Council vows to fight for revenue


POSTED: Wednesday, December 23, 2009

Already staring at a potential $140 million hole in their next budget, the City Council and Mayor Mufi Hannemann's administration now face the prospect of coming up with $45 million more, based on the governor's plan to scoop all of the hotel room tax money that normally is divvied up among the state's four counties.

The governor's plan comes on the heels of county property assessments on Oahu coming in about 6.7 percent lower than a year ago, which translates into less property tax money for the county if rates remain unchanged.

City Council leaders say they will fight for the hotel room tax money, known as the Transient Accommodations Tax, or TAT, to stay with the counties.

But if they fail, taxpayers should expect the cost of living to go up.

“;We already know we have lower assessments. We already know we're making more cuts than we did last year,”; said Council Chairman Todd Apo. “;If you take away our TAT, that's going to cause higher tax rates. Nobody should fool themselves.”;

Property taxes remain the main source of county revenue, and would be relied on even more if TAT revenue vanished.

Any additional tax increase would come on top of tax hikes approved earlier this year.

The Council approved an increase in the residential property tax rate of 13 cents, to $3.42 per $1,000 of property value, along with increases in usage fees for TheBus, admission to the Honolulu Zoo, public parking at Kapiolani Park and greens fees for public golf courses, among others.

When he allowed the budget to become law, Hannemann was mindful of state efforts last session to divert the TAT, noting the city came “;perilously close”; to losing it.

“;We shouldn't really be surprised that this was on the table,”; said Budget Chairman Nestor Garcia. “;I didn't think she (Lingle) would be the one to do it.

“;For someone who came from the county experience, she should know that taking away that money from our budget is really going to hurt.”;

It is too early to say what could happen to property tax rates, he said, adding he wants to wait for more financial information after the start of the new year. Garcia already has informed the mayor's office of plans to explore further cuts in nonessential services.

Councilman Charles Djou, a frequent critic of government spending, said he expects the Council to push through some form of tax increase.

“;Oh, yes,”; he said. “;Taxpayers should have a very deep-seated fear of a tax hike from the city and county.”;

Lingle, a former Maui mayor, said she expects the counties to fight for the TAT, but the concept should not come as a surprise.

Last year, a proposal to divert the TAT to the state was linked with giving the counties the authority to levy a sales tax of up to 5 percent to offset the revenue loss. House Bill 1744 stalled in conference committee last year but could be brought back this session.