Mayor Kim threatens
layoffs as tax-hike
proposal falters

The Big Island mayor says the
increase is needed to help
balance the budget

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By Rod Thompson
rthompson@starbulletin.com

HILO >> Hawaii County is in a financial crisis and may have to lay off employees, Mayor Harry Kim said moments after a County Council committee deferred his proposal for an increase in property taxes yesterday.

Without the increase, Kim said, the county may have to temporarily furlough employees, put off buying vehicles, delay vehicle repairs and defer facility repairs.

Kim said furloughing employees -- or putting them on unpaid vacations -- are possible this fiscal year and next. Kim said he has met with government employee unions to raise the possibility of furloughs.

If the crunch worsens and the unions do not agree to furloughs, layoffs could be necessary, he said. Kim did not specify the number of employees who could be affected.

The Council's Finance Committee voted 5-4 to defer action until February on Kim's request to raise the minimum property tax payment from $25 to $100 on about 20,000 properties. That means he cannot include $2.4 million from the increase in drawing up next fiscal year's budget, county Finance Director Bill Takaba said.

"If we're not going to raise money, we're going to have to reduce services," Takaba said. "We're still trying to balance this year's budget. We know we're currently in a shortage."

The county's current budget is $196 million. For the current fiscal year, the county has reduced its shortfall to $1.5 million from $7.5 million, Takaba said. That means the administration needs to find $1.5 million in revenues or make cuts of that amount during the current year.

The county, like the rest of the state, is suffering in the aftermath of the Sept. 11 terrorist attacks. Tourism arrivals have plummeted since the attacks.

Japan Airlines is still flying to Kona, but with planes only 15 percent full, resorts will argue for lower property tax assessments based on low occupancy rates, the county's share of the hotel room tax is expected to drop "dramatically," and county workers are due a raise, all of which adds up to major problems next year, Kim said.

The focus on financial problems was brought about by Kim's proposal to raise minimum property tax payments.

The average homeowner tax bill is $363 a year, and the average bill on homes where the owner does not live full time is $713, Takaba said.

Because some undeveloped, rural properties are valued so low, tax bills drop to less than $25, he said. On those, the county now raises the bill to a minimum of $25.

Kim proposed a sliding scale of minimums, based on property values, of $25, $50, $75 and $100. Breaks would be given to seniors, disabled, low-income and owners of lava-inundated land.

Kim stressed that raising the minimum was just the first in a series of reforms, with closing of loopholes on certain agricultural lands to follow.

Kona Councilwoman Nancy Pisicchio was among Kim's supporters.

"We are so far behind already, everything is falling apart," she said. "We're turning into a Third World country in terms of services and infrastructure. We're in a desperate situation."

Roughly two-thirds of people who would pay the increased minimums live outside the Big Island, she said.

But Puna Councilman Gary Safarik said too much of the burden would fall on poor people in his district.

Councilman Jimmy Arakaki made a motion, supported by the majority, to withhold action until Kim presents a total package of tax reforms.