Big Island mayor requests tax limits
Property value increases allow rate caps, Kim proposes
HILO » Property values and expected tax revenues have shot so high on the Big Island that Mayor Harry Kim wants to increase next year's county budget by 11 percent while also limiting increases in taxes.
Kim proposed a $316 million budget for 2006-07 this week, up from the current $284 million in 2005-06.
Roughly half of the county's money comes from property taxes. Property values have increased 35 percent overall, Kim said, but he would cut property tax rates so the increase in property tax revenues would be held to 19 percent.
That would be done by cutting tax rates in 2006-07 on all properties except owner-occupied homes by about 13 percent. For owner-occupied homes, Kim already obtained agreement from the County Council last year to limit increases in their taxable value to 3 percent per year, besides boosting annual homeowner exemptions to $80,000.
In 2007-08, Kim envisions limits on growth of taxable value for other properties, similar to the 3 percent limit on owner-occupied homes.
Council Chairman Stacey Higa reacted with caution, calling for "fiscal prudence."
"I know times are good. I also know that everything comes in cycles," he said. With Kim also calling for the creation of 53 new county jobs, Higa asked if enough money will be available for them when the economy slows.
Kim's budget message recalls that times were tough in 2000-2002.
To avoid a repeat, Kim's proposal calls for creating a "rainy day" fund with an initial $4 million. "Its purpose is to enable the county to continue providing services to the public without having to increase taxes during economic downturns," his message said.