Honolulu residents, come Wednesday, will have to pay more for property taxes, bus fares, Waikiki parking and a host of other items under the city's operating budget that becomes law without Mayor Mufi Hannemann's signature.

With a deadline yesterday to approve, veto or stay idle, the mayor chose the final option, allowing the $1.8 billion operating budget—and the city operations it funds—to take effect as scheduled, despite serious concerns he expressed over property tax rates approved by the Council.

“;After due consideration, I believe that it is in the best interest of the people of this city to move forward,”; Hannemann said.

His main concern focused on a 13-cent hike in the real property tax rate, setting it at $3.42 per $1,000 of property value, with no tax credit for homeowners who live on their property. Hannemann had urged a rate of $3.59, with a $75 tax credit for owner-occupants, to help offset the increase.

“;If it were possible—legally possible—I would have vetoed the tax rate that the Council proposed,”; he said.

Council Chairman Todd Apo said he understands the mayor's frustration, but there simply was not enough support for his proposal.

“;The Council went through the exercise and there weren't five votes to support that,”; Apo said. “;That was just the reality of the process.”;

Hannemann plans to focus next year on legislation that would create a homeowner class for property taxes, to differentiate between those who live in their properties and those who have the property as a second home or investment.

Property taxes could then be increased on non-occupant owners without affecting local residents.

“;We're going to separate the investors and speculators from the true homeowners,”; he said. “;Basically, I'm looking to take care of Honolulu first—the Honolulu guys—and make sure that we try to help them in tough economic times by averting the impact of our property taxes.”;

It would be the third time the mayor has proposed the legislation. Neighbor islands have had separate homeowner classes since the 1990s, he added.

Apo and Budget Chairman Nestor Garcia said the proposal is worth discussing, but they are unsure whether the separate class would be beneficial.

Apo noted that the increase to non-occupant owners could hurt by forcing landlords to increase rent.

He said there are other ways to help owner-occupants, such as increasing the $80,000 homeowners' tax exemption on properties.

“;There's nothing wrong with the mayor's proposal,”; Apo said, “;but we can get to the same result without creating this inequity that becomes too easy to tax non-residents who are, a lot of times, the landlords of our residents themselves.”;