LIHU‘E, Kauai — Facing heavy budget cuts, potential county furloughs and fee increases that could be used to finance government operations, Mayor Bernard Carvalho Jr. on Friday called on the strength of ‘ohana to sustain Kaua‘i through the coming “year of sacrifice.”

“My strength comes not just my immediate ‘ohana,” an emotional Carvalho said in his second annual State of the County Address, delivered in front of a crowd of some 100 at the Pi‘ikoi Building in Lihu‘e and those listening live on the radio or watching on the Web or television. “I have also drawn my inspiration from you — the people of Kaua‘i — my extended ‘ohana.”

Carvalho, a new grandfather who acknowledged a number of family members in attendance, used the Hawaiian word for family 19 times in the prepared text of the approximately 30-minute speech, saying Kauaians’ ability to take care of each other during adversity — on display during the recent tsunami scare — has made him an “eternal optimist” that sees “many signs of recovery and hope” despite the current economic uncertainty.

Carvalho compared the county’s budgetary struggles to the difficulties currently facing Kaua‘i’s families, saying the same principles apply even if the terms are different.

“Cut where you can, stretch where you can, share expenses with others where you can, hold off on spending where you can, and save for the future when you can,” he said.

The speech came four days after the Monday submittal of his proposed Fiscal Year 2011 operating and capital improvement budgets to the Kaua‘i County Council.

The $146 million operating proposal marks a 5 percent cut from the 2010 fiscal year and includes two furlough days per month for HGEA and UPW union workers as well as non-union workers and appointed personnel across all county departments, saving the county $4.3 million.

“Furloughing our employees isn’t an easy decision,” Carvalho said Friday. “We realized that furloughs will not only impose a hardship on employees, but they’ll also make it difficult for us to provide an acceptable level of service to the public and move forward on important initiatives.”

In an exclusive interview with The Garden Island following the speech, Carvalho said the county was able to “hold off” on furloughs for all of the current fiscal year.

If the state declines to raid the counties’ shares of the transient accommodations tax — Kaua‘i’s portion is about $12 million — it could open up some options regarding the furlough proposal, he said.

Carvalho’s speech also focused on the recent $60 million bond float and $100 million worth of projects that were proposed on his capital improvement budget. He said approximately $45 million could be spent this year alone on projects like playgrounds, bridges, wastewater facilities, coastal erosion studies and the next phase of Ke Ala Hele Makalae, the multi-use path.

“This is a critical effort in stimulating our economy and providing badly needed infrastructure upgrades,” Carvalho said, noting that it is “imperative that a CIP program of this magnitude” have “proper oversight” in the form of a newly created position for a CIP project manager.

In the post-speech interview, he said that some of the responsibility of getting money out the door, onto the street and into the pockets of Kaua‘i firms and workers could fall to outside project managers as the county moves into “expediting mode” in an effort to get the economy moving.

“This budget represents the county’s commitment to dig deep and become more frugal, more efficient and more progressive all at the same time,” Carvalho said in concluding his address. “Can we work in partnership with our community to make the necessary adjustments that are needed to accomplish these extremely difficult goals? I am confident that ‘together we can’ ... because that’s what ‘ohana is all about.”

To read Carvalho’s full prepared remarks or to view his budget submittal, visit www.kauai.gov.