The $3.41 billion proposed operating budget, which Honolulu Mayor Rick Blangiardi touts as prioritizing affordable housing, public safety, mass transit services and even better communications with residents and businesses, saw its first critical reception Monday.

Members of the Honolulu City Council’s Budget Committee questioned Blan­giardi’s prime request: to give property tax relief to about 151,750 qualifying homeowners in the form of a one-time $300 tax credit. The city administration says that amount — granted to those with an active home exemption on their 2023 assessment, regardless of property value — equates to an additional, one-time homeowner’s exemption of approximately $86,000.

The administration says the proposed tax credit — funded in total for approximately $45.5 million — could be applied directly to property tax bills before they are distributed this summer. In December the value of all real property on Oahu rose to $343.07 billion from $305.27 billion, marking a 12.4% increase, according to the city’s Real Property Assessment Division.

Since then many homeowners have reported seeing their latest property tax bills soar 20% to 30% over prior tax years. The city also says that its real property tax revenues of $1.504 billion in the current fiscal year are projected to rise to $1.670 billion in fiscal year 2024, an 11.03% increase.

“We think it will provide a significant benefit to taxpayers,” Andrew Kawano, director of the city Department of Budget and Fiscal Services, told the Council committee of the $300 tax credit. “It will help people to weather the storm and help the recovery of our residents.”

But some, like Budget Committee Chair Radiant Cordero, asked whether the city administration looked at longer-term solutions including raising “residential aid thresholds, or possible tax credits for kupuna” or other tax relief remedies beyond a one-time rebate.

Kawano replied, “We thought that something had to be done right away. And this one-time tax credit … will allow us to provide relief that will go along with the tax bills that will be issued starting in July.”

In addition, Kawano noted pending city legislation yet to be adopted by the Council — namely, Bills 37, 38 and 40, which deal with real property taxes exemptions — might be used as a “vehicle to moderate, if you will, the tax burden for homeowners who have lower-valued homes, who may have more of a need for relief.”

However, he said those proposed bills would require technical “startup and system changes” and, most of all, time. “The bills need to have time to implement if we decide to move forward with them,” Kawano added. “More likely than not, the effective date for all of those bills will have to be July 1, 2024, so fiscal year 2025.”

Council member Augie Tulba asked how the administration decided on the $300 amount for the credit.

Noting a similar tax credit of $200 had been offered in year 2006, Kawano said Blangiardi also “wanted to provide something back that would be meaningful.”

“Obviously, we balanced what we needed. There was a lot of give and take — a lot of agencies didn’t get everything that they wanted — but we pushed as much as we could and we made sure we were responsible in how we allocated our budget dollars. But we were able to scrape up about $45 million, therefore we backed into the $300,” Kawano said. “We feel that this one-time tax credit that can be implemented right away will have a positive impact for those residents who are struggling. Our focus is helping the residents with a home so that they don’t lose their home.”

Saying that as he’s driven around the city, he’s noticed many closed business, Council Chair Tommy Waters asked whether in the city’s “$3.4 billion budget, is there any help or relief for businesses?”

“No,” Kawano replied, “we don’t have any direct relief to businesses in terms of grants or that kind of stuff.”

The city’s proposed operating budget also reflects other issues — notably, rising costs related to city employee liabilities. Since June 30, the city notes, its pension liability is at $2.3 billion. Likewise, as of July 1 the city pays $1.3 billion for retiree health care.

Council member Calvin Say asked about the city’s attempt to control costs for things like the state-level Employees’ Retirement System — part of $783.4 million in “miscellaneous expenditures” earmarked under the mayor’s proposed budget — while recognizing the city is mandated to pay such contributions toward retiree pensions and related benefits.

Kawano said the issue of “spiking” — when city workers nearing retirement put in more overtime to get more out of their retirement pension — and other types of “premium pay” was a “driver” for the problem of excess retiree costs. The budget director added that a “financial system upgrade” was in the works to stem the practice, particularly within the Honolulu Police Department.

“We are looking at a related project to automate overtime and other types of nonbase pay for officers,” said Kawano, noting the overtime pay of city agencies, including the Fire Department, could also be tracked by similar means. The proposed budget devotes $591 million toward funding Honolulu Police, Fire and Emergency Services departments as well as other public-safety programs. “But our focus will be HPD. So we’re automating the process so that more information can be provided on a timely basis to supervisors to help them to control overtime; but that’s in process.”