9. HAWAI`I: Establishment of a Disaster and Emergency Fund
QUESTION: Shall the Charter of the County of Hawai`i be amended by establishing a Disaster and Emergency Fund for specific and limited purposes, to be funded by an annual appropriation of a minimum of one percent of real property tax revenues?To see the proposed language changes and Fiscal Impact Statements prepared by the County of Hawai`i Department of Finance, go to https://www.hawaiicounty.gov/Home/Components/News/News/2444/.CHARTER COMMISSION SUMMARY: This proposal would establish in the charter a disaster and emergency fund, monies for which would be provided by a minimum of one percent of the certified real estate tax revenues annually, state and federal grants, the federal emergency management agency, private sources and other sources of revenue. The proposal enables the accumulation of at least $20 million in the fund. The fund shall be used only for the following purposes in the event of a natural or human-caused disaster or emergency: repair of county facilities and infrastructure; cleaning of county property; providing for immediate response to deal with public health and safety risks; matching federal, state or private grants-in-aid to restore public property; paying for county operations expenses in certain circumstances; acquiring property to mitigate potential disasters or emergencies; and administrative expenses. The fund would be administered by the director of finance. The commission finds that the current fund in the county code does not provide an adequate measure of protection for county infrastructure and residents, and needs to be upgraded as a top priority of county government.FISCAL IMPACT: Expenditures would increase by approximately $3 million per year for an undetermined number of years. Currently $250,000 is contributed to the Disaster and Emergency Fund annually as required by Hawai`i County code. Based on fiscal year 2021 budgeted real property tax revenue, the total transfer to the Disaster and Emergency fund would be $3.3 million per year if this amendment was adopted. The actual transfer would be based on actual real property tax revenue collected. It will take approximately five years to reach the $20 million accumulation called for in the amendment if expenditures are not made from the fund in times of disaster.Currently the Disaster and Emergency Fund has a fund balance of $6.5 million. This balance has steadily increased since formed in fiscal year 2006 and the balance has exceeded $5 million since fiscal year 2014. The fund continues to increase each year even in times of disasters as all reimbursements received from the Federal Emergency Management Agency (FEMA) are returned to the fund to replace the expenditures out of the fund.If passed, this amendment would require revenues to be increased or expenditures to be decreased to keep the budget balanced. This amendment would bring mandated appropriations to 3.25% of real property tax revenue or approximately $10.8 million annually.We have received assistance from the State and Federal government in the past to help in times of disaster. Potential future impacts could include State aid as we could be asked to utilize our own resources first.WHAT YOUR VOTE MEANS:A "YES" vote means that you are IN FAVOR of the amendment and the Charter of the County of Hawai`i will be changed as proposed.A "NO" vote means that you are AGAINST the amendment and the Charter of the County of Hawai`i will not be changed as proposed.ARGUMENTS IN FAVOR:-The proposed Disaster and Emergency (D&E) Fund makes sense. Due to climate change, disasters will be more frequent and bigger. Having an adequate reserve reduces the need to seek and obtain funding to address emergencies or disasters at the worst possible time.-The reserve will be built up over time but funds will be available for use before the $20 million minimum is reached.-The present disaster fund established by county code is insufficient and will not meet projected needs. This proposal will establish and adequately fund the D&E Fund in the Charter of the Hawai`i County.-The County could have a healthier balance sheet that might translate into better bond ratings, which reduces the County's borrowing costs.ARGUMENTS AGAINST:-The proposal limits D&E Fund expenditures to prescribed activities, including county operational expenses, and acquisition, repair, or restoration of county physical property. No support is proposed for impacted individuals, families, or businesses.-Dedicating one percent of property tax revenues to the D&E Fund until it reaches the targeted $20 million will leave less revenue to fund other county expenditures, including those for police, fire, county government operations, and the funding of employee health and retirement benefits.-When funds are used, the one percent slice of property tax revenues starts again until the fund once again reaches $20 million. This fund rebuilding begins the year after a disaster occurs, a time when property has been damaged and businesses are rebuilding. County tax revenues might be lower.-This proposal should include provisions to increase transparency about how disaster funds are spent.-The $20 million cap is not enough. Based on the number and size of recent disasters in Hawai`i, $30 million is closer to the real need.
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