FOR IMMEDIATE RELEASE                               February 28, 2007

Release No. M-20-07

MAYOR CALLS FOR $376 HOMEOWNER TAX CREDIT

Hannemann submits ‘lean, no-frills’ FY2008 budget proposal to City Council

            Mayor Mufi Hannemann today proposed a 2008 City budget that includes a $376 property tax discount for homeowners, $10 million to double the City’s fiscal stability reserve fund and an accelerated program of sewer improvements.

            “This lean, no-frills budget provides significant tax relief and continues our emphasis on fiscal prudence and accountability,” said Hannemann. “The budget continues our efforts to get the City’s sewers and roads back up to snuff. It also provides for new initiatives for recycling and in our multimodal transportation system, including a fixed guideway, commuter ferry and bicycle paths.”

            Hannemann stressed that his administration has saved taxpayers millions of dollars by  cutting costs, generating additional revenue, obtaining grants and fostering public-private partnerships – everything from leveraging $5 million in City funds to save all of Waimea Valley to setting rules for Kuhio Beach surfboard rentals that will generate $208,000 a year, more than triple the annual average of $60,000.

            “We’re not just collecting money, we’re saving it,” said Hannemann.

            Other examples include:

·       The City will eliminate $6 million to $10 million from its books in construction projects that have had no activity for more than six years.

·       The Department of Planning and Permitting collected $163,572 in building permit fees over the past year with its HonLine service, which allows certain kinds of building permits to be applied for and granted over the Internet. More than 1,600 permits have been issued by HonLine in less than a year, saving more than 1,200 staff hours and allowing the department to take in an additional 927 permit applications.

·       Collecting $219,554 in fees for “deadbeat” permits, which were reviewed and ready to be issued, but had not been paid for. A campaign to target deadbeat permits closed 133 of the 725 that were lingering last year, generating that additional capital.  

·       Energy-conserving improvements to Kapolei Hale, the Fasi Municipal Building and the Alapai Police Station save $550,000 a year in electricity costs. The Honolulu Fire Department has installed solar heating and other improvements that save another $10,000 a year.

·       The Department of Facility Maintenance Division of Automotive Equipment Service switched the City’s diesel fleet to biodiesel, resulting in a saving of $178,077 through February. The savings this fiscal year is projected to exceed $342,000.

·       The Department of Budget and Fiscal Services Treasury Division saved taxpayers $600,000 by capitalizing on inefficiencies in the refunding escrow from a 2004 bond issue.

·       The Customer Services Department revised towing contracts for abandoned vehicles to save taxpayers $850,000 next fiscal year and established the Koolau Driver Licensing Center for $140,000 less than was budgeted.  The department also obtained a two-year extension on a lease for its central driver licensing office that averts a $600,000 move and the resulting disruption.

            “We have an ongoing effort to save money and generate revenue,” said Hannemann. “It’s headed by the deputy managing director and our Performance Management Office. People should know we’re very careful about how their dollars are spent. We’re working at it assiduously.”

            The mayor is proposing the one-time property tax discount of $376 for homeowners, almost twice the discount of $200 that the City gave homeowners during the current fiscal year to relieve some of the burden of rising property values and taxes. This is something that has the support of the City Council, he said. In addition to offering the $200 discount again next fiscal year, the mayor is tacking on another $176, which reflects the average home’s savings if the City had a homeowners classification for property that were taxed at a rate of $3.25 per $1,000 of net assessed valuation. (Residential and apartment property is currently taxed at a rate of $3.59 per $1,000 of net assessed valuation.)

            “We’re proposing this credit to ease the burden placed on homeowners by increased property values,” said Hannemann. “We estimate this $376 tax discount will return $53 million to taxpayers.”

            “We will also ask the City Council again to create a homeowners tax classification, as the other three counties have done, in order to relieve the tax burden on owner-occupants,” he said. “I understand Council members Kobayashi and Dela Cruz are also calling for such a change.”

