The Hawaii County Council was working into the night Monday, sifting through a combination of budget cuts and tax increases trying to arrive at a number acceptable to two opposing economic philosophies.
The legislative body seemed headed toward adopting a property tax hike scenario that keeps rates steady for homeowners, agriculture and affordable rentals, while raising other rates more than recommended by Mayor Harry Kim.
The council got mired in the details of the various tax rates of nine tax classes, especially taking their different philosophies into account. They hadn’t voted by press time.
“We need to first figure out what we’re going to get and then figure out the expenditures, not the other way around,” Kohala Councilman Tim Richards said, pushing to get the tax rates set before looking into budget amendments. “Rather than increase our revenue to meet expenses, we need to reduce expenses to meet our income.”
Richards, Kona Councilman Dru Kanuha and Hilo Councilwoman Sue Lee Loy sought a fiscally conservative approach to push the administration to live within its means, favoring lower tax hikes while funding a safety net.
“I did what I could to feel a little bit better about this,” Kanuha said about efforts to cut the budget rather than raise taxes. “I truly feel that this doesn’t go far enough. … I personally don’t think we’re sacrificing enough. … To me it’s a little irresponsible. … It’s not cool.”
Kanuha was the only one who voted against the budget on first reading last month.
“If we fail to act fiscally responsible this year, financial shortfalls will be compounded,” Lee Loy added.
Puna Councilwoman Jen Ruggles, on the other hand, wanted to significantly raise taxes on hotel/resort and other commercial properties, while giving a bigger break to homeowners.
“In this day of massive wealth and income inequality … I just want to make sure our tax doesn’t put the burden on those who can least afford it,” Ruggles said.
Hilo Councilman Aaron Chung said the proposed rate hikes were particularly hard on businesses and hotel/resort properties.
“It’s very tough running a business, and I don’t want to make it even tougher for those guys,” Chung said. “I have such a hard time using these guys as whipping boys.”
Council members voted 6-3 not to add more age exemptions for those older than 75, saying they planned not to raise the tax rate for those in the homeowner class, where the senior discounts apply. Voting to add them anyway were Lee Loy, Richards and Ruggles.
The council also agreed on an 8-1 vote to raise the minimum property tax from $100 annually to $200 before exemptions are taken for homeowners and disabled veterans. Raising the tax on the 50,000 parcels would net an additional $3 million. Ruggles was the sole no vote.
Four council members presented alternative tax hike scenarios.
Richards wanted to lop $6 million off Kim’s proposed property tax hikes, while Ruggles sought to add $11.6 million. In between were Kanuha, who seeks to trim $1.6 million, and Puna Councilwoman Eileen O’Hara, whose plan would add $232,687.
The mayor’s proposal would add $36.9 million to the mix as the basis for his $491 operating million budget. The budget takes effect July 1, and if the council doesn’t pass it, Kim’s proposed budget automatically goes into effect.
“We are your managers of your will. .… The process is before your hands,” said Kim, addressing the council earlier in the day. “There’s nothing in here that’s not necessary for us to do our jobs. … We’re all in a bad stage now because of circumstances we cannot control.”
Chung and Ka‘u Councilwoman Maile David suggested the council approve the mayor’s tax hikes as proposed.
“The administration, to their credit, has done a pretty good job in cutting the fat,” Chung said.
Council members adding a flurry of last-minute amendments filed too late for public notice or timely council consideration added to the burden.
“What they took months to do, we’re going to (try to) do in a few hours,” David said about the council’s late efforts.
By press time, the council had not voted on the $491 million budget itself.
Email Nancy Cook Lauer at ncook-lauer@westhawaiitoday.com.
