As with most other state agencies, the Department of Land and Natural Resources is facing straitened circumstances as Hawai`i attempts to deal with forecasts of crashing revenues. From an authorized spending level of roughly $111.6 million for the current fiscal year, the DLNR will, under Governor Lingle’s proposed budget, see a cut of about 2 percent, to $109.5 million for the 2009-10 fiscal year.
That’s what a quick glance at the budget figures proposed to the Legislature suggests.
But a closer look reveals a cut of more than $6 million proposed for the DLNR’s operational expenditures of general funds (from $33 million in FY 2008-09 to $27 million in fiscal years 2009-10 and 2010-11). To make up for some of that loss, the biennium budget proposes increases of $2 million and $1.5 million, respectively, in special fund ceilings for the two fiscal years. It also anticipates increases of roughly $2 million a year in federal funds.
Yet the budget forecasts do not tell the whole story. For that, one needs to look at actual versus authorized expenses. And here, again, the DLNR falls short. For years actual spending in the department has fallen far short of authorized levels. When the 2007-08 fiscal year ended last June 30, for example, the DLNR had spent just 91 percent, or $98.3 million, of the $107.6 million operating budget the Legislature had approved. Half of the difference between what was authorized and what was spent can be found in the Division of Boating and Ocean Recreation, which always sees a shortfall between its expected and actual expenditures; in FY 2008, that amounted to $4.6 million. The overall difference (excluding DOBOR’s $12 million authorization level) between authorizations and expenditures comes to $4.7 million, or 5 percent of the department’s remaining non-DOBOR budget.
In the current fiscal year (2008-09), the DLNR has an operating budget of $111.6 million, but in the wake of spending curbs imposed by the Lingle administration, the actual amount spent by June 30, when the fiscal year ends, is certain to fall far short of that. As of September 30, when the first quarter of the current fiscal year ended, the department’s expenses were running at about 70 percent of the projected pace, according to the Variance Report issued by the Department of Budget and Finance. So, instead of burning through some $29 million, the amount that the department was projected to need for the first quarter, it limped along on just $20 million.
Most of the savings is a result of empty seats. The department’s vacancy rate has historically been far higher than the 5 percent that the Legislature customarily uses in figuring a department’s budget. When Environment Hawai`i reported in November 2004 on Draconian cuts to the DLNR budget for the 2004-05 fiscal year, the vacancy rate stood at 21 percent of authorized positions; by comparison, the overall vacancy rate in state government was between 12 and 13 percent. As of the end of last September, the number of vacancies at the DLNR was reported to be 128 of 804 authorized positions, which translates into a 16 percent vacancy rate. In other words, one in every six authorized positions is unoccupied. And there seems to be little effort to fill the posts: in mid-January, the department’s website advertised only three vacancies (a botanist on Kaua`i, and two non-civil service positions in the Historic Preservation Division).
In narratives accompanying the numbers in the governor’s proposed budget, one after another of the DLNR divisions describes how it plans to cope with the anticipated reduction in revenues. Many say that they are using the funds saved by keeping positions vacant to pay for other program costs. This statement, attached to the spending request for the Division of Forestry and Wildlife’s commercial forestry program, is typical: “Due to economic downturn and the need for General Fund budget restrictions, vacancy savings will be employed to meet reduced available budgets.”
Yet many of those same divisions that propose to make up for operational budget deficits by not hiring to the full level of authorized personnel also face cuts in their authorized personnel. That can only result in even more vacancies or serious deficiencies in their missions.
Lost Gains
Overall, Lingle proposes cutting 34 full-time positions from the DLNR, giving it 775 full-time equivalent positions for the 2009-10 and 2010-11 fiscal years. That nearly sets it back to the level (771) authorized for the 2007-08 fiscal year, effectively cutting away gains made in the current budget.
More than half of the personnel cuts – 18 – are proposed to come from the Division of Conservation and Resources Enforcement, the DLNR’s enforcement agency. That division has experienced extreme swings in personnel levels over the last several years. In the 2003-04 fiscal year, it was authorized to have 119 permanent positions, but in FY 05, that was reduced to 107. For FY 06, DOCARE was given 16 new posts. By the 07-08 fiscal year, DOCARE was authorized to have 152 full-time positions. Now, for the coming fiscal year, it is to be pared back to 147. Yet the cuts do not mean pink slips or layoffs for any existing employees, since, with just 130 employees now on the rolls, DOCARE will still need to fill 17 vacant positions to get up to the authorized level. Furthermore, one enforcement officer and an office assistant are to be transferred from DOCARE to the DLNR administrative office to manage a proposed Office of Civil Compliance. That office, according to the budget document, will “process DLNR’s minor, non-criminal enforcement cases and administrative civil actions in an expeditious and cost-effective manner.” Of the remaining positions lost, 12 are for enforcement officers.