            The mayor noted that the budget also provides for a one-time $150 payment to low-income renters, a proposal he announced earlier this month, to give the neediest renters direct relief from the effects of rising property taxes. Council members Marshall and Kobayashi have indicated their support for this type of assistance.

            Hannemann is also proposing  to lower the tax rate for agricultural land from the current $8.57 to $5.70 per $1,000 of net assessed value as a way to encourage production and distribution of locally grown food and to protect farmlands.  He’s also proposing the $5.70 rate for preservation and unimproved residential land, which are currently taxed at $9.57 and $5.72 per $1,000 of net assessed valuation, respectively.

            In response to the Mayor’s Tax Policy Review Committee recommendation that the City consolidate tax rates and to Council Budget Chairman Todd Apo’s proposal for more equitable distribution of the tax burden, Hannemann also is proposing an increase in the tax rate for commercial, industrial and hotel/resort property from the current $11.97 to $12.50 per $1,000 of net assessed valuation.

            For fiscal year 2008, Hannemann is proposing an operating budget of $1.636 billion, an increase of 9.7 percent over this year, and a capital improvements budget of $724 million, 6.4 percent more than this year. The City Charter requires the mayor to submit a budget to the City Council by March 2 each year. The Council has until June 15 to enact the budget ordinances and set the property tax rates for the next fiscal year, which runs from July to the following June 30.

            The highlights include:

·       $351 million in sewer work. This is almost half of the entire proposed capital improvements budget. Some of this is part of the program the mayor unveiled two years ago, to make up for years of neglect by his predecessors. As he mentioned in his State of the City speech last week, even more work is needed now. The Waikiki sewage spill last March provided ample evidence for City officials to begin an accelerated program of upgrading its infrastructure, including six critical force mains. This will require raising sewer fees even more than initially planned. In 2005, the City began a series of six annual increases in sewer fees. Increases of 25 percent and 10 percent have already been implemented, and four years of 10 percent increases were scheduled. However, Hannemann said, the accelerated work will require additional increases of 15 percent next fiscal year and 8 percent the following two fiscal years and 5 percent in FY 2011.

·       Recycling. $1 million is in the budget to begin work on the curbside recycling program that the mayor announced in last week’s speech. Specifics of the program will be worked out with the community, and an islandwide series of meetings is scheduled for April and early May. The initial proposal is to change the city’s free, twice-a-week collection. General trash would be picked up once a week. The second pickup each week would be either green waste or “mixed recyclables” such as beverage containers, paper and cardboard. Under the initial proposal, those who want a second weekly pickup of trash would pay $10 a month.

·       $40 million for rehabilitation of streets and $3.3 million for filling potholes and “first aid” repairs.

·       Fixed guideway. Hannemann proposes creating a new transit division of 35 people that would temporarily be part of the Department of Transportation Services. This is only part of the mayor’s multimodal transportation system for Oahu. The budget includes $85 million for the preliminary engineering and environmental impact statement for the project, to be funded with federal funds and revenue from the general excise tax surcharge.   

·       Creation of a 12-person office of transit-oriented development in the Department of Planning and Permitting to manage land-use issues related to transit.

·       $1 million for commuter ferry. The service will begin this summer, carrying commuters from Kalaeloa to Aloha Tower and back each day.

·       $25.3 million to acquire 30 hybrid diesel-electric buses and 20 Handivans.

·       $17 million to complete the Middle Street Intermodal Center.

·       $1 million for Honolulu Bicycle Master Plan and other bicycle projects.

·       Funding for the Department of Emergency Management, which replaces the Oahu Civil Defense Agency.

·       $5.5 million for 89 new sedans and 30 motorcycles for the Honolulu Police Department; $2 million for police station building improvements and $1.8 million for indoor firing range.

·       $3.3 million for three fire engines, one aerial truck, a helicopter tender and a tanker; $2 million to continue upgrading fire houses.

·       Place $10 million in the fiscal stability fund, doubling the sum available for the City to use in specific emergency or crisis situations. 

·       $2 million for a Waianae community benefits package, similar to this year’s effort.

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Contact:

            Bill Brennan, 527-6928

            Mark Matsunaga, 527-5767