waste Removal

• Solid Waste Fund. Some repairs to facilities projects will be transferred to the Capital Projects fund, reducing operating expenses by over $800,000. Equipment lease expenses were reduced by approximately $600,000 as some financing leases were completed. Solid Waste and Recycling contracts for services were also reduced by a combined amount of over $800,000.

Debt Service

• Transfer to Debt Service. The County will make its final payment on bonds issued in 1993, which will result in a reduction in the required transfer to the debt service fund for the budgeted fiscal year. Future transfers to the debt service fund will be higher as the County begins principal payments on bonds issued in 2010.

Health Fund

• Health Benefits. This item represents the purchase of health coverage for active and retired employees. It is a binding obligation on the part of each of the counties and the state, and will continue uninterrupted next year and into the future to ensure that all public workers and retirees receive all of the health benefits to which they are entitled. This proposed budget includes $29.8 million to provide coverage to active employees and retirees, which will continue the current level of health coverage for all.

Miscellaneous

• Provision for Payroll Lag. This item from the current year budget was a one-time provision to reflect the adjustment of pay days to fall on the day after a pay period ends, rather than on the last day of the pay period. The elimination of this item results in an increase to miscellaneous expenditures of approximately $6.0 million.

• Provision for Compensation Adjustment. For the FY 2011-12 budget there was an expectation that County employees represented by HGEA would be taking a one-day per month furlough, however there was no final agreement, so a provisional account was established to reflect the expected savings. For the FY 2012-13 budget the savings are reflected in each department’s salaries and wages accounts. The elimination of this item results in an increase to miscellaneous expenditures of approximately $3.0 million.

• Transfer to Self-Insurance. Due to current fiscal challenges and the fact that the balance in the fund is now at $1.2 million, no transfer is included in the proposed budget from the general fund to the county’s self-insurance fund, resulting in a $1.0 million reduction in this item. However, the administration is concerned about the possibility of new potential claims against the county and will re-evaluate the status when preparing the amended budget submittal for May to determine if a transfer is needed to cover potential or existing claims against the county.

• Transfer to Solid Waste Fund. This budget reduces the general fund subsidy of the solid waste fund by $2.3 million. Total transfers from the general fund to the Solid Waste Fund to subsidize the solid waste management in the County of Hawai‘i will be $15.9 million in the year ahead.