Mayor wants to tax pricey second homes, hike hotel property tax

Mayor wants to tax pricey second homes, hike hotel property tax
Mayor Kirk Caldwell (at podium) with other city officials / personnel
Mayor Kirk Caldwell (at podium) with other city officials / personnel

HONOLULU (HawaiiNewsNow) - Honolulu Mayor Kirk Caldwell wants to create a higher tax for million-dollar second homes on Oahu and hike property taxes for hotels to help balance the city's budget.

His budget proposal unveiled Friday would create a new property class for homes that are not owner occupied and are worth $1 million or more.

There are about 7,300 of those second homes on Oahu, many of them owned by non-residents who spend only a few weeks or months on the island.  Caldwell wants those homes to be taxed at about 36 percent higher than most homes on Oahu that are occupied by their owners, bringing in an additional $26 million a year to the city budget.

For the first time in seven years, Caldwell also wants to raise hotel and resort property tax rates by about 8 percent.  That hike would generate about $8.2 million a year in extra revenue.

He also proposed selling ads on the outside of city buses, a controversial idea that he estimated  will bring in $1.5 million annually.

The Honolulu City Council now must approve these and other proposals.

"I will ask them (the council) to seriously consider the revenue enhancements I proposed," Caldwell told a news conference at the city's bus headquarters. "If they don't like them, they need to come up with ways to balance the budget through other means or by cutting services."

Even though a majority of the council opposes Caldwell's proposal for Oahu residents to $10 a month for garbage pickup, Caldwell is still including the idea in his budget plan.  The trash collection fee, which would charge condos and apartments $314 a month for each dumpster, would generate about $21 million a year, covering 20 percent of the city's refuse collection costs.

Some council members said Caldwell essentially created a big hole in the budget because he knows the measure is doomed on the council.

"He should not include it in the budget because he knows the council has killed the proposal," said Council Chairman Ernie Martin on Wednesday, the day the council budget committee essentially killed the proposal by refusing to advance it after a majority of members spoke against it.

"There is $11.6 dollar hole in the budget," Martin said, because many council members oppose the trash pickup fees and bus advertising.

"It's pretty much dead," said Councilman Ikaika Anderson Friday, referring to the garbage collection proposal.

Caldwell's budget proposal also called for eliminating 618 unfilled, funded city jobs, many of which he said have been vacant for five years or more.  Caldwell did not call for any layoffs.

The department losing the most vacant positions is Facility Maintenance, which maintains city roads and sidewalks, where 120 unfilled jobs are being deactivated, saving about $5.5 million.

"No department director wants to give up a position that they may need in the future and it's there for a good reason.  But it made them start to think, do I really need it and how do we shrink the size of government?" said Caldwell.

Caldwell also wants to eliminate vacant 106 jobs in the Environmental Services department, which handles garbage and sewage, saving $5.1 million

About 80 empty city parks positions will also be taken away under the mayor's proposal, saving $3.1 million.

"There's so many vacant funded positions that have been on the books for sometimes over ten years.  And the Council has always tried to eliminate those positions," said Council Budget Chair Ann Kobayashi.

Kobayashi said the council has been after Caldwell and previous mayors for years to get rid of these unfilled positions, because she said mayors use the unspent salary money as slush funds on things the public knows little about.

"The public then had no, it wasn't transparent enough that the public could follow where those monies went," Kobayashi said.

In all, the mayor wants to save $37 million from the budget by doing away with the vacant positions.

"We took positions out that we thought would not impact core services," Caldwell said.

At the police department, the mayor is proposing eliminating 69 vacant police officer jobs and 31 unfilled civilian positions saving $5.3 million.

Caldwell wants to cut 25 vacant city firefighter posts saving $1.3 million.

"We worked collaboratively with all the departments and HPD and fire worked with us to identify the positions they could live without," said Ember Shinn, the city managing director who met with each department head to determine which positions would be de-activated. "They, both fire and HPD have assured us that it's not going to affect services."

The council has until early June to approve a city budget, which by charter, must be balanced.

If council members reject any of the mayor's proposed cuts or fees and taxes, they have to either cut somewhere else or raise other taxes.

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