HONALO — Mayor Harry Kim, a self-described fiscal conservative, spent the afternoon in Kona explaining reasons behind tax hikes set to accompany Hawaii County’s budget for next fiscal year.
HONALO — Mayor Harry Kim, a self-described fiscal conservative, spent the afternoon in Kona explaining reasons behind tax hikes set to accompany Hawaii County’s budget for next fiscal year.
“I truly invite you to be very disturbed about our (tax) raises, but I do invite you to please inquire why, for an explanation,” Kim said to a group of Kona Mauka Rotary Club members at a Tuesday luncheon held at Teshima’s Restaurant.
One hike in question was a 6.5 percent property tax increase applicable to every category of ownership, save for affordable rental properties, with a couple of exemptions for senior citizens.
“One of the strongest values of Hawaii Island … is the recognition of senior citizens,” Kim said. “Respect your elders. Your taxes should also do that.”
The other notable tax increase the mayor wants to impose to balance his $491.2 million budget involves a 116 percent jump in the gas tax to be enacted in 2017, bringing the cost to motorists up from 8.8 cents per gallon to 19 cents per gallon.
That number will continue to increase over the following two years, topping out at 23 cents, though those proposals aren’t factored into the budget.
Rotary Club members seemed mostly understanding of Kim’s movement on taxes considering the county’s current financial position, much of which the mayor inherited from former administrations.
“I’m fiscally conservative as well, so I’d like to think we don’t need to raise taxes, but the reality is that we do need to in this case as I understand it,” said Adam Reugh, a financial advisor. “I’m in favor of a balanced budget … so long as the money is appropriated responsibly, which I believe in (Kim’s) case it will be and has been. Then, I’m in favor of it.”
Ken Obenski, another Rotary member, said the county’s property tax is really the only tax that isn’t regressive.
“In fact, it’d probably make sense if the tax was progressive,” he said. “If you can build a $34 million house, you can probably afford it.”
Lisa Folden, a realtor on Hawaii Island, said the relatively comfortable property tax level in Hawaii should allow for the increase without stemming interest in further real estate development and investment across the county.
She added, however, it seemed like Kim was relying too heavily on the county’s share of the transient accommodations tax (TAT), of which the county will receive $2 million less this year than last year.
The $17 million Hawaii Island will receive is still the county’s second highest source of revenue, even with the reduction.
Kim said when the TAT was created, the intent was to split 95 percent of it among the counties. He added that currently, the state Legislature in its “wisdom and greed” uses the TAT as its “cash cow,” distributing only 45 percent of it to county coffers.
The mayor said even that level of disbursement, if done appropriately, could have spared Hawaii County residents any tax hikes.
“If we were given just 18 percent of the 45 percent (given) to the counties, I wouldn’t have to raise $1 of tax to you,” he said. “Not $1.”
Another source of strain on the county is a 4 percent increase in union salaries statewide, something Kim said his administration voted against but lost.
“I stated to all the mayors, I stated to the governor, the unions all knew it …. that this administration would not support any raise,” Kim said.
Bond debt from previous administrations and the county’s obligation to retirement funds are also costs the county has no choice but to cover.
However, one question some in attendance felt the mayor has repeatedly glossed over involves what his administration is doing to create a more streamlined, efficient government.
In other words, what is Kim doing to manage expenditures he can control?
The mayor said Tuesday that almost every county department will see its budget decrease in the next fiscal year, beginning July 1. But the mayor also plans to add seven more people to the county payroll.
“I can defend every single expenditure with confidence as to why it was needed,” Kim said. “I’m not confident you will approve … but (I am confident) that there was a solid rationale for why we did it.”