Honolulu Mayor Rick Blangiardi presented the city’s $5.14 billion budget package to the City Council on Monday, framing it as simultaneously innovative and fiscally responsible.
The fiscal year (FY) 2026 budget controls city spending between July 1, 2025, and June 30, 2026. The $3.93 billion operating budget is $300 million (8.3%) higher than in FY2025, and the $1.21 billion capital improvement project (CIP) budget is $160 million (15.2%) higher. No property tax increases are called for, and that’s welcome. However, recent changes in federal policies and spending priorities create the risk of unanticipated budgetary holes.
This requires that the city anticipate potential excess costs, while continuing to address ongoing needs. Now, the City Council must carefully scrutinize the numbers, ensuring taxpayer dollars are allocated where they benefit Honolulu most, and resources aren’t frittered away in areas providing little solid return.
To address the issue of shrinking federal support for social services, housing and transportation — all needs that don’t go away even if they receive less funding support — the city maintains a fiscal “stimulus” fund available to backfill key programs: it’s currently at $190 million, with another $10 million set aside in FY2026, which seems prudent.
A major portion of the operating budget is allocated to Oahu’s public safety operations, with $657.2 million (17%) in combined operating funding for Honolulu Police (HPD), Honolulu Fire, Honolulu Emergency Services, and Honolulu Ocean Safety departments. That’s overshadowed by the $976.7 million (24.8%) of the operating budget allotted for city employment benefits such as health care and retirement. Individual line items within this budget must be closely scrutinized and justified, across all departments.
Agency budgets must be assiduously examined for redundancies and potential savings, with departments called to expeditiously fill vacancies and to limit overtime use. The public can be kept abreast of these efforts with transparent operations and regular reporting, whether from HPD or from the city Department of Planning and Permitting, which has scored well with taxpayers recently by improving public access and performance.
Significantly, $117 million earmarked as “temporary hazard pay” for city employees who worked during the COVID-19 period is just one portion of a big bill that hit the city (and state, and other counties) after the pandemic. While much of it has been covered by federal aid (including a $35 million line item in this budget), it’s a reminder that staffing choices must be made carefully, and with anticipation of emergency needs and longterm costs.
Another $476.7 million (12%) of the operating budget goes to transportation; of this, Skyline operations and maintenance costs are estimated at $120.7 million, including an annual jump of $31.6 million for operations and maintenance after rail’s second segment opens in October. That spending bears watching closely — both for efficient use and for return in the form of increased ridership once commuters can access the Honolulu airport and the Middle Street transit hub.
About $143.8 million of the CIP is allocated to affordable housing and homeless facilities, with another $28 million in operating funds set aside for programs serving homeless people. This spending is necessary, and the need has grown large because services have been inadequate in past years. The city’s focus on housing and homelessness, working in tandem with the state, is welcome.
City revenues have risen sufficiently to cover this budget — for now. While residential property tax valuations rose by just 1.4%, assessments on Residential A homes, valued at more than $1 million and with no exemption for being owner-occupied, went up by more than 5%. That’s a prod to look more closely at an empty homes tax, and other revenues that can fund affordable housing while addressing the widespread speculation on homes by out-of-state buyers. It’s clear that Honolulu will need to raise more revenue in future years, and the time to start that process is now.
