Council starts
groundwork for
next budget

A committee defers on simplifying taxes
as another calls for a study on core services

Oahu property values for fiscal year 2004

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By Crystal Kua
ckua@starbulletin.com

The City Council started the groundwork yesterday for its budget for fiscal 2004, facing a $159 million shortfall.

In sessions of the Budget and Executive Matters committees, Council members:

>> Learned why the value of all taxable properties on Oahu went up for the third straight year, to $95.1 billion or 6.6 percent over last year's $89.2 billion. Experts said the increase was due to the real estate sales boom fueled by low interest rates.

>> Considered combining tax classifications into two groups -- residential and nonresidential -- each with a flat rate leading to a decrease in most tax classes except for residential, industrial and commercial. But because of concerns about possibly adversely affecting single-family homeowners, the Budget Committee deferred action.

>> Approved a resolution that calls for creation of a committee to look at "core" city functions and decide which city services could be cut. The Executive Matters Committee sent the resolution to the full Council for a vote Jan. 29.

Members also heard the financial philosophy of Ivan Lui-Kwan, Mayor Jeremy Harris' pick as the city new budget director, during his confirmation hearing.

"In the time that's available to me, I really want to work hard in developing ... a long-term plan that advances the long-term financial health of the city," Lui-Kwan said.

Lui-Kwan, the current acting director, whose nomination now moves onto the full Council, said it is too early to determine whether there will be a request to hike property tax rates in the budget the administration is supposed to submit by March 1.

Property taxes are based on multiplying the assessed values by the tax rates given for different classifications of property. The Council, which will set the rates in the spring, has been talking about hiking rates this year to help offset the anticipated budget shortfall.

Council members said they have heard complaints from constituents about rising property values.

Property tax officials said the real estate market took off because of the low interest rates and caught them off guard.

But tax appeals are down this year by more than 50 percent from last year's appeals, which numbered more than 4,000.

Councilwoman Barbara Marshall said one of her constituents told her that she had been discouraged by tax officials from filing an appeal.

Oahu property values for fiscal year 2004

The latest assessments for Oahu residential properties show where values rose and fell:

>> Zone 1: Urban Honolulu, up 8.8 percent
>> Zone 2: Urban Honolulu, up 8.8 percent
>> Zone 3: East Honolulu, up 8.9 percent
>> Zone 4: Waimanalo to Waikane, up 10.9 percent
>> Zone 5: Kaaawa to Kahuku, up 1.5 percent
>> Zone 6: North Shore, down 2.4 percent
>> Zone 7: Wahiawa, down 2.7 percent
>> Zone 8: Nanakuli to Makua, up 0.7 percent
>> Zone 9: Central Oahu, up 9.6 percent
>> All residential zones: up 8.7 percent