Honolulu Mayor Proposes Cautious $3.4 Billion Budget
$100 million for affordable housing and a $300 tax credit for some homeowners are also in the draft.
With island residents still reeling from double-digit real estate assessments fueled by pandemic-related price hikes, Mayor Rick Blangiardi announced Thursday that he is proposing for the City and County of Honolulu for fiscal year 2024, which is essentially flat, adjusted for inflation.
Instead of offering to decrease tax rates, which is what many residents want, Blangiardi said that he will offer a tax credit to homeowners who qualify for the program. Eligible homeowners would receive property tax bills $300 lower than they would otherwise receive, which the mayor called 鈥渉istoric property tax relief.鈥
Blangiardi said he anticipated that 151,749 homeowners on Oahu would qualify for the tax refund.
In a statement, Blangiardi said the budget reflects the financial strain many households on Oahu are experiencing.
鈥淚t has been constructed to address head on the difficult challenges that the City and County is facing, not the least of which is the high cost of living many of our friends and neighbors are experiencing,鈥 Blangiardi said in a press release. 鈥淏y proposing meaningful tax relief for our residents without losing sight of our commitment to responsible spending on city priorities, we believe this budget is an important step forward for our island home,鈥 he said.
The city鈥檚 operating budget for the 2023 fiscal year was $3.2 billion. The increase to $3.4 billion represents a 6.3% increase. According to the Bureau of Labor Statistics, .
In the press release, Blangiardi said the proposed budget reflects his commitments to affordable housing and public safety.
The mayor鈥檚 , also relatively flat at $1.09 billion, includes $100 million for land and property acquisition for affordable housing and $19.8 million for drainage and erosion control measures.
At a , Honolulu Managing Director Mike Formby detailed a list of affordable housing projects the city is advancing, including on city-owned sites such as the 5-acre lot, a site in Pearl Highlands, the and a property at 820 Iwilei Road. The city is taking possession through condemnation of a property at 1615 Ala Wai Blvd. The city is also moving toward rehabilitation of the .
Public transportation continues to be a hefty expense for the city the draft budget shows.
The city will be required to spend $85.1 million for the annualized operating and maintenance cost of Honolulu鈥檚 rail system, which will open to the public later this year, the mayor said.
The city鈥檚 bus network cost $240 million to operate in 2022 but the city recouped only $32.6 million in fares, or 13.56% of the system鈥檚 cost, according to Andrew Kawano, director of the Department of Budget and Fiscal Services.
More than half of the proposed capital budget is taken up by $506 million in wastewater capital improvements.
The city鈥檚 biggest single category of expenditure, 23% of the total, is employee salaries and benefits, which the mayor estimated at $783.4 million. Paying off debt takes up another $656.9 million, or 19.5% of the budget.
Other items in the draft budget include $500,000 for planning and design of a canoe halau at Haleiwa Beach Park, $750,000 for designing a replacement boat ramp in Kailua, $100,000 for a bird facility at the Honolulu Zoo, $500,000 to plan and design a landfill on Oahu and $2.1 million for a bus transit center at Middle Street in Honolulu.
Blangiardi would also like to spend at least $12.5 million building or rehabbing police and fire stations.
The mayor鈥檚 budget is presented to the Honolulu City Council , which the City Council then reviews, adjusting the numbers to reflect their own preferences and judgment. Last year, the mayor proposed a $3.35 billion budget but the council passed the measure at $3.2 billion instead.
The needs of individual departments of city government will be highlighted to be held at Honolulu Hale next week.
The mayor provided no details on who might be eligible for the tax refund, but members of the Honolulu City Council have recently discussed ways that low-income people could apply for tax relief. Members of the City Council may have different ideas about how to provide relief to their constituents.
, Honolulu City Council members listened to an informational briefing on how Maui County has established differentiated tax tiers for short-term rental properties, time-share apartments and a category called 鈥渃ommercial residential,鈥 which covers properties where owners live on site and rent out rooms on a short-term basis.
On Maui, property owners who rent houses they own to long-term tenants with 12-month leases pay lower tax rates than people who rent out their properties on a short-term basis, the council was told.
Council member Andria Tupola has said she was looking forward to enacting what she called 鈥減roperty tax reform,鈥 and many council members have spoken recently about the financial stress the prospect of higher property tax bills are placing on their constituents.
