Most of a 6.5 percent increase in Hono­lulu Mayor Kirk Caldwell’s operating budget will be earmarked for no-frills, essential, "fiscal stability" initiatives like catching up on mandatory contributions for the government employees health fund, paying off more debt and shoring up the rainy day fund.

"These additional resources will not be used to grow government," city Managing Director Roy Ame­miya said at a news conference Monday at Hono­lulu Hale. "Instead, money will be used to improve city finances."

The operating budget for fiscal year 2016, which begins July 1, totals $2.28 billion.

Amemiya reiterated that there are no new taxes or fees, or any increase in property tax rates, in Monday’s submittal. They aren’t necessary, largely because Oahu taxpayers would be paying more in taxes next year due to an 8.3 percent increase in assessments that would bring $77 million more into city coffers.

Property taxes make up about 34 percent of operating fund revenues.

"The real estate market is doing quite well," Ame­miya said. "It’s robust."

On the other hand, the bump in revenues is not going to result in a lowering of tax rates, either.

Amemiya said the administration did discuss the possibility of lowering tax rates, "but when you’re staring down at a $1.7 billion (health fund) unfunded liability, as well as some of the other things (that are required to be paid), we felt it was best to address some of those systemic issues as opposed to lowering tax rates."

Pressed by a reporter on whether lowering tax rates would have been a better political move, Ame­miya said, "I don’t know if we’re necessarily going to make decisions just on making people happy."

Besides the hike in property valuations, next year’s budget will get a boost from a projected $141 million "carry-over" balance of unexpended appropriations.

Additionally, about 1,000 additional properties moved into the Residential A property tax class, which is made up of properties valued at $1 million or more but do not qualify for an owner-occupant exemption. That switch added $8 million in revenues over the current year’s $79 million take for the class, Deputy Budget Director Gary Kuro­kawa said.

Among the items in the Caldwell budget package, submitted to the City Council on Monday as mandated, are:

» Paying $51.5 million toward a $1.7 billion state retirees health fund instead of the minimum $30.8 million.

"We feel that it’s very important to work on this problem and not kick the can down the road," Ame­miya said of the account, known formally as the Other Post Employment Benefits fund.

» Reducing debt service by drastically shrinking the city’s capital improvements budget to $494 million from this year’s $709 million, and by paying principal more quickly on bonds in an effort to reduce interest payments, he said. Additionally, the city will spend $24 million from the operating budget for vehicles and equipment, which traditionally has been financed with 25-year bonds.

» Increasing the fiscal stability fund, also known as the rainy day fund, by $30 million to $100 million.

"This real estate market won’t stay hot forever," said Ame­miya, a former bank executive. "There’ll be a down cycle coming up, and to have moneys in a reserve fund like this we believe is very prudent."

» Paying for previously negotiated wage and salary increases averaging 2.5 percent for city workers.

» Adding $10.6 million to help subsidize TheBus and Handi-Van operations.

There are also few increases in new employees. Only 21 employees are being added to the 8,000-plus city workforce, 12 of whom reflect the conversion of Ocean Safety contractual lifeguards to permanent civil service employee status. But the city does have roughly 1,200 funded but vacant positions that could be filled during the year.

Council Budget Chairwoman Ann Koba­ya­shi said Monday afternoon that she had not yet had a chance to review Caldwell’s submittal. But she said that she hopes the administration will work harder to address concerns raised by Council members.

Even when Council members have earmarked specific funding for programs and services, "the administration hasn’t been funding the Council’s initiatives," Koba­ya­shi said.

Kobayashi’s committee will begin department-by-department budget briefings next week. The Council typically gives final approval to the budget in June, just ahead of the start of the new fiscal year.

Caldwell is on the mainland on a personal family trip, said spokes­man Jesse Broder Van Dyke.