Honolulu City and County spending has nearly doubled over the past decade despite Oahu’s population declining during the same period, suggesting that now might be a good time for Honolulu lawmakers to start looking for ways to trim the county budget and give Oahu taxpayers a break.
Specifically, Honolulu’s population has declined by 2.8% since fiscal 2015, from 1,017,588 to 989,408 as of July 2024. Yet the mayor is proposing an operating budget of $3.9 billion for fiscal 2026, compared with the $2.1 billion budget in fiscal 2015.
That’s an increase of 83% versus 33% for inflation during that same period, so this is not just about keeping up with inflation — nor keeping up with an expanding population.
Meanwhile, the average property tax rate in Honolulu has increased by 8.8%, from an average of $5.46 per $1,000 in assessed value in fiscal 20151 to $5.78 per $1,000 today — and that’s on top of net property assessments increasing during that period by 56%, from $174 billion to $307 billion — basically a double whammy on the average Oahu taxpayer.
City and County lawmakers have tried to limit tax bills somewhat, such as in 2023 when they increased the homeowner exemption by $20,000 and issued a one-time homeowner exemption tax $350 credit. But otherwise, Honolulu tax collections have gone in only one direction — up.
So what has the city been doing with all the money it has been collecting — and where could it find some places to cut?
Adjusted for inflation, City and County debt-service payments have increased 29% since 2015, from $538 million to $697 million. Retirement and pensions costs have also ballooned, growing from $353 million in 2015 to $697 for the upcoming fiscal year — a 97% increase. Together, these two items make up about 40% of the city operating budget.
These fixed costs are the result of past state and city decisions about how to compensate employees and how to pay for infrastructure and even daily operations.
The city cannot restructure them without risking its AA+ bond rating, but it should keep them in mind when considering future big projects — such as extending the already-way-over-budget Honolulu rail project or upgrading the Sand Island Wastewater Treatment Plant.
Long-term liabilities aren’t the only reason spending is up. The city’s payroll also has increased since 2015, by 10%, from 9,898 to 11,015. Ironically, more than 2,000 of all city positions are actually vacant, creating a strain on county taxpayers without improving services in the slightest. The result is a budget that leaves the city with little room to deal with big upcoming costs, including inevitable emergencies.
In response, the City Council is considering defunding some of the city’s vacant positions and moving the money into payments on debt and other liabilities — which would be a good thing. Just this month, Council Chair Tommy Waters suggested moving $24.5 million from the vacant jobs to sewer upgrades, possibly lessening the need for a drastic city sewer-fee increase.
Honolulu lawmakers need to engage in more of this kind of creative budget thinking. To the extent possible under state law, the city should look for ways to contract with third parties to help deliver critical government services. It should also create a plan to aggressively pay off existing debt and take a hard look at any new bond sales.
If nothing else, the City Council and mayor could just mandate across-the-board cuts in department budgets and let the managers of those departments take it from there.
Perhaps the recently started City Charter Commission could tackle some of these spending problems, too. Hawaii, Maui and Kauai counties each have commissions tasked with identifying county inefficiencies and making suggestions to their respective county councils. Honolulu should get on board with this idea as well. Now would be an ideal time to start.
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NO THIESSEN: Washington Post Marc Thiessen did not move a column for today.
Joe Kent is executive vice president of the Grassroot Institute of Hawaii.
Correction: An earlier version of this "Island Voices" commentary gave incorrect information on city spending and the city budget.
