Posted on: Monday, June 6, 2005
City banks on tax to plug budget gap
By Robbie Dingeman
Advertiser Staff Writer
City officials plan to use about $2 million in delinquent property tax collections to help balance the record $1.35 billion city budget expected to win final approval today before the Honolulu City Council.
With more than $10.5 million outstanding in delinquent property taxes as of April 30, officials said they can easily count on collecting about 20 percent of that figure. The city has been able to collect at least 95 percent of real-property taxes due each year for the past 20 years.
And city financial records indicate that officials have collected an average of about $5 million in delinquent property taxes each year, although collections have ranged from as little as $1.4 million to as much as $12 million.
Property taxes make up the biggest single source of revenue for the city's operating budget, and this year soaring property values have pushed up revenue without raising tax rates.
This year, the city expects to send out bills for $498 million worth of property taxes compared with $430 million last year.
But some, like Councilman Romy Cachola, worry that soaring tax bills could result in even more delinquencies.
City spokesman Bill Brennan said that is a legitimate concern because the number of people who fail to pay their taxes has risen in the past when value and property tax bills have increased.
In March, Mayor Mufi Hannemann proposed this year's operating budget at a record $1.35 million plus a $497 million construction budget.
Hannemann has said that even his no-frills budget requires the increase to keep up the aging city sewer system, fix roads and potholes and maintain public safety, needs that were put off by his predecessor, former Mayor Jeremy Harris. City budget officials scrambled last month when they determined that paying for raises for government workers would cost more than originally budgeted and that they needed to find about $4.3 million.
Most residents are likely to feel the increase first in their sewer bill, with sewer fees rising 25 percent, or about $8 per month on the average monthly sewer fee from $33 to $41 in July.
Like the higher sewer fee, most of the other increases also would go into effect July 1, the start of the city's new fiscal year.
Increases scheduled for approval today include plans to:
• Double Honolulu sewer fees over six years from the current monthly average of $33. After an initial 25 percent increase this year, the fee would rise 10 percent more in each of the next five years. • Increase the fee charged to developers to hook up to the sewer system. Under the proposal, the fee would increase from $4,641 per unit today to $5,541 per unit by 2010-11. • Raise the vehicle weight tax by 50 percent, to 3 cents a pound. For the owner of an average car, that would increase the tax by about $30 a year, city officials have said. The tax is paid when residents register their vehicles. The increase would take effect Jan 1. • Raise the rates for nonprofit organizations that rent such city facilities as Blaisdell Center's Arena and Concert Hall and the Waikiki Shell. City Enterprise Services director Sidney A. Quintal said fees would increase by 15 percent to 20 percent each year for five years. That's because the nonprofits including schools that rent the facilities for graduations are paying less than a third of what it costs the city to open and staff such an event. Reach Robbie Dingeman at rdingeman@honoluluadvertiser.com or 535-2429.
Even with a variety of fee increases that could soon find Honolulu residents paying more to shore up core services, the tax collections will be needed to cover higher-than-expected pay raises for government workers, officials have said.