Harris unveiled his $1.035 million 1997-1998 operating budget yesterday. A $415 million capital improvements plan was also submitted. The package is now in the hands of the City Council, which will hold meetings through May.

The operating budget is $7 million more than the current year's budget. But the mayor insists most of the increase is the result of uncontrollable costs.

Harris and City Council Budget Chairman Duke Bainum warned that the no-new-tax promise holds only if the Legislature continues to give Honolulu and the other counties their existing share of hotel tax revenues.

The possibility remains that the counties could end up with smaller shares of the transient accommodations tax through a cap proposed by Gov. Ben Cayetano.

Both Harris and Bainum vowed to lobby strongly against the room tax cap. Harris said even if the bill does pass in the House, he doubts the Senate will OK it.

"Clearly that's the most serious thing facing the City and County this year," Bainum said.

"Our budget can avoid raising property taxes probably only if the Legislature is sensitive to the needs of the City and County of Honolulu."

The mayor's retreat from the tax freeze would mean $12 million less in revenues than what city budgeteers had been hoping for.

That's because the assessment dropped 3.9 percent for the average home and 4.5 percent for the average apartment.

So instead of paying the average $918 per home like they did last year, property owners would pay $872.

"There were concerns from many quarters about the ability of people to appeal (assessments)," Harris said.

Critics, including Bainum, had complained that the tax freeze plan announced by Harris at his January inaugural address mislead the public, since most should have received tax cuts as a result of lower assessments. Bainum called the mayor's reversal good news.

Harris, who had assured voters no increase in property taxes this coming year, hinted strongly that the rise may be proposed next year.

Real property tax revenues have dropped to the lowest they've been since 1990. Adjusting for inflation, the mayor said, Oahu residents have had virtually no increase in property taxes during that time."We cannot continue to run the city year in and year out with fewer dollars than we had seven or eight years ago," he said. "This trend has got to eventually be turned around."

Harris said the city "cannot have a tax cut next year." If property assessments continue to decrease, he said, "we're going to have to raise the rates in 1999."

To make up for the loss in property tax revenues this year, the administration is proposing $17.2 million in agency cuts. It also calls for taking $22.6 million from HPOWER plant purchase fund.

Non-controllable costs are projected to go up $24.9 million in the coming year. The major culprits are increased costs for health insurance, contributions to the state retirement system and debt service, and new contracts with city workers. Harris said fewer city dollars are now going directly to fund operations, while the non-controllable fixed costs now make up 32.5 percent of the operating budget.

While the city work force is shrinking as a whole, the mayor is heeding the call for more police officers. Six recruit classes are expected to bring in 240 new officers. After taking into account retirements and other leaves, the plan is expected to add 140 more officers onto the force by the end of the year.

Tipping fees for commercial haulers -- who would likely pass on the cost to apartment associations and others -- are proposed to increase from $55 to $60 per ton, an increase of 8 percent. Plans call for tipping fees to increase in the two subsequent years as well.

Meanwhile, those seeking city jobs would need to pay an application fee of between $3 and $35, depending on the job. Harris said the city is overloaded by people who are not seriously seeking a job, but simply want to be eligible for welfare by applying.