Renters' credit proposal shelved

An expected drop in property taxes would use up available funds

Mayor Mufi Hannemann's administration is giving up on a $150 tax credit for low-income renters this year.

Budget Director Mary Pat Waterhouse said one reason is that the City Council is moving toward lowering the property tax rate by 30 cents, to $3.29 per $1,000 in property value.

"Hopefully, that will help the renters," Waterhouse said.

The move also means the $11 million to fund the renters' credit would be used up.

Renters' assistance, as the administration called it, was designed to be part of a package of property tax breaks whose centerpiece was the mayor's proposed homeowner's classification, intended to give residential owner-occupants the greatest tax breaks.

When the administration proposed the classification last year, City Council members declined to act on it because they were concerned a lower rate for owner-occupants would lead to higher taxes on rental properties, and that landlords would pass on the increase in the form of higher rents.

"One of the reasons that we did it (the classification) was because last year the Council kept on asking, 'What are we doing for the renters?' " Waterhouse said.

While the mayor's proposed homeowner's classification can't be enacted for the next fiscal year beginning July 1, the proposal is not dead, and will likely be taken up after the budget is finished.

But members of the Council said abandonment of the renters' credit is not a total surprise, as the administration is aware that Council members have been eyeing the $11 million for tax reductions.

"Clearly, the renters' assistance is not going to be there," said Council Budget Chairman Todd Apo.

Waterhouse, in a letter to Apo last week, requested that nearly all the money slated for renters' assistance instead be used to offset some higher-than-expected collective-bargaining salary increases.

The administration had budgeted for 4 percent raises, but some are coming in a little higher, Waterhouse said.

Apo acknowledged that the collective-bargaining numbers are still not final, with the police union contract not settled. Other question marks in the budget are how much to set aside for future retiree health costs and how much to budget for shipping garbage off-island.