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Council committee tackling tax hikes and budget cuts

By B.J. Reyes

POSTED:
LAST UPDATED: 11:36 a.m. HST, May 17, 2011



 

A 1-cent-per-gallon hike in the gasoline tax, a higher real property tax rate for owner-occupants and other tax and fee increases on Oahu residents are up for a final vote in committee today before heading to the full City Council for final passage to the budget next month.

The Council's Budget Committee also will consider steep spending cuts that Mayor Peter Carlisle's administration says would cripple departments such as the Office of Economic Development and the Mayor's Office of Culture and the Arts.

The city dodged a big blow to its revenues when the state Legislature decided against a complete scoop of hotel room tax moneys traditionally distributed to counties. A massive scoop of city funds never materialized but state lawmakers did cap the amount of hotel room tax money distributed to counties at $95 million.

Council Chairman Nestor Garcia has estimated the room tax cap will cost the city as much as $7 million.

Budget Chairman Ernie Martin had said he wanted to keep all budget options alive in case the state took some or all of the counties' traditional share of funds.

Among the steepest proposed cuts is $337,979 from the Office of Economic Development's $476,156 budget and $303,536 from Culture and the Arts' $345,188 budget. Those proposals remain on the table but Martin has said public support at today's hearing could result in some of the money being restored.

User fee increases, rate hikes and a property tax increase for owner-occupants all appear set to pass.

Carlisle proposed a fuel tax increase of 6 cents per gallon to be phased in over three years. The initial 1 cent hike in the next fiscal year, which begins July 1, is expected to generate about $3 million for the city Highway Fund for road repairs. 

Council members appear poised to defeat the tax hike, with some members questioning the rationale behind the fuel tax increase coming as the Carlisle administration has proposed a 40 percent reduction in the amount of money set aside for road repairs in its capital improvement budget.

The change in the real property tax rate follows the elimination of separate tax rates for owner-occupant property owners and nonoccupant homeowners. The separate classes were proposed by former Mayor Mufi Hannemann as a way to go after speculators and nonresidents, but others said the effect was felt by renters.

The proposed rate of $3.50 per $1,000 of property value amounts to an 8-cent increase for owner-occupants and an 8-cent decrease for those who do not live in their properties.

Meanwhile, the Council also will take up the proposed operating and capital project budgets for the rail transit authority and a bond authorization for the city to help pay for the rail system. Council members approved last week the budget for the Honolulu Authority for Rapid Transportation, but included provisions that final spending decisions must first be approved by the Council. 

Other matters on the committee's agenda include a proposed subsidy for private companies and nonprofits to encourage recycling. 

The Council voted last week to eliminate an 80 percent discount on "tipping fees" charged to companies that deliver recycling residue to the Waimanalo Gulch landfill, but members said they wanted to continue to encourage recycling efforts in the community. One proposal would restore the discount at 60 percent, while another would cap the amount that recyclers could claim.

 







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