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Monday, November 24, 2014         

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Mayor banks on higher taxes

Carlisle's proposed city budget would cut public workers' pay by 5% and increase fees

By B.J. Reyes

POSTED:


Mayor Peter Carlisle is counting on tax hikes, user fee increases and across-the-board cuts to public worker salaries as he seeks to follow through on campaign promises to rein in spending and put forth a lean, fiscally responsible administration.

Single property tax rate

Homeowners who live in their properties face a tax-rate increase. Those who do not will see a drop. A home valued at $400,000 would be assessed $1,400 in taxes: a $32 increase for resident homeowners and a $32 cut for nonoccupants.

Current rate

Resident homeowners, $3.42 per $1,000, nonoccupant homeowners, $3.58 per $1,000.

Proposed rate

$3.50 per $1,000, an 8-cent increase for resident homeowners and an 8-cent decrease for nonoccupants.

Fuel Tax

Increases 1 cent per gallon in 2012, 2 cents in 2013 and 3 cents in 2014.

Sewer fees

A $2.74 increase, 4 percent more than the current monthly rate of $68.39.

Golf

For 18 holes, a $2 increase from the current rate of $16 weekdays, $20 weekends/holidays. For senior/disabled golfers, a $3.50 increase from the current rate of $4.50.

Driver's licenses

A $2 annual increase from the current $3-per-year rate.
In the first budget of his administration, unveiled yesterday, Carlisle proposed a real property tax rate increase for resident homeowners, a 1 cent per gallon hike in the county fuel tax and various user fee increases.

His budget assumes all tax money from the state will remain intact and a savings of at least 5 percent in public employee salaries.

Pay rates for public employees must be negotiated, but Carlisle said he believes there is sentiment among many public workers that they must pitch in to help the city's bottom line during the recession.

If those salary reductions are not made, "then the city and county is in a lot of trouble and it will effect, essentially, how many people are working for the city and county," Carlisle said. "Something we would not like to have to confront."

A spokeswoman for the Hawaii Government Employees Association, the largest public worker union, said it would be premature for the HGEA to comment, noting that the mayor, along with the governor and other employer groups, must first present a proposal.

Carlisle's proposed operating budget for fiscal year 2012, which begins July 1, is $1.932 billion, an increase of $114 million over this year.

"No real surprises there in terms of him submitting a lean budget," said City Councilman Ernie Martin, Council budget chairman. He said one issue being raised by colleagues is "whether it's too lean and whether having such a lean budget will jeopardize services to the public."

All of Carlisle's proposals, unveiled yesterday, are subject to negotiation with the City Council, which must finalize the budget by June.

The $114 million increase in spending reflects the rising cost of paying "non discretionary expenses" such as debt and public employee retirement and health benefits, Carlisle said.

Officials had projected a $100 million loss for the 2012 fiscal year, but that never materialized because a predicted drop in real property tax collections never occurred and budget restrictions carried over from previous years helped save money.

"We're not as sick as we thought," Council Chairman Nestor Garcia said.

The city's main source of revenue, real property taxes, is projected to remain steady from 2011 levels of $797 million.

But tax rates would change for residential property owners after the City Council decided last year to eliminate a separate classification for property owners who do not live in their dwellings -- so-called nonoccupant homeowners.

Under last year's budget, resident homeowners and nonoccupant homeowners paid rates of $3.42 and $3.58 per $1,000 of property value, respectively. Carlisle has proposed a single rate of $3.50 -- an 8-cent increase for true homeowners and an 8-cent decrease for those previously classified as nonoccupant homeowners.

Whether individual property owners would see an increase in their tax bills would depend on the valuation of the property. Overall, Oahu property values increased 0.4 percent in 2010.

Fuel tax rates, which have remained steady since 1989, would go up 1 cent per gallon in 2012, 2 cents in 2013 and 3 cents in 2014. Garcia had proposed raising the 16.5 cents per gallon fuel tax last year, but did not receive support.

"I'm glad to see now that the administration and I are in sync ," Garcia said.

As he previewed last week in his State of the City address, Carlisle also proposed increases in various user fees to generate about $17 million.

Those increases include a 4 percent hike in the $68.39 monthly sewer fee and a $2 raise in the annual fee for driver's licenses. The current fee is $3 per year, or $15 for a five-year license. Zoo rates and auditorium rental rates also would increase as would the price of public golf course greens fees. Carlisle also has proposed raising the cost of monthly employee parking, by $13 to $48 per month.

Carlisle's capital improvement program budget of $526 million -- excluding costs for the rail transit project -- cuts 62 percent over this year's CIP spending.

Carlisle said his administration would focus on existing capital improvement projects, including those required for mandated sewer and wastewater upgrades, and would aim to limit CIP spending to $125 million annually, as recommended by previous administrative agencies.

Councilman Martin said some colleagues already have expressed concerns that the proposed budget may not provide enough money for needed projects.

The budget is balanced on the assumption the city receives its traditional share of state money from the hotel room tax and the Public Service Company tax.

Although the governor had promised to leave the hotel room tax money in place, lawmakers have proposed a measure to cap the amount of the tax money to counties and scoop half of the Public Service Company tax, Carlisle said. The loss to the city for fiscal year 2012 if both bills passed is estimated at $26.5 million.

Members of the House Finance Committee advanced last night a proposal to cap, for five years, the amount of the hotel room tax, or Transient Accommodations Tax, revenue distributed to counties.

The proposal sets the cap at the lesser of 45 percent of the total collected or $102 million, the amount distributed to counties in the 2010 fiscal year. Any additional collections would go into the state's general fund.

Counties have expressed concerns over any taking of the Transient Accommodations Tax money.

"We are concerned with the cap because it doesn't account for the growth in the tourist industry that we're anticipating as we come out of this recession," Chrystn Eads, deputy city managing director, told lawmakers.






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