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Mayor’s budget includes tax hikes, higher user fees

    Mayor Peter Carlisle painted a bleak picture of the city's financial situation yesterday during his first State of the City speech.

Homeowners who live in their properties would see a tax rate increase, while the fuel tax and various city user fees also would go up under the new budget outlined today by Mayor Peter Carlisle.

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

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

"The 2012 operating budget has been balanced by holding real property tax revenue at 2011 levels and making modest changes to other taxes and user fees," Carlisle said in a budget briefing for Star-Advertiser editors and reporters yesterday.

The mayor’s proposals are subject to negotiation with the City Council, which must finalize the budget by June.

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 a move by the City Council last year to eliminate a separate classification for property owners who do not live in their dwellings — so-called nonoccupant homeowners.

The separate rate was proposed by former Mayor Mufi Hannemann as a means to help balance the budget by targeting speculators and investors, many of whom do not live in Hawaii.

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.

To maintain a consistent stream of real property tax revenue with a single tax rate, Carlisle has proposed a rate of $3.50 per $1,000 of property value — an 8-cent increase for true homeowners and an 8-cent decrease for those previously classified as nonoccupant homeowners.

Fuel tax rates, which have remained steady since 1989, would go up one cent per gallon in 2012, two cents in 2013 and three cents in 2014. The current county fuel tax is 16.5 cents per gallon. 

Carlisle also has proposed to end furloughs through continued restrictions on agencies and across-the-board salary reductions of at least 5 percent.

Those salary cuts would be subject to union negotiations, and Carlisle already has said there would be no "sacred cows," calling on all public workers to share in the sacrifice or face options such as layoffs.

"Are there other ways that you can make them up? Yes, and they’re far more unpleasant than having an across-the-board shared sacrifice of those people who are lucky enough to have jobs," Carlisle said.

As he previewed in his state of the city address last week, Carlisle also is proposing increases in various user fees, except TheBus, 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.

The mayor also noted 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 PSC tax — proposals that would cost the city about $26.5 million.

"That immediately puts us into a hole," Carlisle said.

On capital improvement projects, Carlisle said his administration would aim to limit spending on existing projects, limiting spending to $125 million annually, as recommended by previous administrative agencies.

One exception would be for the rail transit project, which will fall under the jurisdiction of a new public transit authority on July 1, he said.

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