Watch out as city politicos mull ‘revenue enhancers’

This may be an off-election year, but the effects from last year’s election are just starting to catch up with Oahu residents.

Last October, the Star-Advertiser reported that a new study predicted that 19 percent of Honolulu’s general fund and highway funds would be needed for rail, the bus and Handi-Van.

That means Honolulu "would need to reduce the rate of growth in non-transit uses of these funds to less than the historical average."

In other words, if you have a Chevrolet budget, but you buy a BMW, when the BMW breaks, you won’t be able to fix it.

Before rail, this paper reported, those transportation items nibbled just 10 percent of the city budget. Now with rail construction about to crank up again, how’s the budget look?

This is from May of this year: "(Mayor Kirk) Caldwell has warned the City Council that it will need to cut spending or raise either property taxes or bus fares to balance the city’s $2.09 billion operating budget."

Last year’s mayor’s race had consequences. One of them was raised by Ben Cayetano.

The former governor and unsuccessful candidate for mayor based his campaign on the contention that rail was expensive and if Honolulu continued to pay for rail, it could not pay for the daily cost of operating the City and County of Honolulu without more money.

Once elected mayor, Caldwell asked the Council to raise the city tax on gasoline by 5 cents. As Honolulu gas prices are already stuck above $4 a gallon, the Council knew Caldwell’s idea was in the "no-fly zone."

They rejected it on first reading, an almost unheard of political slap in the face.

Later Caldwell pitched a city budget that did not include a property tax raise, but had the gas tax increase included. That again did not work.

City people wanted more money — but if you spent a dollar on City Hall pay raises, you couldn’t spend that same dollar on the train.

Caldwell told the Star- Advertiser’s Gordon Pang that he and the Council need a serious discussion about why the city needs "revenue enhancements going forward."

I asked Cayetano what he thinks now, and not surprisingly, he feels that his predictions are coming true.

"I said repeatedly during the campaign that the city would have to raise taxes but both Kirk and (former Mayor) Peter Carlisle denied it, saying everything was accounted for and there would be no need for raising taxes.

"So either the city increases revenues or cuts services, or does a combination of both. One did not have to be a rocket scientist to figure it out," Cayetano said in an email.

In a 2012 Honolulu Magazine interview, Caldwell said not to worry about increases in the city budget.

"One-third of the excise tax for rail is getting paid for by tourists. The rest comes from the federal government, $1.55 billion. Now, we pay part of that as the taxpayers, we pay federal taxes, but most of that tax is being paid for by the rest of Americans not in this county. Honolulu residents are paying for 48 percent of the entire project, less than half," Caldwell told the magazine.

"Our real-property taxes (won’t) pay for rail," Caldwell said.

Finally at the end of last month, Caldwell and the Council were in loose agreement on what they wanted: more money.

Caldwell’s budget director and the Council’s budget committee chairwoman found the compromise.

According to City Hall reporter Pang’s June 27 story, Councilwoman Ann Kobayashi said she wants to "look at revenue enhancers" for next year’s budget, while Budget Director Nelson Koyanagi said the administration is amenable to developing more ways for the city to generate additional revenues to pay for services.

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Richard Borreca writes on politics on Sundays, Tuesdays and Fridays. Reach him at rborreca@staradvertiser.com.