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The Honolulu Advertiser
Posted on: Wednesday, March 5, 2003

EDITORIAL
Harris city budget deserves a serious look

The shoe that didn't drop during the first several years of Mayor Jeremy Harris' administration now has.

After years of holding firm against any increase in property tax rates, the mayor has concluded that the city cannot go on without a hike.

The City Council will have to give those rates a hard look, not just in terms of how they affect homeowners and businesses, but also in how they fit with proposed spending.

This analysis should begin on the spending side: Get a handle on what O'ahu's residents demand in terms of services, and then figure out what the cost will be. At that point, set property taxes high enough to cover the bill.

Harris makes a strong case that adjustment in property tax rates is long overdue, a situation for which he must shoulder some responsibility. For years Harris made holding the line on taxes bedrock policy. That made for good politics. And it was sensible at a time when the economy was suffering.

But as a result, the mis-fit between what property owners paid and the cost of city services they received grew worse and worse every year.

Consider, just for example, hotel and resort properties, which paid, collectively, some $63.6 million in property taxes in 1994. This year, they will pay around $45 million. Granted, the slide in taxes reflects a slide in values, but the cost of providing basic services to these hotels and their guests did not decline.

Harris managed to keep taxes at bay through a combination of efficiency, spending cuts and accounting that put unused cash into general fund service. All of that will be true again this year, including targeted use of money "management" to make the general fund balance.

Examples of such management include Harris' decision on two so-called "enterprise" funds: refuse and sewers.

In the case of refuse, Harris intends to continue reducing the general fund subsidy to refuse with the goal of eventually eliminating it altogether. That means direct refuse costs ("tipping fees") will go up.

In the case of the sewers, Harris contends that the sewer fund — which today has a substantial surplus — "owes" the money to the general fund for years past when taxpayers subsidized sewer costs directly.

These are substantial policy issues that the council will have to take up in the next several weeks. Last year, with Harris eying the governorship and the council eager to flex its muscle and display independence, that policy debate became unnecessarily political.

This year, we have a new council and a mayor who is not headed anywhere but back to the office for the next two years. It is time to give this budget the focused, nonpartisan attention it deserves.