View Point
View Point
AS the budget deliberations came to a close, we witnessed much rhetoric and rancor in questioning the financial condition of the city and the process with which the budget for fiscal year 2000 had been prepared. City budget is
in fine shapeTheatrics grossly overshadowed the city's progress in reducing its operating costs, cutting the tax burden and maintaining the financial soundness of our local government.
We only have to ask a few questions about Honolulu in comparison to the state and the other counties to understand the city's financial progress:
The answers to all of the above is the City and County of Honolulu.Who has reduced the cost of government?
In fiscal year 2000, the city's operating budget is $38 million less than the current year's budget. In fact, the operating budget is a minuscule .4 percent or $4.5 million greater than it was in fiscal year 1994.
In comparison, the state's operating budget has grown 20 percent or $1 billion, and the other county budgets have also sharply increased during the past six years.
When the effects of inflation are reflected, Honolulu's budget is actually $47 million less than in fiscal year 1994. The city has reduced its operating expenditures by consolidating departments and functions, streamlining approval processes, eliminating redundant activities, improving productivity and focusing on customer service.
During this period, the city has honored its agreements to fund collective bargaining pay increases for the police, fire, professional, administrative and field employees, and to pay increased pension and health fund costs.
In addition, the city has fulfilled its commitments to provide police, fire, recreation and other public services for the new communities of Kapolei, Waikele and Mililani Mauka.
With respect to real property taxes, Honolulu and the County of Hawaii are the only counties to have reduced their real property tax burden on its residents. In Honolulu, the city has cut its real property tax revenues by $40 million since fiscal year 1994. Even after losing $13 million in Transient Accommodations Tax (hotel room tax) revenues, the city did not increase its real property tax revenues.
As a result, the city's real property tax revenues have fallen 9.2 percent since fiscal year 1994. Next year, the city's real property revenues will be the same as in the current and past year. In comparison, Maui's real property tax revenues will increase a sizable 10.2 percent and Kauai's real property tax revenues will jump 9.1 percent.
By not increasing real property taxes and by cutting operating expenses, the city has reduced the cost of government to our residents. As a result, real property tax bills on Oahu, on average, have declined about $198 or 16.4 percent during the past six years.
For next fiscal year, real property tax rates have been adjusted to generate the same amount of revenue as in the current year. A majority of Oahu property owners -- 134,854 or 54 percent -- will pay $156 less in property taxes, and 8,680 property owners will see no change in their property tax bills.
On average:
The assessments for a majority of property owners on Oahu have declined far greater than the overall adjustment in property tax rates. Consequently, most property owners on Oahu will have a smaller real property tax bill to pay next year.
So, contrary to popular belief, the adjustment of property tax rates has reduced, not increased, the tax burden for the majority of property owners on Oahu.
Malcolm J. Tom is the city's budget director.