Mayor Harry Kim asked state lawmakers in Honolulu on Thursday to grant more flexibility in how counties can use their general excise tax surcharge.
Kim said that’s needed to help avoid a budget shortfall.
“The whole county budget is in jeopardy,” he said, while addressing a joint meeting of the Senate Ways and Means and House Finance committees.
“… We need the general excise tax, we need the (transient accommodations tax), to help us just balance the budget.”
The state Legislature previously gave counties the authority to add a half percent surcharge to the state tax to fund transportation projects. The County Council opted for a one-quarter percent increase instead, which went into effect in January, but it is expected to soon consider increasing the surcharge to the current limit.
The smaller surcharge the council adopted is expected to raise $25 million a year. It adds 26 cents to the cost of a $100 purchase.
Kim didn’t state how big of a budget gap the county might expect in the next fiscal year that begins July 1. But he did use the dreaded “L” word — layoffs.
“Additional cuts will have to be made, including the ugliness of laying off people, which we don’t want, obviously,” he said.
Kim addressed the committees following other mayors, with each addressing their needs from the Legislature this session.
The county is asking the Legislature to appropriate $155 million to help Puna recover from last year’s Kilauea eruption, which destroyed more than 700 homes from Leilani Estate through Kapoho. Several dozen other homes remain cut off or isolated by the flow, and portions of Highway 132, Highway 137 and Pohoiki Road remain covered by lava.
Gov. David Ige has approved $22 million to the county for disaster response.
Kim, who didn’t renew the county’s emergency proclamation last month, didn’t go into detail about the county’s requests. But he thanked the state for its help.
“Without the assistance from the state, we would be up the creek, not without a paddle, but without a boat,” he said.
Some lawmakers have criticized the county for not being specific enough in its funding requests related to the eruption early on.
Kim addressed that by apologizing to Rep. Sylvia Luke, who chairs the Finance Committee.
“We did not have an adequate plan; we made a mistake,” he said.
As a result of the eruption, the county devalued many properties in lower Puna to zero dollars so owners didn’t need to pay property tax.
The impact to the county’s budget was about $3.3 million for this fiscal year.
Lisa Miura, county property tax division chief, told the Tribune-Herald the parcels are being reassessed, and those that aren’t covered by lava could see an assessment in March, though likely for a lower amount than they were paying before.
Assessments are based on the real estate market in an area, and she noted there are sales happening in Leilani Estates.
Since the eruption, there have been nine sales in the neighborhood, three of which involved vacant land, including at least one parcel covered by lava.
The sales indicate there is some demand for properties, at least in upper Leilani, she said in an email, although the values are not what they were prior to the disaster. The lava-covered lot that sold won’t be used to set values.
Properties assessed at lower than $500 don’t pay a tax. It’s not clear yet how properties with homes that still exist but are isolated by the lava flows will be valued.
Email Tom Callis at tcallis@hawaiitribune-herald.com.