Mayor Billy Kenoi has a "Plan B" if Hawaii County cannot balance its budget by selling Paauilo land for $8.2 million -- but it will be painful.

"We feel very confident that through the freezing of vacant positions, through other cost savings we've been able to realize over the past year, that we'll be able to make up some of the difference through our carryover fund balance. And if need be, we'll look at other cuts in our operation," Kenoi said Friday at a news conference.

Kenoi used the occasion to recap his first year in office.

When he took office last December amid a severe economic recession, Kenoi said he asked all departments to take a 5 percent budget cut.

"We then asked everybody to cut 10 percent of this year's budget. And right now we're asking all of our departments to come in at a 20 percent target."

If the county can't get $8.2 million from the sale of former sugar lands, Kenoi was confident that "hopefully those cost savings will make up whatever balance or deficit we have from our originally budgeted amount."

When the county approved its $386.7 million budget last year, it called for selling 737 acres in Paauilo mauka that once belonged to Hamakua Sugar Co. but was given to the county to settle a tax penalty.

After considerable controversy, the mayor was authorized to sell the agricultural-zoned lands. An independent appraisal in July found it was worth $6.33 million.

"We've asked Police and Fire (departments) to take a look first at their overtime and how we can reduce overtime expenditures," Kenoi said. "We've asked them to propose cuts" but also give an analysis of how those cuts will impact public safety.

"We don't want to be pennywise and pound foolish and jeopardize our public safety," Kenoi said.

The next fiscal year won't be any easier.

Beginning July 1, 2010, county employees represented by the Hawaii Government Employees Association will be furloughed two days a month for 12 months, Kenoi said.

"It's going to generate up to $4.6 million in savings from our HGEA two-day-a-month furlough," Kenoi said.

The mayor's appointed employees already are working one day a month without pay.

The state's mayors are "still in conversation" with the other major public union, the United Public Workers.

"If in fact, we are able to achieve a two-day furlough with UPW, that will be a $760,000 savings" for a total savings of $5.3 million. Kenoi emphasized those talks are still in the preliminary stage.

The county is girding for a 10 percent loss in property tax revenue and could lose $17.4 million in transient accommodations taxes to the state, resulting in a $100 million deficit over two years.

"Ultimately we're going to have to start looking at revenue enhancements," he said.

The county's main source of revenue is property taxes. Because the decrease in property tax revenue isn't yet known, Kenoi could not say how much the tax rate might increase next year, "if any."

At minimum, the administration is looking at a "revenue-neutral tax policy" meaning that property owners' taxes would not change from current levels, even if property values declined.

"That's one proposal that we're taking a very hard, serious look at," Kenoi said. "It would not meet our budget shortfall, but it would go a long way to reduce it."

Kenoi said he will roll out a number of initiatives in January.

Not all will be about saving money. While he didn't give away too many details, he hinted the county is planning a pilot bus program, powered by hydrogen gas, and extracted with geothermal energy.

"We want to be a model," Kenoi said. "We want to be leaders and we want to encourage outside investment that helps us to tap our incredible, bountiful, natural resources" to wean the county off its dependence on imported oil.