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The Honolulu Advertiser
Posted on: Thursday, April 22, 2010

City Council turns to tax hikes

By Gordon Y.K. Pang
Advertiser Staff Writer

Hawaii news photo - The Honolulu Advertiser

Lori Maumalanga of Papakolea carries paper links each link representing one person involved in recreation programs to a City Council hearing at Honolulu Hale, to urge saving of recreation programs that could be cut if the Legislature diverts hotel-room tax revenue from the city.

REBECCA BREYER | The Honolulu Advertiser

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City Council members yesterday advanced proposals to hike property and fuel taxes in an effort to stave off drastic cuts to popular programs whose supporters came out in droves to oppose cuts.

Whether that's enough will depend on what the Legislature ends up doing with the counties' share of hotel room taxes for the coming year. The city currently gets about $45 million annually, but that could be reduced to only $20 million or even nothing under scenarios now being discussed by state House and Senate leaders.

At city hall yesterday, the council passed on the second of three votes:

• Raise the city's at-the-pump fuel tax by 3 cents a gallon, from 16.5 cents to 19.5 cents. It would be the first time the city has hiked the tax since 1989, when it raised the tax by 5 cents a gallon. The additional tax is expected to bring in $9 million.

• Increase the minimum property tax for nonprofit organizations and other selected property owners from $100 to $300. The increase would bring an additional $2.4 million.

• Raise the tax rate for absent owners of residential properties from $3.42 per $1,000 of valuation to $3.72 per $1,000, as originally proposed by Mayor Mufi Hannemann. The increase would raise about $18 million.

Councilman Donovan Dela Cruz raised objections to an increase in the gas tax, Resolution 10-70, noting that it would be primarily those who live in far-flung O'ahu neighborhoods, such as his North Shore constituents, harmed by the tax.

The tax increase was also opposed by the Hannemann administration and the Hawaii Transportation Association. Budget director Rix Mauer III said city officials are worried that at some point, the city may even lose tax dollars if the fuel tax is raised too high.

Dela Cruz also opposed Bill 32 (09), which would up the minimum property tax for nonprofit organizations and others. The last time the minimum property tax went up was in 1993, when it went from $7 to $100. The Hannemann administration also opposes the bill. Mauer said nonprofits are under enough economic strain as it is without an additional burden.

The minimum real property tax is $150 in Maui County, $100 in Hawai'i County and $25 in Kaua'i County.


Meanwhile, Councilman Ikaika Anderson rattled the budget picture last night when he pushed through an amendment to Bill 15 (10), the operating budget bill, which would cut funding for all vacant, funded positions left unfilled prior to July 1, 2009. Anderson's staff said the reduction would save the city about $15 million annually.

Several city department heads attempted to justify the need to keep vacancies open for periods longer than a year. But Anderson said he was frustrated that council members have repeatedly asked for the specifics related to vacancies only to be rebuffed by the administration.

"We cannot get accurate information from the administration," Anderson said. He added that he cannot see the logic in keeping funding for vacant positions when the city is instituting twice-a-month furlough days.

The $1.82 billion operating budget, as well as the rest of the city's budget package, will now go back to the Budget Committee for further work before coming back to the full council for a final vote.

Yesterday afternoon, the council heard testimony from more than 75 people who came to plead for continued funding for an assortment of city programs, from park recreation programs to the Royal Hawaiian Band.

The operating budget that moved out yesterday did not include the drastic cuts that Garcia had suggested. But he warned that they may still occur, depending on what state lawmakers decide to do with hotel room taxes. House and Senate leaders are expected to decide tomorrow.


There were particularly poignant stories coming from those supporting the Parks and Recreation Department's recreation programs. Garcia has threatened to cut the entire $21 million budget, which could impact practically anyone who uses a city park and result in the layoffs of nearly 500 full-time employees.

UH women's basketball coach Dana Takahara-Dias, a former deputy parks director, said she learned not just sports skills but life skills while participating in organized activities at city parks as a youth.

"The park is where relationships and friendships are built, especially important for those that live alone and are socially isolated," said Linda Liu, Kanē'ohe Complex parks supervisor.

Thirty-year recreations specialist Renee Ing said, "Cutting parks programs is extremely short-sighted. With all due respect, you apparently are not aware of what goes on at the parks."

Supporters of the Royal Hawaiian Band submitted a petition with 1,800 signatures of support, and pointed to the need to preserve a legacy that began under Hawaiian royalty.

The council also chopped its own legislative budget, trimming 5 percent off their salaries and reducing their contingency accounts from $16,000 to $14,000 annually.