Mayor Harry Kim earlier this month presented a balanced budget to the County Council.
Projected revenues from property taxes, gas taxes and fees cover the $515.7 million spending plan for the fiscal year that starts July 1.
The budget is balanced without a county surcharge on the state’s general excise tax and without counting on any additional share of the state transient accommodations tax on hotels and other short-term lodging. It doesn’t rely on a property tax increase, instead taking in an additional $12.4 million from a 4.1 percent increase in property values and an extra $8.8 million in gas taxes.
That budget will be the subject of a public hearing at 5 p.m. Tuesday at the West Hawaii Civic Center, with the public also allowed to participate by videoconferencing from the Hilo council chambers.
Kim doesn’t think his preliminary budget goes far enough.
“The budget is balanced because we’re required to submit that. … How easy it is to save the agony of getting there by just maintaining,” Kim said in an interview Friday. “Nobody wants to just maintain. They want to see our county improve.”
But a maintenance budget might just be what the County Council orders. After raising property taxes and fuel taxes last year, many council members are leery of more tax hikes, especially in an election year, and want to exercise fiscal restraint.
“I appreciate and agree with Mayor Kim’s position that it doesn’t do enough,” said Finance Committee Chairwoman Maile David, who represents South Kona, Ka‘u. “However, the sense I have from the community, given increases in property and fuel taxes last year, is the county needs to tighten its belt and see how much it can do with what it has to work with until our financial situation improves.”
Kim said there are many more needs that simply won’t get funded under the current plan.
He rattles off a list of priorities, things he characterizes more as “have to have” rather than “nice to have.”
Among those are 14 new buses to bring Hele-On up to snuff, funding for a homelessness program that currently has none, 17 more police officers, including captains for every district and an additional officer per shift for Puna and Ka‘u, and more regular road maintenance.
Most of the new money in the budget— $12.7 million — is pledged for employee salaries and benefits negotiated at the state level. Salaries and wages account for more than 66 percent of the operating budget.
Kim’s been lobbying the state Legislature for a greater slice of the TAT pie, and also for an extension on the deadline for the county to enact a half-cent GET surcharge.
The TAT bill, Senate Bill 648, would add $12.1 million to Hawaii County’s share for the next 12 years, raising it this year from $19.2 million to $31.2 million. It passed its second reading on the House floor on Friday, with 43 voting yes, three of those with reservations, three voting no and five excused, according to the Legislature’s website.
The GET surcharge extension, HB 2587, also passed second reading in the House on Friday. As amended, the bill would give neighbor island counties until June 30 to enact an authorization bill, rather than the current deadline of March 31.
It would also require a minimum of 60 percent of the half-cent surcharge to be used for transportation projects, rather than the full 100 percent. And, it would allow up to 2 percent to be used for private roadways that are used by the public.
All the pieces could come together at the last minute, with the Legislature set to conclude its business May 3 and the mayor required to submit his final proposed budget by May 5. The council voted last month to postpone consideration of the GET until no later than May 5.
Kim said he’ll craft his final proposed budget with the revenues he knows are available if everything is still up in the air by then. The mayor can amend the budget throughout the year with council approval.
Kim ruled out any increase in property taxes this year, even if no new money comes in. He and the council last year raised taxes by 1 percent — hitting 10.4 percent for some classes. Rates for the homeowner and affordable rental classes were not raised.
Property taxes account for 74 percent of county revenue, he said. Adding the GET and a greater share of the TAT collected on this island would broaden the tax base and make it more fair for everyone, he said.
“We have a fantastic opportunity here to make things better and not just maintain,” Kim said.
Kim said recent research has shown visitors would pay about half of the GET, compared to earlier estimates of about a third.
David said she’s waiting to see what happens after departmental reviews scheduled for April 17-19 and council discussions.
“At that time the council will have a clearer picture of where we are financially,” David said, “and I am confident that creative and meaningful proposals will be forthcoming from my colleagues.”
Email Nancy Cook Lauer at ncook-lauer@westhawaiitoday.com.