Other DLNR areas that will see authorized personnel levels reduced are the Division of Forestry and Wildlife’s commercial forestry branch (from 22 currently authorized to 19) and its native species work (from 63.5 to 60); the Division of Aquatic Resources’ natural resources branch (from 29 to 26); the Commission on Water Resource Management (from 24 to 20); and Historic Preservation (from 13 to 11).
Adding insult to injury in DOFAW’s budget for hunting programs were revenue losses estimated at more than $200,000 in fiscal year 2008. The cuts resulted from a court case decided in 2007 by the Intermediate Court of Appeals, which held that a provision in DLNR rules that allowed the Board of Land and Natural Resources to set fees for game tags, stamps, and applications was improper. A bill to allow the practice was introduced in the 2008 legislative session, but failed to make it out of committee. Now the division has begun the long process of amending its rules to put higher fees in place.
Innovation
In budget document narratives, the various agencies within the DLNR explain how they intend to cope with cuts of 20 percent – the target level that state managers were told to shoot for when developing their FY 2010 budgets.
The approach of the Engineering Division is innovative, to say the least. It says it will shift “general-funded operational expenses (e.g., phone, network expenses, office supplies, parking, gas, travel, training, etc.)” to “CIP or Special funds under the Engineering Division.” This, however, “could create a burden on non-general funded programs” and “will not present a true picture of program costs.” The transfers, the division says, will allow savings of $25,000 in the division’s water and land development budget and $29,085 in its “prevention of natural disasters” budget, which includes funds for inspection of reservoirs and dams.
While Engineering may have found a way to cope with the requested cuts in general funds by tapping into CIP or special funds, other agencies were not so fortunate. Take the Division of Aquatic Resources, for example. It anticipates serious cuts in its programs as a result of the budgetary restrictions.
“Projects in coral reef monitoring and management … may be terminated or the scope of the project reduced. Statewide marine monitoring to ensure the health and identify threats to Hawai`i’s coral reefs may not continue, including surveys of the commercial and recreational important deep bottomfish species… Mapping and monitoring of the anchialine pool ecosystem … may not continue. All attempts to manage this severely threatened habitat could be lost. Reduction of funds for the investigation of coastal fisheries … could significantly curb fishing opportunities for shoreline fishermen…. Native stream species and ecosystem studies may end or be reduced, thereby severely impairing the collection of information necessary to develop environmental stream flow requirements for native aquatic species when setting Instream Flow Standards as mandated by the Hawai`i Supreme Court.”
Natural Resources
The Division of Forestry and Wildlife budget narrative suggests that the reduction in general funds could be magnified if it means that the state cannot provide matching funds needed to receive some federal grants: “Major sources of program revenue are federal grants for conservation initiatives $21 million in the FY09 budget). Many of the federal programs are competitive grants that require state matching funds which to this point have been provided by state general fund salaries and conveyance tax revenue into the Natural Areas Reserve Fund. Additional sources of state match are needed to maintain current federal grants and continue to secure additional federal funds.”
DOFAW’s natural area reserves and watershed management program gets much of its money from a portion of the state conveyance tax. Although its budget anticipates a cut of roughly $300,000 in general funds plus reduced conveyance tax revenues, overall spending proposed for the two coming fiscal years is actually up ever so slightly, the result of an expected half-million a year increase in federal funds. Yet if conveyance tax revenues fall further, the agency states, “this would seriously impact all areas of the division.”
The situation is described in starker terms by Christy Martin of the Coordinating Group on Alien Pest Species (CGAPS), a public-private partnership that works closely with the DLNR. “With the down real estate market, there is significantly less conveyance tax revenue to help support … environmental programs,” Martin said in a recent press release. In fiscal year 2009, she continued, the state’s Natural Area Reserve Fund “will provide a projected $6 million for conservation programs – a sharp contrast to the $12 million deposited in the NARF for FY 2007. This means that programs will see their state funding reduced for Fiscal Year 2010, resulting in fewer federal matching dollars, laying off staff and cutting back on conservation management work.” What’s more, she warned, all special funds, including NARF, are “at risk of being reallocated to meet shortfalls in the state’s general fund budget.”
“From a total of 458 non-civil service conservation staff employed in 2008 with NARF and matching dollars, an estimated 150 will lose their jobs starting in FY 2010,” with deeper cuts expected the following year.
The budget narrative of the Commission on Water Resource Management contains dire warnings about the impact on core programs of cuts of more than half a million dollars in general funds, including more than $379,000 for stream studies, more than $51,000 for its Stream Protection and Management (SPAM) program, and more than $48,000 as its contribution to the U.S. Geological Survey’s cooperative hydrologic monitoring program. The reduction “for regional stream studies and SPAM activities and functions will severely hamper the undertaking and completion of those studies and
investigations necessary to establish and regulate measurable instream flow standards statewide.”
Capital Improvements for a ‘Recreational Renaissance’
The sorry condition of many state recreational areas has been a concern for years. Uninhabitable cabins, restrooms in disrepair, dangerous trails, unusable berths at small harbors, litter – all are widespread among the state facilities that serve as the primary backdrop for recreational activities for many residents and visitors alike.
But that may change. The administration recently announced its “Recreational Renaissance” plan, which anticipates up to $240 million in capital investment in Hawai`i’s “recreational infrastructure” over the next five years. DLNR administrator Laura Thielen wrote that the plan includes “238 projects around the state and leverages an investment of $40 million over 12 years to generate new, non-taxpayer dollars that will support an additional $200 million in capital improvements in the next five years.”
To make this possible, she wrote, the “DLNR has come up with a way to raise new, non-taxpayer dollars to make the payments on the bond debt.” The “new” way is to float something called “general obligation reimbursable bonds,” which differ from standard G.O. bonds in that any taxpayer money spent in paying off the bonds is to be restored, eventually, by fees paid by people using the improvements the bonds paid for. The so-called GORBs (which are to pay for the “additional $200 million” in improvements) differ from revenue bonds as well; bondholders are assured that the state will make good on its debt through general funds, should fee-based revenue streams fall short. This should make the bonds more attractive to financiers – and accordingly reduce the interest the state has to pay. While GORBs are nothing new (they were used, for example, to finance the purchase of the barges in Kahului and Kawaihae needed to load the Superferry), they are an innovation for the DLNR. One of the features that makes GORBs attractive to state managers is that the indebtedness they create is not counted against the state’s overall limit on general-obligation debt.
Because the scope of the plan is far larger than anything handled to date by any of the DLNR’s line divisions, the DLNR’s administrative division, rather than, say, DOFAW or the Division of State Parks, will oversee the work. Russell Tsuji, deputy DLNR administrator, explained in a telephone interview: “This involves not just one, two, or three divisions, but almost every single division of the DLNR except Historic Preservation and the Kahoolawe Island Reserve Commission.”
Central to the plan is income from state land leased for commercial, industrial, agricultural, or other purposes. This includes not just land currently occupied and leased, but also vacant land, some of which will require infrastructure development, either by the state or by lessees.
One of the potential revenue sources Tsuji mentioned is the “Ke`ehi Triangle,” a 300-acre industrial development proposed for submerged lands on the leeward coast of O`ahu more than two decades ago. The triangle would be nestled between Lagoon Drive, the eastern end of the Honolulu Airport reef runway, and the existing piers of Ke`ehi small boat harbor and La Mariana Sailing Club. An environmental impact statement for the project, to be built on fill, was prepared and accepted by Governor Waihe`e in 1990, but no developer came forward. According to Tsuji, a new EIS would be done before any further work occurred on the project.
Tsuji added that people in the DLNR had already been talking to people in the U.S. Army Corps of Engineers and other agencies. To mitigate loss of waterbird habitat and other natural resources damages, he said, “we’ve been talking to the feds about creating a marine conservation district further out to sea from the reef runway.”
But even as the DLNR talks about the ‘Recreational Renaissance,’ users of state recreational facilities in the short term may be inconvenienced or shut out altogether. The current biennium budget contains a $1.2 million per-year reduction in the operating expenses of the Division of State Parks, including a quarter-million dollar reduction in repair and maintenance costs, a quarter-million savings by park closures, and more than half-a million in lifeguard services.
— Patricia Tummons
Volume 19, Number 8 February 2009
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