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Mayor Caldwell proposes $2.8B city budget with higher taxes for hotels and investment properties

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    Mayor Kirk Caldwell unveiled his $2.83 billion operating budget today. The proposed budget is about $223 million, or 8.6 percent, higher than the current year’s budget.

Honolulu Mayor Kirk Caldwell’s budget plan for the coming fiscal year calls for higher tax rates for owners of resort/hotel and higher-end residential “investment” properties but leaves the tax rate for those who live in their own homes the same.

Caldwell unveiled today his $2.83 billion operating budget, which is about $223 million, or 8.6 percent, higher than the current year’s budget, according to an executive summary accompanying the plan. The new budget year begins July 1.

The budget package also calls for a refuse fee for residences and nonprofit organizations, an idea the administration has proposed and then rejected by the City Council in the past.

Continued increases in uncontrollable expenses, primarily employee fringe benefits and collective bargaining costs, were cited as one key reason for the higher budget.

“The budget also funds the cost for the planning and preparation for the opening of rail service and begins to establish a foundation to help meet future rail operating and maintenance costs,” the executive summary said. The first segment of the rail line, which would run from East Kapolei to Aloha Stadium, is expected to begin operations in December 2020.

The mayor’s budget package also includes an $871 million capital improvements program, comprised largely of sewer system improvements and other essential infrastructure.

Under the proposed tax increase, owners of hotel and resort land would pay $13.90 for every $1,000 of assessed value, $1 more than the $12.90 per $1,000 they now pay.

Owners in Tier 2 of the so-called Residential A tax classification would pay $10.50 per $1,000 of assessed value on any value higher than $1 million, up $1.50 from the current $9 per $1,000 they pay on that portion of their tax. The Residential A category is comprised of residential properties valued at more than $1 million, excluding those whose owners live on their properties and claim a homeowner exemption.

The tax rate for the standard residential classification, made up of those properties valued at up to $1 million and those valued at more than $1 million but receive homeowner exemptions, would stay at $3.50 per $1,000 of value.

Residential A owners would continue to pay $4.50 per $1,000 of value on the first $1 million of value.

The proposal increases would net a projected $31 million in additional property tax revenues. Property taxes are the city’s main source of revenue.

On the expenditures side, Caldwell’s budget plan proposes 29 new positions in the Honolulu Emergency Services Department, 15 additional positions in the Department of Transportation Service as it ramps up for rail operations, 31 new positions in the Department of Parks and Recreation and reactivating 50 positions in the Honolulu Police Department, 37 of them patrol officer jobs.

Other highlights include enhanced service for TheBus and TheHandi-Van, development of an Ala Moana transit plaza, maintaining and improving city parks facilities. Additional funding is proposed also for Caldwell’s street repaving project combating homelessness and addressing issues tied to climate change.

The Council Budget Committee is expected to begin reviewing Caldwell’s plan next week. Final decisions are usually made in June.

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