HONOLULU, Hawaii (HawaiiNewsNow) - The City Council barely passed a property tax hike on hotels Wednesday to help cover a budget shortfall.
Councilmembers who voted for the tax increase say they they had to do it to balance the budget, despite the tourism industry’s strong opposition.
“We are leaning on you again and I apologize for having to do it," Councilman Tommy Waters said, addressing hotel industry members.
“I feel terrible about it, but when it comes down to leaning on our visitors or leaning on our local residents to pay for this, I’m always going to side with the local residents.”
But Councilwoman Kymberly Marcos Pine voted no, saying the administration should instead rein in spending.
“I’m concerned the philosophy of the administration is to just spend, spend, spend and raise taxes and fees on local people,” she said.
The tax increase was approved in a 5-to-4 decision.
Under the measure, hotels and resorts will pay $1 more ― or $13.90 ― for every $1,000 of land value. The increase will add $17 million to city coffers.
Mufi Hannemann, former mayor and CEO and President of Hawaii Lodging and Tourism Association, said the council needed to trim fat in the budget and leave hotels alone.
The industry also warned of the potential for layoffs.
“We certainly don’t want to go down that path," Hannemann said. “We’ve warned the city not to do this, but it is an option that management will have to make with their owners because the costs have gone up.”
Council budget Chairman Joey Manahan said essential city services can’t be cut and the money had to come from somewhere, especially with operation and maintenance of rail costing $39 million next year and $71 million the year after that.
"I don't think any of us wants to raise taxes on anyone," said Manahan.
The council also raised property taxes for second homes valued at over $1.2 million that are not occupied by the homeowner. That brings in $14 million for the city.