The Honolulu City Council Budget Committee on Tuesday again rejected Mayor Kirk Caldwell’s plan for a trash pickup fee, but approved proposals to raise rates in the hotel-resort and nonowner occupant property tax categories.
The committee, led by Budget Chairman Joey Manahan, advanced a
$2.8 billion operating budget along with other budget measures. The package of bills are now positioned for a final vote on June 5 ahead of the start of the new budget year on July 1.
Caldwell first called for a $5 monthly charge for residential property owners, which would have netted the city about $5.8 million annually. But amid strong indications that Council members opposed the plan, Caldwell proposed the monthly charge be $15 a month in exchange for a drop in the property tax rate for the homeowner’s tax class, which is comprised only of those who are owner-occupants and eligible for homeowner exemptions. That scenario would have raised about $16 million more in annual revenue.
Caldwell testified before the committee Wednesday and argued that Honolulu is the only county in the state that provides curbside pickup without a charge and that a majority of the municipalities across the continental United States collect a fee as well.
Because it costs the city $55 a month per household for curbside service, Caldwell said, it makes sense to help defray the cost now being shouldered entirely by property taxes, even when a good portion of apartment-condominium owners do not receive curbside pickup because their driveways can’t accommodate city trash trucks.
That money could then be used to pay for other expenses including operations and maintenance of the city’s upcoming rail line, rising employee fringe benefit costs and an anticipated jump in the pay of city workers whose union contracts are being negotiated this year, he said.
Council members Heidi Tsuneyoshi and Tommy Waters, the two newest members, were among those raising the strongest objections to the trash fee.
Waters said the charge could encourage some families to not pay for the service and to instead dump their trash illegally along the sides of roads. He said he got a call from a Maunalani Heights resident who said someone had dumped trash illegally in his neighborhood.
Caldwell told committee members that when the first segment of rail, from East Kapolei to Aloha Stadium, comes online in December 2020, it will cost the city roughly $37 million to cover operations and maintenance for the service during its first six to seven months.
After the meeting, Caldwell corrected himself and told the Honolulu Star-Advertiser that the Honolulu Authority for Rapid Transportation’s recovery plan actually estimates $39 million for operations and maintenance during that period.
Rail O&M in the first full year in fiscal 2022 would cost $71 million, he said, but at the same time, TheBus operations and maintenance would cost $247 million while Handi-Van O&M would cost $68 million. Both are also heavily subsidized by general fund dollars, Caldwell said.
Meanwhile, the Budget Committee approved Caldwell’s original proposal to increase tax rates on hotel-resorts and nonowner occupants of residential properties worth over
$1 million, a category known as Residential A.
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. The increase would raise about
$17 million more annually.
The rate was last increased in 2014, when it was raised 50 cents from $12.40 per $1,000. Caldwell tried to increase the hotel/resort rate two years ago, to $13.40, but that was shot down by the Council after heavy lobbying from the visitor industry.
A number of hotel-resort executives testified against the increase, including
former Mayor Mufi Hannemann, now CEO and executive director of the Hawaii Hotel and Lodging Association. They warned that it could be devastating for the increase to be instituted just as there appears to be a slowdown in the economy.
Hannemann urged committee members to look for cuts in the budget and to lower the amount of money being in the operating budget’s reserve fund.
“There’s fat in every budget,” Hannemann said, noting that he was involved with six budgets as mayor, and six more as a Council member. “There’s always ‘nice to have’ projects that you can cut or wait for another day. You need to focus on the ‘need to have.’”
Hannemann said money also could be saved by not adding to the reserve fund, and that doing so would not jeopardize the city’s bond rating.
Residential A owners 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 same owners would continue to pay $4.50 per $1,000 of value on the first $1 million of value. It would raise about $14 million more for city coffers.
The Residential A category is composed of residential properties valued at more than $1 million, excluding those whose owners live on their properties and claim a homeowner exemption.
Also on Tuesday, the committee voted to approve
$25 million in bond money to pay for the rail project as demanded by federal officials under a recovery plan for the financially strapped $9.2 billion construction job.
