Council weighing property tax hike
By Robbie Dingeman and Treena Shapiro
Advertiser Staff Writers
A majority of the City Council appears ready to consider Mayor Jeremy Harris' proposal in his State of the City speech Thursday for a "modest" increase in property tax rates, according to Council Chairman Gary Okino.
But it was unclear yesterday how much of an increase Harris will be seeking.
Administration officials declined to provide details of how much Harris would propose or which property tax rates would be increased. The mayor cautioned against assuming the increases would fall on residential homeowners. Values for other types of property, such as commercial and agricultural lands, have decreased.
"There's been no decision made that it would apply to residential rates," Harris said through his spokeswoman Carol Costa.
An increase in property tax rates was one of the proposals Harris made in his speech Tuesday to counteract a drop in city revenues. Others included privatizing Honolulu Zoo, the Waikiki Shell and Blaisdell Arena and maintenance of Pali Golf Course and some city parks.
Okino, who predicted last year that the real property tax rate would have to be increased, said yesterday the council's options appear limited. "How much can we cut services? We've been cutting back on employees for years."
Only Councilman Charles Djou immediately rejected any tax increase. "In our economic environment, raising taxes is a terrible idea that should be rejected by the council," Djou said.
Real property tax assessments for approximately 260,000 O'ahu residential and commercial properties rose by 6.6 percent this year, to $95.1 billion from $89.2 million last year. If the rates remain unchanged, it will mean an additional $13 million in property tax revenues, for a total of $384 million. If rates rise, owners will pay even more.
But owners of other types of property won't be paying more if rates remain unchanged, because their property values fell.
City officials reported decreases for preservation (8.8 percent), unimproved residential (4.19 percent), hotel and resort (2.5 percent), agricultural (2.2 percent), commercial (0.76 percent) and industrial (0.22 percent).
Harris has said he will allow property tax revenue to rise to the 1994 level of $433 million, the year that he became mayor.
Okino said two colleagues initially objected to the tax increase: Djou and Rod Tam, who could not be immediately reached for comment yesterday, but has said he would be reluctant to raise taxes.
Djou said he would oppose increases in categories other than residential. "I just don't think any tax increase is a good idea," he said. "Even if it only applies to commercial properties, the businesses pass it on to the consumers."
Council Budget Chairwoman Ann Kobayashi said it was interesting that Harris, who was running for governor last year, had rejected any increase in taxes earlier. "In years past, he just refused to even talk about increasing property taxes," she said.
Harris is required by law to submit a balanced budget by March 2. The decision on real property tax rates will be worked out in connection with the budget, which must be completed by June.
Kobayashi said the council had not been planning to propose an increase in tax rates, but now that Harris has proposed it, "it may be the only way to balance the budget."
Okino said Harris is facing a budget shortfall of potentially $180 million while the city still has the same core responsibilities of police, fire, sewer and other primary services.
But Okino said he would reserve final judgment until he sees the entire Harris budget plan.
"We have to look at the details of the budget before we can judge whether the tax increase is needed," he said.
On the issue of privatizing Honolulu Zoo, Okino thinks it is a good idea and has been working on such a plan. The Honolulu Zoological Society would raise all revenues needed to maintain and upgrade the zoo, he said. "There would be no city funds used."
Okino noted that the zoo's admission fees do not cover operating and construction costs. He supports giving the Honolulu Zoological Society a management contract to operate the zoo, following a national model. "Most municipalities follow that model, and it's been very successful," he said.
Other cities with privately run zoos include Atlanta; Pittsburgh; San Francisco; Oakland and Sacramento, Calif.; Tacoma, Wash.; San Antonio; and Memphis, Tenn., said city spokeswoman Costa.
Okino said the Honolulu Zoological Society developed a management proposal, but administrators could not be reached for comment yesterday.
He was not familiar with plans to privatize the Blaisdell or the Waikiki Shell, but added, "I wouldn't be against that." The City Council chairman pointed out that the city had been operating the Shell and arena at almost a break-even point, and he would be concerned about whether the public would be charged a higher entrance fee.
Few details are available about the mayor's privatization plan, which includes developing a facility similar to the San Francisco Exploratorium in the Blaisdell Arena, which sits unused 236 days a year, Costa said. The plan does not extend to the exhibition or concert hall.
Harris also mentioned privatizing maintenance of the Pali Golf Course, which was named a good representative of the city's better courses. If the plan succeeds, the city also could contract out maintenance of its West Loch and 'Ewa golf courses, Costa said.
Reach Robbie Dingeman at rdingeman@honoluluadvertiser.com or 535-2429.
Correction: Property tax assessments on O'ahu for 260,000 residential and commercial properties increased to $95.1 billion from $89.2 billion last year. Mayor Jeremy Harris has said he will allow property tax revenue to rise to the 1994 level of $433 million. A previous version of this story was incorrect.
