HONOLULU (HawaiiNewsNow) - With property values rising ― pushing up residential and business tax bills ― Honolulu Mayor Kirk Caldwell is proposing that new revenue come from hotels and resorts, high-end investment homes and from trash collection fees.
The mayor’s $3.44 billion dollar budget proposal was delivered to the Honolulu City Council and Friday, with Council Budget Chairman Joey Manahan suggesting he agrees new revenue has to come from somewhere.
The proposed budget is $108 million higher than the current fiscal year, which is an 8.5 percent increase.
Caldwell said fixed costs, such as a 13 percent rise in the bill for employee health and retirement benefits, drove much of the increase.
So he’s proposing three tax and fee increases.
The mayor repeated his call for a $5 per month fee for residential refuse collection, which would raise $5.8 million.
He pointed out that condominium and apartment buildings are already paying for private haulers, that other counties have similar fees and that charging might make households reduce waste.
Meanwhile, the largest property tax increase proposed ― of more than 15 percent ― would be on investment homes. The city believes the tax hike would generate an additional $14 million.
The real estate industry has complained that the higher rate on investment homes leads to higher rents.
But the mayor brushed off those concerns.
“I don’t know how many people can afford to rent a two or five or $10 million home ... and I think at that level I don’t think they are being rented out unless they are an illegal vacation rentals," he said.
Caldwell also thinks the tourist industry could be paying more.
He’s proposing a real property tax hike for hotels and resorts that would generate $17 million.
Caldwell said the industry is “going gangbusters” and on Oahu no longer includes local companies that keep their profits in Hawaii.
The higher rate would raise the property taxes on a $1 billion hotel property, like the Hyatt Regency Waikiki, by about $1 million a year.
Caldwell added that he considered proposing a larger increase, but didn’t because of the political backlash.
“We are concerned that if we raise it too dramatically we’d get major pushback from the visitor industry and I feel that pressure as a mayor and so does the council,” Caldwell said.
Manahan, the budget chairman, said the time is right to increase the rate on tourist properties, and pointed out that the last increase was met with fury by the visitor industry.
The mayor also cited budget priorities, including adding police officers, improving parks and maintenance and continuing to address homelessness.
There is also $6.77 million set aside for a consultant to train city employees on how to oversee maintenance and operation of the Honolulu rail system, which could take its first riders late in 2020.
The City Council will be reviewing the budget proposal over the next few months. It will take effect on July 1, 2019.
For more information on the budget, click here.