ÌìÃÀÊÓƵ

Under two tax hikes Honolulu Mayor Peter Carlisle needs to help fund next year’s budget, Honolulu would have relatively low residential property taxes but have the highest fuel tax in the state.

Carlisle’s proposed $1.93 billion operating budget for the 2012 fiscal year — a budget 6 percent bigger than this year’s — calls for raising the city’s fuel tax by 6 cents over three years. It also calls for creating a single tax rate for both occupant and non-occupant residential homeowners, which will result in an 8-cent rate increase for homeowners who live in their homes.

The mayor’s budget now goes before the City Council, which has until June to finalize a budget.

Here’s a look at how Honolulu’s proposed higher rates compare with what Hawaii’s three other counties charge.

Fuel Tax

Carlisle wants to gradually increase the city’s fuel tax, which he says is “overdue” for an adjustment. The tax is imposed on distributors, who often pass the tax on to customers.

Honolulu’s current rate — 16.5 cents per gallon — would climb 1 cent in 2012, another 2 cents the following year, and 3 more cents in 2014.

In the end, the rate would be at 22.5 cents per gallon — a 36 percent increase over the current rate. That would make Honolulu’s tax about 41 percent higher than in Maui county and 156 percent higher than on the Big Island.

Source: [pdf]

The counties charge their fuel tax on top of what the . The state’s fuel tax rate is currently at 17 cents a gallon for gasoline and on-highway diesel.

Honolulu’s fuel tax brought in $47.6 million in fiscal 2010 and is expected to bring in $51.4 million for the current budget year ending June 30.

With the 1-cent hike, the tax is estimated to bring in an extra $3 million, or $54.9 million total. The 2-cent increase would bring in an extra $6 million, and the 3-increase would bring in an extra $9 million.

The money generated makes up a portion of Honolulu’s highway fund along with the city’s vehicle weight tax and the public utility franchise tax.

Carlisle said the increases will help pay for road maintenance.

“The fuel tax has not been increased for 22 years since 1989,” Carlisle wrote in his budget proposal. “This change is needed to provide adequate highway funds for the increasing costs of maintaining and rehabilitating city-owned roads. … This overdue fuel tax increase will allow the city to gradually shift most road improvements from being budgeted as a capital investment, which increases debt, to an operating budget cost instead.”

Residential Property Tax

Carlisle has proposed a single tax rate for residential property — $3.50 per $1,000 of assessed property value, up from rates of $3.42 for resident homeowners and down from $3.58 for non-occupant homeowners. The change would represent a 2 percent difference for both groups.

Under the $3.50 rate, Honolulu’s residential property tax would continue to be cheaper than those on Kauai and the Big Island. Maui County has the lowest property tax rate for homeowners. All four counties would have one rate for both occupant and non-occupant homeowners.

Source: Honolulu [pdf]

Honolulu’s two property rates had been imposed by former Mayor Mufi Hannemann in an attempt to balance the budget by charging non-occupant property owners — presumably investors — a higher rate. In October 2010, the City Council collapsed the two rates back together but did not set a new rate.

Because the rate will rise for some and drop for others, the city estimates property tax revenue will be flat in fiscal 2012 compared to this year.

“Depending on current year valuations, this will result in nominal fluctuations in the tax for individual taxpayers, but as a whole, the property tax revenue collected from the City and County will decrease slightly from fiscal 2011,” Carlisle wrote in his budget proposal.

He said other property tax rates — such as for commercial, industrial, hotel and agricultural properties — will not be increased.

“In the same way that the residential split rates were collapsed into a revenue-neutral rate but not increased in proportion to non-residential rates, it would be unreasonable to increase hotel/resort and commercial rates while difficult times continue,” Carlisle wrote.

In fiscal 2010, the city brought in a total of $843 million in property taxes from all classes including $215 million from resident homeowners and almost $213 million from non-occupant homeowners.

The city estimates it will raise a total of $796.8 million in property taxes in fiscal 2011 and $796.5 million in fiscal 2012.