Big Isle property-tax hike sought

By Hugh Clark
Advertiser Big Island Bureau

HILO, Hawai'i — A looming budget deficit is forcing Hawai'i County officials to push for a property tax increase for the first time in more than 30 years.

New tax rates that would increase the bite on homeowners by nearly 25 percent was part of Mayor Harry Kim's budget proposal for the upcoming fiscal year that he sent yesterday to the County Council. Kim said the tax increase is necessary to cover a projected $7.6 million shortfall in the $205 million budget and to avoid layoffs.

If approved by the council, the new rates would take effect July 1.

Some council members have urged program cuts and layoffs to make up the difference.

Council Chairman Jimmy Arakaki of Hilo is not among them.

"I will vote for an increase because I do not feel we can cut services," said the veteran lawmaker.

Arakaki said the county is in its 10th year of deferred hirings and repairs because of the hard times following the collapse of the sugar industry on the Big Island.

Administration officials have said that revenue growth has not kept pace with the increase in population and in government payroll and services over the last decade. Two recent unexpected events also drained county coffers: the November 2000 flooding that caused about $70 million damage on the island, and the dive in tourism after the Sept. 11 attacks that cut hotel room tax revenues.

More recently, the county has had to cover a $171,000 annual increase in insurance premiums for police vehicles and $159,500 in executive pay increases granted last month by the salary commission.

The across-the-board property tax increases range from 6 percent for the land under hotels to 24.7 percent for homeowners. Kim pointed out that even with the increase, homeowner rates will be lower than in 1992-93, when the council last cut tax rates.

The administration also is seeking changes to homeowner exemptions to allow for differences between property values in East Hawai'i and the substantially higher values in West Hawai'i. Kim said he believes some type of adjustment is needed because West Hawai'i residents have assumed a disproportionate share of the county's tax burden over the past 10 years.

Public hearings on the tax rate proposal will be May 15 in Hilo and May 16 in Kona.