Both he and Mayor Jeremy Harris suggested that a property tax increase may be necessary to address an anticipated $180 million budget shortfall, although they disagreed on how serious the city's fiscal crisis actually is.

Okino said the city faces its "greatest financial crisis." Harris didn't necessarily agree the problem is that bad, but said he welcomed Okino's offer of cooperation.

The six new council members and three carryover members sworn in yesterday will be able to assess the budget situation more accurately when Harris submits the administration's budget at the beginning of March.

Okino noted the inexperience of the council — carryover members Romy Cachola, Okino and Ann Kobayashi have no more than two years experience apiece, while the newcomers replaced veteran members who reached their term limits.

"This turnover of members could not have happened at a more inopportune time," Okino said. "It occurs as the city faces its greatest fiscal crisis ever. To deal with this enormous challenge, all of us face a steep learning curve — and we have very little time to prepare."

Okino's speech was the only gloomy note during the inauguration ceremony, which attracted more than 500 people for speeches, musical entertainment and heavy pupus at the Neal Blaisdell.

The nine members of the City Council took the oath of office in yesterday's formal proceedings at Honolulu Hale. Bruce Asato • The Honolulu Advertiser

After contentious budget hearings last year, Okino said the council will have to work more cooperatively with the city administration to address a budget shortfall now approaching $180 million. "The problem is too big for us to continue at cross-purposes."

The city's budget crisis is a result of borrowing over the past several years to keep property taxes low, Okino said.

"Debt service consumes an ever-increasing portion of our operating budget. In 2002, our debt service payment was $104 million. In 2008, now only five years away, that annual payment is projected to more than double to $223 million," he said.

In addition, he noted the city is under a court consent decree to provide $1 billion in upgrades to the aging sewer system and a court order to provide $90 million in curb ramps allowing access for the disabled. The city also needs to maintain its roads and parks, and could need $150 million to catch up with resurfacing.

"So, even if we choose to meet just our legal obligations, we will still have to borrow enormous amounts of money, accelerating the growth of our debt service even further. So, if nothing else, we should limit ourselves to only essential projects for now."

Harris, who attended the ceremony, said he does not necessarily agree with Okino's negative forecasts, "but I was very pleased with his approach and his positive offer of cooperation."

"I think we certainly face challenges in all those areas that he talked about — waste management and leasehold conversion and the budget and all the rest. We don't necessarily agree on all the issues, but we can certainly agree that we're going to work together as a team to deal with them."

Okino has said raising property taxes may be inevitable, but will depend on the administration's budget.

Harris said it is premature to comment on whether he will propose a tax increase, since the administration does not know what all the cost items will be next year. However, he said that the city has kept property taxes down every year since 1994 to help O'ahu residents cope with the economic recession. He estimates that since 1994, the city has given residents $350 million in tax relief.

Harris added that his administration has not raised sewer fees, motor vehicle weight taxes or gasoline taxes.

"Our goal is to keep the money in people's pockets, but obviously you can't continue to run an expanding city operation with more police, more fire, more services, more roads, more subdivisions, more sewers and all the rest with less taxes than you brought in in 1994," he said.