During his State of the City address yesterday, Harris announced plans to scrap this year's tax assessments and give all property owners the same bill they got last year.

The plan must still get the approval of the City Council.

Optimistic Oahu homeowners had been expecting to get a property tax break this year, assuming rates stayed the same.

Tax assessments mailed to homeowners in November showed the values of improved residential properties dropping 3.9 percent in 1996, while apartment parcels were down 4.5 percent.

But going with the current assessments and assuming rates stayed the same, the city would have received $12 million less, and that is critical in a cash-strapped operating budget, said budget director Malcolm Tom.

Lowell Kalapa, executive director for the nonprofit Tax Foundation of Hawaii, said city ordinances stipulate that the most recent assessments are to be used in determining a property owners' tax bill.

"If he wants to go back a whole 365 days, then that's a violation of the law," Kalapa said.

"Those (1996) assessments will be void," Harris told reporters after his speech. "What we promised was no increase in taxes. We never said we supported a tax cut."

Harris said he didn't want to propose an increase in rates, the traditional way of keeping tax revenues higher when assessments decrease, because property owners would have been affected differently.

Harris said the freeze on tax bills is only a temporary measure to allow his administration and the Council to come up with long-range ways of dealing with the property tax dilemma.

Tom said bills are to be introduced allowing the administration's plan to kick in.

"It is inappropriate to say (the plan) is illegal," Tom said. "Mr. Kalapa fails to understand ordinances can be amended and changed."

Waianae homeowners will be the most disappointed with no tax break.

Homes in Waianae and other Leeward Coast neighborhoods saw the largest drop in assessments, with values declining 10.5 percent.

Adrian Silva Jr. said he's not surprised to hear a tax break isn't forthcoming.

A disabled person who doesn't have a job, Silva said he's owned his own home for more than 30 years.

"We're the highest paying tax people in the country," Silva said. "Why should it go any higher?"

Council Budget chairman Duke Bainum said he likes the idea that the Harris proposal "provides us with some breathing room."

Still, Bainum said he has questions like: Why did the mayor choose not to raise rates?

Councilman Jon Yoshimura said he likes Harris' plan because it offers predictability in budgeting to both city departments and homeowners.

Yoshimura said property values should be assessed not annually but every five years.

Councilman Mufi Hannemann said it's too early to form a position on the mayor's tax plan.

Another Harris point that is generating talk is his plan to infuse the city's construction industry with $400 million in new capital improvement projects.

The city plan comes on the heels of Gov. Ben Cayetano's proposal that the state will propose a $1 billion capital improvement plan.

The city's proposal includes $100 million waste-water projects for the city's aging sewage system.

Bainum said the Council will give the projects close scrutiny, but he likes the idea. He expressed some worry about how the borrowing will affect the city's bond rating.

Nonetheless, Bainum said, government traditionally takes on construction projects during bad economic times.

"Given the state of our construction industry, this is probably a wise move," he said.

Other points from the Harris speech:

A proposal to transfer the zoo and golf course divisions from the Parks and Recreation Department to the Auditoriums Department.

While some seemed puzzled by the move, longtime Council Parks chairman John Henry Felix said the plan "makes good business sense." Current deputy Parks director Alvin Au has been nominated to take over as auditoriums director.

A promise to include $10 million in the budget for purchase of Golf Courses 5 and 6 and Queen's Beach as part of the Koko Head Regional Park system and the state's Ka Iwi Shoreline Park system.

Harris estimated the property is worth $30 million and suggested that state and federal money be used to offset the difference.

An emphasis on crime-fighting. He promised to train six recruit classes in the coming year and provide funding for an enhanced communications system.

Proposals for a 200-acre soccer complex including the site of the Ted Makalena Golf Course and a new Waiola sports center, which would have a new golf course, baseball training complex and champion tennis facility.