Oahu homeowners might get $350 tax credit

The Honolulu City Council’s pending approval Wednesday of Mayor Rick Blangiardi’s proposed $3.41 billion operating budget for next fiscal year might include a $300 one-time tax credit the administration seeks to give to nearly 152,000 qualifying homeowners, a city official said.

“The Council members are going to propose adding a little more to that — $50 more — so we’re going to get up to about $350,” Budget and Fiscal Services Director Andrew Kawano said Monday on the Honolulu Star-Advertiser’s “Spotlight Hawaii” livestream program. “So, depending on where you are in terms of the value of your property, if you’re a homeowner — let’s say at the average, a million dollars — having a $350 tax credit is equivalent to having an exemption of $100,000.”

Previously, the city said the $300 tax rebate would cost about $45.6 million to implement. If approved at $350, that cost would rise to approximately $53.2 million.

Still, Kawano said the mayor kept the tax credit “flat” because “the thought was that people who live in homes that are not high, in terms of assessed valuation, would get more of the benefit, (and) those that live in multimillion-dollar homes would get a smaller impact from the credit, and the thought was we help those that are in most need first and we moved ahead with that.”

He also noted other factors that needed to be weighed in the city’s future budget.

Those included filling Honolulu’s nearly 3,000 city worker vacancies and funding the city’s pending collective bargaining agreements with its public worker unions.

“Even if our vacancies remain on hold, in terms of amount, we have pay increases that are going to kick in from fiscal (2024) to fiscal (2025), and those pay increases are significant,” he said. “We’re looking at salaries, and benefits tied to salaries, creating a combined increase in what we’re going to have to fund in (fiscal year 2025) of $160 million; so that’s a huge number we’re going to have to fund.”

In terms of filling thousands of city worker vacancies, Kawano said it’s been an ongoing challenge.

“We’re looking at all different options to address the problem,” he said. “The first thing we had to do was to assess our needs, and we do that on a department-by- department basis.”

He added the city’s Department of Budget and Fiscal Services and Department of Human Resources were working together on streamlining the city’s selection and hiring process, which was taking approximately six months to hire new employees.

“Our goal was to cut that time in half,” he said. “It seems like it’s still a long time. Unfortunately, we’re a government operation, and there are a lot of rules and laws that we have to comply with, and we’re working through that to shorten the time because if we take too long, then people are going to find jobs elsewhere and we lose out in the end.”

He said the city is reviewing how and where it recruits potential workers and that social media has offered greater outreach to job candidates. However, other issues related to the city’s organization persist.

“We’ve had to embrace the fact that during the pandemic, (and) even before that, a lot of experienced city employees retired or left the city (and) took a lot of institutional knowledge along the way,” he said, “and we’re in the process of filling positions that are needed so that we can carry out services effectively to serve the public.”

But adding new hires to the city was no “silver bullet” to fixing issues related to vacancies and basic city services, he said. “It’s going to take effort by everyone involved, and it’s going to take a number of years to address,” he added. “We’re not going to fill those vacancies overnight.”

Kawano also discussed the city’s nearly $1.1 billion capital improvement budget — now called Bill 12, up for Council approval Wednesday, too — which, among other things, covers the city’s affordable-housing programs, sanitation projects as well as the city’s rail system.

“About half of that amount relates to sanitation projects, so wastewater and solid wastes,” he said, referring to the city’s prior consent decree brought in 2010 by the U.S. Environmental Protection Agency to force upgrades to the city’s wastewater treatment and collection systems, which failed federal Clean Water Act requirements. “And we have a number of projects working on that.”

Under a prior mayoral administration, the estimated cost of the upgrades to the treatment plants was $1.155 billion — $480 million for the Honouliuli Wastewater Treatment Plant in Ewa Beach and $675 million for the Sand Island Wastewater Treatment Plant on Sand Island Parkway. The federal agreement allowed 14 years to complete the work at the Honouliuli plant and up to 28 years at the Sand Island plant.

“So the big focus area would first of all be the Sand Island treatment center, and at the same time Honouliuli, and we have other treatment facilities around this island that also require investment and upgrade,” he said.

In terms of rail, Kawano said the line — which begins interim operations June 30 — will also become a new, city-funded service. He added that transit-related budget items include the purchasing of more city buses.

“So we’re looking at electric battery-run buses, (and) we’re also going to invest in (TheHandi-Van),” he said.

Part of the reason is to not only modernize the aging bus fleet, but to also ensure that service near the rail line — initially from East Kapolei to Aloha Stadium — will have greater connectivity to the rest of the city, he said.

“In addition to that, we’re gong to access how rail impacts bus usage along the rail line and make adjustments to bus routes, frequency and so on as we have more information on that,” he said.

As far as affordable housing, he said the mayor’s main focus is to increase Oahu’s housing inventory with an emphasis on affordability.

“So the mayor included a proposal of $100 million to acquire, develop (and) construct more affordable housing units on this island,” he said, adding that Council members have also supported that effort with extra funding requests of their own. “They have actually introduced some additional moneys in their amendments that are going to be reviewed on Wednesday. So there’s a strong possibility that the mayor’s $100 million could be doubled up, along with additional funding for homeless sheltering and some other homeless wraparound services for those in need.”