Mayor, council work on fighting $156 million city deficit

By Andrew Pereira
Published On: Dec 10 2013 11:36:00 AM HST

Honolulu Mayor Kirk Caldwell asks city departments to cut spending to avoid burdening homeowners with property tax increases.

Property taxes.  They're by far the biggest money-maker for the city.

So, with Honolulu facing a projected budget deficit of $156 million in the coming fiscal year, many homeowners worry they'll be paying more. The mayor is trying to hold the line.

Click here to watch Andrew Pereira's report.

"I don't want to put additional burden on our taxpayers by raising real property taxes for most homeowners," said Honolulu Mayor Kirk Caldwell.

On that point, the mayor and the vice-chair of the City Council's Budget Committee see eye-to-eye.

"Before we start looking to homeowners for more tax revenue, we really should be focusing on cutting waste and being creative about generating revenue from user fees and other ways," said Councilman Stanley Chang.

That's why the mayor has proposed taxing properties worth a million dollars or more at a higher rate.  The proposal would impact 5,676 properties on Oahu.

But, even at a dollar more for every thousand dollars of value, the measure would only raise $10 million.  That's why the mayor has asked nearly every department to cut spending during the current fiscal year.

"We're watching our nickels and our dimes from a very large amount of money, to small amounts of money and that's what we need to do," said Caldwell.

Caldwell is taking a piecemeal approach to close the city's budget gap.

A recent administration-sponsored bill hopes to increase fees for certain permits and services provided by the Department of Planning and Permitting.

If approved by the council, the bill would raise $500,000 to $1 million during the coming fiscal year.

However, the mayor's piecemeal approach may still not be enough.

Consider that 46.5 percent of the city's entire budget goes to city workers and that will only increase in the coming years.

Perhaps the best scenario for closing the deficit is a growing economy  which leads to more property taxes.

In fiscal year 2001, the city raised $374.1 million from all forms of property taxes.  In fiscal year 2013, that amount grew to $832.2.

Property values have followed the same trend.  In fiscal year 2001, all property on Oahu was worth $83.4 billion.  Twelve years later, that amount stood at $184.3 billion, more than $100 billion more.

What we really need to focus on is expanding the base, increasing the tax base, stimulating job growth and economic growth here in Hawaii so that they're more taxpayers, that more people are working, that more people are contributing to our economy," said Chang.  "That's how we're going to grow our way out of this."

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