7 percent tax hike part of Harris proposed budget
By Johnny Brannon
Advertiser Staff Writer
Mayor Jeremy Harris yesterday called for a 7 percent tax increase for most nonresidential properties as part of a $1.5 billion city spending plan for the fiscal year that begins in July.
The proposed budget includes no tax hikes for homes or apartments, and no sewer fee increases or new garbage collection fees, which many had expected.
Taxes for land classified as agricultural or preservation would be cut 10 percent, but would rise 7 percent for unimproved residential property.
"The city is in excellent financial shape," Harris said.
The plan would provide $2.7 million for an islandwide curbside recycling program, $40 million for road repairs and $123 million for sewer and sanitation work.
Harris said he also wants to set aside $10 million more for a transitional housing facility for homeless people at an undecided location. More than $5 million has already been earmarked for the project.
He said he would push for a new outdoor amphitheater in Kaka'ako Waterfront Park, which would be built on state land with city bond money that would be paid back by leasing the facility to a private operator.
The budget drew cautious praise from several City Council members who will be scrutinizing it during the next four months.
"I think this mayor does a great job with financial responsibility, but we'll wait and see what's in all the line items," Councilwoman Barbara Marshall said. "I have this too-good-to-be-true feeling."
The plan relies heavily on the sale of city rental and commercial property to raise more than $175 million, but includes a program for low-income renters to buy their apartments.
Councilman Gary Okino said he was intrigued by the rent-to-own program, but questioned whether it was prudent to sell other property.
"It's generally not good to sell off city assets to pay for recurring expenses, because once they're sold the money won't be there the next time," he said.
The tax increases would affect commercial, industrial, and hotel and resort properties, as well as vacant residential lots.
Councilman Charles Djou said he was disappointed by the proposal and that costs would likely be passed on to consumers.
"The people who end up paying for a commercial tax increase are the people who visit the shopping mall," he said.
Council budget chairwoman Ann Kobayashi had similar concerns, and worried that small businesses could be hurt.
"It's easy to say 'just sock it to the businesses,' but all of us end up paying," she said.
But Harris said that if the council approves the increases, the city will still collect $4 million less per year from commercial property owners than in 1994, and $12.1 million less from hotel and resort owners.
Djou and others have criticized Harris for borrowing money to pay for popular but nonessential park and beautification projects, and the new budget includes very few.
But Harris, who has been mayor for a decade and can't run for re-election this year, defended past spending and said opposition has been short-sighted.
"I would severely disagree with people who would characterize those improvements as frills," he said, especially for work done in Waikiki and sports facilities that draw visitors.
"The reality is that's our economic engine," he said. " ... Unless we're willing to invest in the future, our tourism economy is destined for demise."
Harris had not publicly announced that he would unveil the budget yesterday, and most council members were caught off-guard. Chairman Donovan Dela Cruz and five other members are in Washington, D.C., for a national conference of county officials.
"I congratulate the mayor for coming down with the budget ahead of schedule, and we're waiting to see the supplemental budgets for the vehicle weight tax and bus fare increase, which the administration demanded we pass right away back in August and December," Dela Cruz said.
Harris, who returned yesterday from Hong Kong, said he is leaving Monday for Washington, D.C., and wouldn't be back before the budget was due on Tuesday.
"We certainly didn't mean to blindside them," Harris said. "It was just a matter of scheduling."
He said the vehicle tax and bus fare budgets would be ready soon, but there was no reason for them to come out before the annual spending plan.
The tax increase for commercial, industrial and hotel and resort classifications would raise the rate to $11.37 per $1,000 of assessed value, from $10.63.
The rate for unimproved residential property would go to $5.72 per $1,000 value, up from $5.35.
The operations portion of Harris' budget totals $1,222,717,306, or $53,634,625 more than the current year's. The plan includes an additional $286,481,348 for construction projects, or $10,027,745 more than this year.
Harris said most of the increased operational spending is to cover worker salaries and benefits required by collective bargaining.
The plan doesn't earmark money to cover any raises awarded in contracts that are under negotiation, but would increase a special reserve fund by $30 million.
