The task the City Council faces over the coming months — assuring that Honolulu can pay for the services it needs — is arduous in even the best of times. But in a recession, setting the tax policy demands even greater rigor, so the current proposals to expand property tax relief deserve careful scrutiny.

Both the bills — 09-09 and 09-75 — seek to enlarge the group of taxpayers who would qualify to have their taxes capped, at 3 or 4 percent of income.
A cap already exists for households earning $50,000 per year. This 15-year-old provision, known as the “circuit breaker,” began as an assist to elderly homeowners on fixed incomes but now includes any property taxpayer, regardless of age, that earns below the set “low income” ceiling.
The problem with raising the ceiling to $70,000, as one bill proposes to do, is that the city has no data on the earnings of taxpayers above the current $50,000 mark, So it’s unknowable how such a change would affect city tax revenues.
It would be better to leave the ceiling where it is. Any added relief targeted to the lower-income could come from a slightly lowered cap on their maximum tax bill, and the city can more easily predict how much that would siphon from coffers.
More general relief is best issued through an increase in the existing tax exemption or a lower tax rate for the newly created “owner-occupant” class.
However, this is only part of the council’s job. Falling property values during the recession are sure to reduce tax revenues.
And if collections are further cut by tax-relief measures, the question must be asked: Will the city have enough to cover expenses?
The administration and the council need to collaborate on a spending plan that will save on the expense side of the equation. Granted, there isn’t much wiggle room in the realm of municipal services: Managing city roads, parks and sewers are the no-frills kind of government work.
But combing through the budget to find ways to restructure government in search of potential efficiencies, or broker new partnerships with the private sector, is a necessity.
A daunting budgetary landscape lies ahead, and elected leaders owe the public their best effort at squeezing the most bang from a government buck.