Caldwell Budget: Raise Taxes and Fees, Then Hope For Help On Rail
The Honolulu mayor spent much of a budget press conference emphasizing the need for the Legislature to extend the general excise tax surcharge.
Honolulu Mayor Kirk Caldwell devoted much of his annual budget presentation Thursday to trying to persuade state lawmakers and the public that it makes sense to extend a half-percent general excise tax surcharge to help fund construction of the city鈥檚 rail system.
The project was originally supposed to cost $5.2 billion but now the price could go聽as high as $9.5 billion.聽Right now the city is expecting to receive about $6.8 billion to pay for it.
Sen. Jill Tokuda, who leads the Senate money committee, criticized the idea of extending the GET surcharge Monday, saying聽the city had misled state lawmakers and needed to do a better job of managing its own budget to pay for rail.
Caldwell鈥檚 press conference聽was partially a plea to Tokuda and her colleagues, in addition to the usual yearly description of what he hopes the City Council will fund in fiscal year 2018, which begins July 1.
The mayor proposed a slew of tax and fee increases to fund rising operating costs that include employee benefits and debt service. 鈥淭here is no money in the budget to fund rail,鈥 Caldwell told reporters.
He refused to answer questions about how the city would pay for rail if the Legislature doesn鈥檛 approve the GET surcharge聽extension. He said he doesn’t want to raise property taxes on owner-occupied homes, but has that a 14 percent property tax increase would be necessary to cover the rail project shortfall if the Legislature doesn鈥檛 help.
鈥淚鈥檓 not going to talk about something I don鈥檛 support,鈥 he said Thursday.
The city’s rail construction costs overshadowed the discussion of the mayor’s proposed $2.45 billion operating budget 鈥 an increase of more than 5 percent from last year 鈥 and a capital improvement budget of nearly $1 billion.
The mayor proposed raising bus and TheHandi-Van fares and increasing property taxes for hotels, resorts and homes that aren鈥檛 owner-occupied and are worth more than $1 million.
The mayor also wants to require homeowners and businesses to pay $10 per month for trash collection. Companies that receive federal permits governing pollution would be charged much higher fees as well.
Meanwhile, Caldwell is hoping the Council will agree to increase the fuel tax, vehicle weight tax and street parking fees to help pay for public transportation.
Council Chairman Ron Menor was in Washington, D.C., on Thursday, where he and Councilman Ikaika Anderson have been meeting with federal transit officials. Menor and Anderson issued a joint statement announcing that officials said that if Honolulu tries to shorten the rail route or change it, the city would have to conduct new environmental assessments and renegotiate the original federal funding agreement.
Caldwell said after the press conference that he wasn鈥檛 surprised by the federal officials鈥 stance and that the city is working hard to find the money to complete the rail project as planned. He added the city must submit a new plan to the Federal Transit Administration by April 30 explaining how the city will overcome its multi-billion-dollar shortfall.
Then he walked across the street to the Capitol to continue lobbying for the GET extension.
Better Relationship With Council
While Caldwell struggles to persuade聽key state lawmakers, he is聽facing a much friendlier group of legislators at Honolulu Hale.
Last year, Caldwell was running for re-election and made an impassioned plea to a largely antagonistic City Council to fund new positions in a proposed housing agency. Councilman Ernie Martin, then the Council chairman and considering his own run for mayor, held a press conference immediately after Caldwell鈥檚 to sarcastically mock him.
This year, the mayor is freshly re-elected, and the City Council鈥檚 recent leadership shakeup nearly guarantees that his proposals will be seriously considered, if not embraced.
Councilman Joey Manahan is the new Budget Committee chairman, replacing longtime Caldwell critic Councilwoman Ann Kobayashi. Manahan, who attended the press conference, said afterward that he doesn鈥檛 have any concerns about the taxes and fees Caldwell is proposing.
鈥淚鈥檓 definitely keeping an open mind,鈥 Manahan said. 鈥淲e are going to have to vet all of these proposals and make sure that everything is justified and that all of these revenue enhancements are needed to balance our budget.鈥
Manahan, who publicly criticized Caldwell last year for his poor communication with the City Council, says the relationship between the two branches has improved. Manahan backs Caldwell鈥檚 stance on rail and also supports spending $730,000 to add positions in the city鈥檚 new Department of Land Management. Caldwell has tried to hire staff for a version of the agency in past years but didn’t get anywhere when Martin and Kobayashi were in power.
鈥淲e鈥檙e working definitely more collaboratively,鈥 Manahan said. 鈥淚 am going to be very supportive of the proposals but we do have to work with the other members and the public to be able to come up with a balanced budget at the end of the day.鈥
City Council members are expected to spend the next few months considering聽the budget before sending a final version to the mayor by June.
Parks, Homelessness and Sewers
The mayor is , currently set at $2 per trip, by 50 cents each year until it reaches $4. The bus fare, now at $2.50, would also rise by 25 cents each year until it reached $3.25.
for hotels and resorts would rise by 3.8 percent, from $12.90 per $1,000 value to $13.40. Property taxes would also rise for homes that aren’t owner-occupied and worth more than $1 million, a category known as Residential A. Instead of $6 per $1,000 value, the rate would be $6.30.
Depending on the volume of material discharged, fees paid by companies that discharge pollutants under the National Pollutant Discharge Elimination System .
The bulk of the mayor’s proposed operating budget goes to employee benefits, debt service and collective bargaining costs. The next biggest spending areas are public safety, sanitation and mass transit.
The budget includes funding for Caldwell’s longtime priorities, including road repairs, park improvements and sewer upgrades. Some of the largest proposed expenditures include $655.9 million for wastewater system improvements and $254.6 million for bus and TheHandi-Van services. The mayor’s road repair budget is down to $30 million because he said the city has already made significant progress repaving streets.
Caldwell聽also wants to continue to support homelessness initiatives, and the proposal includes $5.7 million for Housing First support services and $1.6 million for transitional housing.
He also wants to hire a third crew to enforce ordinances that prevent homeless people from sleeping in public spaces in certain neighborhoods. It would cost $289,000 to add five new city employees and a police officer for that effort.
Caldwell emphasized how difficult it is for city workers to wake up in the middle of the night, rouse homeless people from their tents and force them to move.
Homelessness and civil rights advocates have criticized the strategy, which Caldwell calls “compassionate disruption,” as inhumane and ineffective. But Manahan said he鈥檚 happy with the mayor鈥檚 commitment to fund more enforcement of sidewalk nuisance laws and similar ordinances in his district, which includes Kalihi and Iwilei, and says he thinks it will be necessary as long as there’s a housing shortage.
Caldwell also listed several other positions he wants to add, including 16 groundskeepers and three irrigation and maintenance workers.
The mayor鈥檚 proposed capital improvement project budget is $956 million. While it’s mostly dedicated to sewer upgrades, it also includes more than $47 million for parks and $27.5 million to acquire a building for the city鈥檚 Kapalama satellite city hall. Another $12 million would be for redeveloping the Blaisdell Center, and $4 million would be spent on pedestrian and bike initiatives related to rail.
Read the details about the mayor’s budget proposal below:
