City Council members are keeping a close eye on what is happening at the Legislature as they launch their annual round of budget hearings tomorrow.

Mayor Mufi Hannemann has already proposed increasing property taxes and various fees to help cover an expected $50 million budget shortfall in the upcoming fiscal year.

That shortfall could grow $43 million by early May, when the 2009 legislative session ends.

State lawmakers - looking to close a sizable budget gap of their own - have advanced a bill that would delete a key source of funding for counties.

House Bill 1744, which was passed by the House last week, would suspend for six years the distribution of state hotel tax revenues to the counties to help the state make up a projected $910 million deficit in the 2010-11 fiscal biennium.

Hannemann's proposed budget does not account for a loss of hotel tax money.

“;We're going to have to proceed with the $43 million still in our budget and then hope that it doesn't fall off the cliff when the Legislature ends,”; said Council Budget Chairman Nestor Garcia. “;I'm keeping one eye on that and one eye on what we can do as far as revenue enhancements.”;

Those could include some or all of Hannemann's proposed hikes.

The mayor's budget proposes a 30-cent increase in real property taxes, setting the rate at $3.59 per $1,000 of property value. He also has proposed increases in some bus fares, admission and parking rates at the Honolulu Zoo and greens fee at public golf courses.

“;Just like my friends across the street, I have to put everything on the table, too, so we're exploring ways of raising what taxes and fees are in our jurisdiction,”; Garcia said. “;That's not to say that we will actually go ahead and do it, but I need to be able to advance all these proposals as a 'just in case' thing.

“;I think it would be irresponsible not to.”;

Budget hearings begin tomorrow, with Garcia's committee being briefed on budget requests from various city departments. A complete schedule of hearings can be found online at hsblinks.com/4t.