The Honolulu City Council voted Wednesday to approve a $2.14 billion operating budget and $708.9 million package that avoids tax rate increases for most residential property owners, a fee for curbside garbage pickup and advertising on the sides of buses but directs $40 million toward homeless shelters and programs.

The operating budget is about $5 million less than the one presented by Mayor Kirk Caldwell in March. In an 8-1 vote, Councilman Breene Harimoto cast the lone "no" vote on Bill 12 after voicing objections to Council leadership’s decision to add about $3 million to the fund that gives grants to Oahu nonprofits. Harimoto said he could not justify increasing aid to nonprofits when it was raising property tax rates on a new Residential A property class and the hotel/resort class.

The capital improvement projects (CIP) budget is about $69 million more than the original Caldwell proposal. Under a last-minute "floor draft" proposed by Councilman Ikaika Anderson, Bill 13 saw a $32 million boost that is targeted at providing housing units for the chronically homeless, but with an emphasis on homeless families. Last week, Council Chairman Ernie Martin called for adding $32 million more for homeless projects, but proposed doing so by taking out $32 million from the $132 million pot Caldwell had set aside for road repaving and pothole repairs. The Caldwell administration, which had objected to diverting money from the repaving budget, said it was OK with Anderson’s plan.

Caldwell, after the Council’s budget votes, told reporters that he intends to sign both the operating and CIP budget bills. Last year, Caldwell allowed both budgets to become law without his signature based on various objections.

The bulk of Oahu’s homeowners will not see an increase in their property tax rate, currently $3.50 per $1,000 of valuation. But those in the new Residential A category (made up of owners of homes valued at $1 million or more who don’t have homeowner’s exemptions for being owner-occupants) will now pay $6 per $1,000. Several leaders from the Board of Realtors testified against the increase Wednesday. Meanwhile, hotel/resort property owners will see their property rates increase by 50 cents to $12.90 per $1,000, up from the current $12.40 but less than the $13.40 Caldwell initially proposed. Hotel and resort officials had argued against any increases, citing an anticipated slowdown in tourism.

Some of Caldwell’s most eye-opening budget proposals for fiscal 2015, which begins July 1, were rejected or altered by the Council.

For instance, the mayor’s plan to charge residents $10 a month for residential refuse pickup to help make up the cost of the service was rejected. Caldwell also proposed allowing the sale of advertising on the sides of city buses to help pay for the restoration of bus routes in West and Central Oahu. But Council members said they found the money for the bus service through other savings in the budget, although Budget Chairwoman Ann Kobayashi said the bus ad idea may be revived next year if the city finds itself looking for revenue sources.

Drastically altered was Caldwell’s plans to use $3 million in operating budget money and $18.9 million in CIP dollars from the city’s Affordable Housing Fund for a Housing First initiative designed to get the chronically homeless into permanent shelter. After saying too much was directed toward homeless singles, who typically make up the larger share of Housing First beneficiaries, and not enough on families, the Council set about establishing its own homeless initiatives including proposing $4 million to partner with an affordable housing provider in a Waikiki project and $3 million for a homeless project near the Iwilei transit station, possibly in partnership with the state. 

When Caldwell pressed for restoring all the money he had originally sought for Housing First, Martin countered by proposing $32 million in bond money be diverted from the repaving budget to homeless shelters, which led to Wednesday’s last-minute action boosting the CIP budget by an additional $32 million.

Caldwell said Wednesday that the administration will look at the Council plans, but gave no assurances they will be funded.

Also Wednesday, the Council voted to:

» Defer Bill 6, giving the administration the authority to seek new proposals for the Honolulu Affordable Housing Preservation Initiative and Resolution 14-121, which seeks to control the mix of different income groups eligible to live in nine affordable rental buildings. Both measures now go back to the Budget Committee. The latest draft of the resolution would have required all units to revert back to the original tenant mix when the respective nine buildings were built. Administration officials said that would displace 309 tenants and cost taxpayers $18 million.

» Give first-reading approval to Bill 40, barring food establishments from using foam food containers. While a handful of people testified for the bill, one businessman said he opposed it. The measure now goes to the Budget Committee.

» Give first-reading approval to Bill 41, establishing a one-year pilot program to allow collection of bulky items when the city is requested to do so at an as-yet unspecified cost. The bill now goes to the Budget Committee.

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CORRECTION: An earlier version of this story misstated the property tax rate increase for Residential A taxpayers. They will now be paying $6 per $1,000 of valuation, not $5.50 per $1,000 valuation.