The Honolulu City Council is considering a bill that could raise property taxes for transient vacation units and bed-and-breakfast properties by lumping them in with the hotel and resort tax classification.

Also under Council review is a proposal to set up tax changes for owners of $1 million-plus homes and multifamily housing by separating the categories from the residential tax classification.

Council Budget Chairwoman Ann Koba­ya­shi on Thursday promised that all 10 bills will get a fair airing before her committee when it meets at 9 a.m. Wednesday.

Mayor Kirk Caldwell said he’s not sure whether he supports all the proposals, many of which were recommended by the 2011-2012 Real Property Tax Advisory Commission, which urged the city to conduct a review of tax exemptions.

Caldwell said his administration talked extensively with Koba­ya­shi and Council budget staff before putting forth the bills. "We want to put them out for discussion and see what people are saying," the mayor said. "We are just talking classes here, not increases."

Both Caldwell and Koba­ya­shi both acknowledged, however, that the discussion is being spurred largely by forecasted spending increases due to pay raises given to unionized government employees in recently inked collective-bargaining contracts. On Thursday, Caldwell told Council members a four-year contract with the State of Hawaii Organization of Police Officers would cost $200 million.

"We know we’re going to need more money in the coming years, so we’re beginning now to look at ways to raise that money," Koba­ya­shi said.

If there is heavy pushback against all the proposals, Caldwell said, "we look at how we control our costs, maybe reduce some of our services."

All 10 bills passed their first hurdle Wednesday, but a number of Council members raised objections to the bill placing transient vacation units and bed-and-breakfasts with hotels and resorts. Both TVUs and bed-and-breakfasts are currently taxed at residential rates, which are significantly lower than the rates for hotels and resorts.

For the new 2014 fiscal year, which began July 1, hotel and resort class properties paid a rate of $12.40 for every $1,000 of assessed value while properties in the residential class paid $3.50 per $1,000 of value.

Both bed-and-breakfast and TVU owners from across the island testified against Bill 37.

Kailua resident Will Page said the bill would hurt licensed TVUs and bed-and-breakfasts while the remaining 80 percent of the industry, which is operating illegally, would be unaffected.

Page said the bill would hurt not just legitimate TVU and bed-and-breakfast operators, but the tourism industry in general. "Please do not hurt the local people in your rural communities by promoting a war on tourism in our districts," he said.

After the testimony, Council Chairman Ernie Martin voted against the bill while four of his eight colleagues said they were only approving it on first reading to allow the bill to clear with reservations.

Meanwhile, discussion has already begun on Bill 42, which creates what is being dubbed a "residential A" category for homes assessed at $1 million or more and whose owners do not live in them.

The bill targets investment property owners and could be a way for the city to raise taxes on those property owners who can most afford it while isolating owner-occupants and those who cannot afford to pay more taxes.

"I’m interested in a tiered system where people who own a second home, worth a million or $2 million, they’re not residents here, they don’t have a homeowner’s exemption, which means they don’t live in a home and have it as an investment or a second home, perhaps they pay at a higher rate," Caldwell said.

Kobayashi has also stressed repeatedly that she would prefer to not raise taxes on owner-occupants and others least able to afford tax hikes.

"We don’t want to hurt the resident taxpayer," she said, predicting that Bill 42 would have the best shot of passing of all 10 proposals.

A previous attempt to split owner-occupants from nonoccupant owners proved to be too much of a burden on lower-income renters "because property owners would pass on the increase to the renters," Koba­ya­shi said.

The original draft of Bill 42 does not include condominiums with more than $1 million of assessed value owned by nonoccupants, just single-family homes that meet the criteria, but Koba­ya­shi said she wants to include qualifying condos in the residential A category.