REPORT FROM KAUAI COUNTY – LĪHU‘E – On Wednesday, August 29, the Council’s Committee of the Whole discussed two bills aimed at correcting a budget imbalance that occurred during the fiscal year 2013 budget deliberation process.

The nearly $1 million budget imbalance was discovered shortly after the passage of the 2013 fiscal year budget ordinance. The imbalance was caused in part by errors in Mayor Bernard Carvalho, Jr.’s March 15th initial and May 8 supplemental budget submission, which were not detected and addressed during the budget deliberation process. Additional imbalances were created when fiscal 2012 encumbrances, that were unanticipated by the Council, were effectuated in the month of June.

Immediately after the recognition of these issues by the administration’s budget analysts on June 28, meetings commenced between the administration and council staff, with the intent to rectify the situation as quickly as possible, and culminated in the submission of Bills 2441 and 2442 on July 18.
“There have been public statements made that money was ‘taken’ from the budget and that something criminal may have occurred,” stated Mayor Bernard Carvalho. “Nothing could be further from the truth. We took immediate steps to fix the errors once they were found.”

The budget imbalance occurred due to the following factors:

Funding for both the Highway Fund CIP ($1,470,705) and Sewer Trust Fund CIP ($559,159) requested by the Department of Public Works was inadvertently omitted in the budget submittal.

The Council utilized $3,870,583 out of the Capital Improvement Projects (CIP) General Fund to balance its budget. However, encumbrances of $952,392 on several projects were executed during the months April through June – which was legally allowed – but was unanticipated by the Council when they made the adjustment. The encumbrances included funding for contracts involving the adolescent drug treatment center, Kaua‘i War Memorial Convention Hall improvements, Americans with Disabilities Act access projects, lighting retrofits, work involving the Hanapēpē and Waimea levees, and road construction projects.

The money bill of July 18, in the amount of $2,529,820 restores funding to Highway Fund CIP ($1,470,705), Sewer Trust Fund CIP ($106,723), and General Fund CIP ($952,392). The money bill is funded through reductions in operating appropriations.

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