City still drafting tax relief

The Council hopes to help
lower-income homeowners
amid a slew of fee increases

As the City Council prepares to raise taxes and fees for many services, it is also trying to find a way to offer some relief to lower-income homeowners.

"I worry about how some (residents) are going to be able to handle it. And so we continue to work on some type of property tax relief for those who really need it," said Council Budget Chairwoman Ann Kobayashi.

The Council is ready to approve a 50 percent increase in the vehicle weight tax, and it is expected to approve a series of sewer fee increases in the next 10 years.

A proposal to raise the state general excise tax a half-percentage point to pay for county transit projects is also making its way through the Council. The Council is now considering a plan to offer relief to homeowners who earn less than $48,000 per year, Kobayashi said. These residents will be given the choice of paying their property tax based on the tax rate and the assessed value of their homes, or paying 5 percent of their income.

There is no estimate on how much the plan will reduce city tax revenues. But Kobayashi said Council members backed off earlier proposals to set the income level at $80,000 and the tax rate at 3 percent, for fear the plan would be too costly.

Owner-occupants already qualify for an exemption on the first $40,000 of assessed value of their homes, more if they are 55 and older. The Council plan will have no minimum age qualification "because many of our young families are having a tough time, also. They're paying mortgages and raising children," Kobayashi said.

The Council is hoping to finalize the details and approve the plan by September, in time for the next round of property assessments. If they qualify for the relief, homeowners will still have to pay their 2006 tax based on the assessed value of their homes, because those tax revenues would have already been budgeted. Homeowners would get a credit in their 2007 tax bill, Kobayashi said.

No members of the public testified yesterday when the budget committee approved increases to the vehicle weight tax, sewer and sewer hookup fees, and rents for Blaisdell Center and Waikiki Shell. The Council is expected to give final approval for the increases, as well as next year's operating and construction budgets, on June 6.

The vehicle weight tax will increase to 3 cents per pound from 2 cents for passenger cars and trucks starting January 1. That means the tax for a 3,200-pound midsize sedan will rise to $96 from $64. The tax for commercial vehicles will increase to 3.5 cents per pound from 2.5 cents.

Sewer fees will jump 25 percent July 1 and 10 percent annually for the next five years, then rise at a lower rate for the next four years. The average single-family monthly sewer bill, $33.05, will go to $41.31 in the first year, more than double to $66.54 in year six and increase to $83.91 in year 10.

Missing city money found

Money from a salary adjustment fund, delinquent property tax collections and settlement of a contract dispute will cover the projected $4.2 million shortfall in next year's city operating budget caused by higher-than-expected employee pay raises.

Mayor Mufi Hannemann's administration forwarded documents to the City Council's Budget Committee yesterday after committee members said they first learned of the projected shortfall Tuesday.

The funding is coming from: