Mayor accepts tax changes in 'spirit of cooperation'
Mayor Mufi Hannemann said he will go along with the City Council's desire to lower residential property tax rates and increase rates for businesses.
"All along, I felt that the tax rate should remain the same, that we shouldn't be increasing it nor should we be decreasing it," the mayor told reporters yesterday. "It's clear (Council members) feel very strongly about this, and so the administration in a spirit of cooperation will accept that recommendation from them."
Hannemann's comments came after the Council approved a $1.48 billion operating budget and $680 million construction budget for the fiscal year.
"I think at the end of the day, the Council recognized that I had submitted a no-frills budget to them, and we are focusing on core city services," Hannemann said, noting the Council passed most of his budget proposal.
Budget Chairwoman Ann Kobayashi said the budgets crafted by the Council were "fair and balanced, which was addressing the city's needs and also addressing the large increase in residential property taxes."
The operating budget the Council passed is about $7 million less than what the mayor proposed to make room for property tax cuts for residential property homeowners faced with years of rising property values, but the capital improvement budget was about $50 million more, mainly to accommodate additional construction and sewer projects that came about as results of the heavy rain and flooding from earlier this year.
The Council approved a 16-cent decrease in property tax rates to $3.59 per $1,000 valuation for single-family and apartment owners and a 60 cent-increase to $11.97 per $1,000 valuation for commercial, industrial and hotel/resort property owners.
Also making it through was a one-time $200 discount for owner-occupied homes.
Hannemann noted that the Council either agreed with or approved tax measures similar to what he had proposed earlier this year, including a one-time tax credit.
Hotel and business groups made one last unsuccessful pitch to the Council to vote down the tax rate increase.
"If this is also enacted, the cost will be passed on to consumers," said Jim Tollefson, president of the Chamber of Commerce of Hawaii.
But Bob Grantham, co-founder of Property Tax Relief Now, said that the tax rate adjustment for residential and nonresidential property owners "represents the most equitable way to address the concerns of residential taxpayers balanced with the needs to operate the city."