Financial balancing act: Kim says higher taxes not an option to offset expected budget gap

As the March 1 deadline approaches for Mayor Harry Kim to submit his preliminary budget to the County Council, the administration is working feverishly trying to cover a roughly $12 million difference between anticipated revenue and anticipated expenses.

“We are looking at all options as we work to balance the budget,” said Deputy Finance Director Deanna Sako. “Many things are still being considered.”

Kim said Friday he wants to cover that difference without raising taxes. At the same time, he wants to help bridge the ever-widening gap between the haves and the have-nots. Kim said more than 90 percent of Ka‘u schoolchildren and more than 70 percent of Puna schoolchildren are on the free and reduced-cost lunch program for families in poverty.

“How can I raise taxes on these people?” he asked.

Last year’s budget was $462.7 million, a 5.5 percent increase from the prior year.

The county’s open space land fund, where 2 percent of property tax revenues are taken off the top to buy land for environmental and cultural protection, continues to be a frustration for Kim, who said the $4 million annually accounts for a third of his budget gap.

He’d rather spend the money on police and firefighters, he said.

Former Mayor Billy Kenoi and a former County Council were able to suspend the land fund during tough budget times, but it since has been set in the county charter, making it impossible to suspend except with a ballot initiative.

Kim got an earful Wednesday evening at the Ocean View Community Center, where a crowd lamented a shortage of police protection and a shortage of county amenities such as parks. He said an upcoming visit to Puna likely will be an encore.

According to Kim, most people on the island are one or two paychecks away from being homeless. As homelessness grows, there’s even more of a strain on county services, he said.

One small change could be to return to free Hele-On bus service, a program he started in his last term that was reversed under Kenoi and a former County Council. Kim said he hasn’t finalized a decision, as the budget is still up in the air.

“I’m still in the review,” Kim said. “I’m not sure of definitive actions we have to take.”

It costs the county $13 for each fixed-route rider each way, while riders pay $1 to $2, depending on their age, disability and whether they buy tickets in bulk. While eliminating the fare would have an only moderate impact on county finances, it could make a big difference for Puna commuters who spend $400 to $500 annually in gas to get to their jobs at Kohala resorts, said county Managing Director Wil Okabe.

Okabe was in Honolulu on Friday, meeting with state officials about such issues as collective bargaining for raises for civil servants and the rising burden counties shoulder for the employee retirement fund. State-level budget decisions such as what will be the counties’ share of the transient accommodations taxes collected on tourists and short-term residents also are factors in the county budget.

Even without a property tax increase, rising property values could bring in more revenue because property owners pay more based on the rising values of their property. It will be another couple of weeks before county officials have a good grasp of property values.

Property taxes are by far the biggest source of revenue for county government.

The county’s share of the transient accommodations tax is second. The county also brings in revenue from state and federal grants, interest and user fees.

The County Council will undertake a department-by-department analysis of the budget April 11-13 as the individual department chiefs come before them to explain their program budgets.

“We’re going to be cautious,” Okabe said. “We’re trying to give the best service for the money we have.”

Email Nancy Cook Lauer at ncook-lauer@westhawaiitoday.com.