Cuts to budget will hurt city, Harris warns

By Treena Shapiro
Advertiser Staff Writer

Budget cuts proposed by a City Council member could eliminate the need to raise the real property tax rate for homeowners, but Mayor Jeremy Harris said the cuts mean the city wouldn't be able to pay its utility bills, maintain its vehicles in a timely fashion or offer the same level of services.

"We may actually have gone too far in our own cuts," Mayor Jeremy Harris said. Advertiser library photo

Council members have proposed various cuts to Harris' budget plans in order to avoid raising the property tax rates or increasing fees, but Harris defends his budget proposals. With the city having to come up with $76 million more this year for negotiated pay raises and payments into employees' health and retirement funds, Harris' administration said it sent down a "bare bones" budget.

"We may actually have gone too far in our own cuts," Harris said.

The budget that Harris submitted March 2 includes property tax increases for everyone except apartment and condominium owners. The rate increase and new fees are expected to increase revenue by $50 million.

For single-family homeowners, Harris' proposed rate increase is 10 cents per $1,000 of the assessed value of the property, for example, about $40 a year for a $400,000 home.

New and increased user fees will also be addressed at tomorrow's public hearing. These include fees for tourists and commercial vehicles at Hanauma Bay, an increase in fares for adult bus passes, a user fee for trash pickup, a counter fee at satellite city halls, an increase to the Highway Beautification Fund and higher costs for building, zoning and land use permits and hooking up the the city's wastewater system.

Harris said the council and public need to be aware of the severe impact further cuts will have on the city.

Council members have proposed various amendments to Harris' budget proposals, but only Councilman Charles Djou and Councilwoman Barbara Marshall offered comprehensive proposals to avoid tax rate increases.

While the budget committee postponed consideration of most of Djou's drastic plan to cut $24 million from the operating budget, many of Marshall's more moderate proposals will likely make it into a revised draft of the operational budget bill after the public hearing. The council will then take one more pass at the budget before sending their final draft to the mayor by June 15.

Marshall has suggested keeping the tax rate for the improved residential owners at its current $3.65 rate and dropping the apartment and condominium rate further to match the single-family homes. The result would be losing almost $6 million in revenue.

According to Marshall, the loss could be made up by increasing the tax rates for hotel/resort and industrial properties by 14.9 percent, matching the increase in Harris' proposal for commercial classes. These increases would bring in an extra $4.36 million, and the remaining $1.61 million shortfall would be offset by cuts to the operating budget.

Marshall's plan also calls for cutting another $1.4 million from the operating budget to continue the city's spay and neuter subsidy and restore money to the fire department, the prosecuting attorney and the emergency services department.

Harris said the method the council used for making the cuts will be more difficult for the departments to deal with than if the council had just asked the departments to reduce spending by a certain amount.

"These are targeted cuts, so we don't have the ability to simply move money around and absorb the cuts as best we can," he said.

For example, a $703,000 cut to the Department of Design and Construction specifically targets the money set aside for the city's utility bills. Assuming that the city will continue maintaining its water and water system, as well as the 800 MHz radio system used by public safety departments, Harris said the cut will "basically mean we don't have the money to pay the electric bill for city offices and the phone bill for city offices for the full 12 months."

Harris also questions the council's move to cut money for the Office of Economic Development by 63 percent. The move would put an end to the Waikiki torch lighting and hula performances, as well as the Sunset on the Beach program.

Marshall also cut all money for sports tourism marketing, which is intended to attract groups to the city's new sports complexes and which Harris said could potentially bring in millions of dollars.

"The cut seems penny wise and pound foolish," he said. "When the economy is the No. 1 issue, when our tourism is down and we're facing both SARS and the war situation and so much of our economy and our employment depends on this sector, it seems like an odd time to be cutting your economic development by 63 percent."

Harris also objected to a $30,000 cut to postage for the Neighborhood Commission. While Marshall justified it by noting that the neighborhood boards have moved to e-mailing agendas and posting them on the commissions' Web site, Harris questioned whether cutting the money was wise considering the effort the city has put into encouraging community involvement.

Reach Treena Shapiro at tshapiro@honoluluadvertiser.com or 525-8070.