KAILUA-KONA — As the budget process winds down, Mayor Harry Kim is spending considerable time and effort meeting with various groups across the island to discuss the finer points of his office’s proposed $491.2 million budget for the fiscal year beginning July 1.
Kim was joined by several of his cabinet members in one such an endeavor Thursday night at a Community Enterprises forum in Kailua-Kona. Much of the discussion at the forum was focused on choices the county did or didn’t make to address the nearly $20 million budget shortfall that necessitated a nearly universal 6.5 percent hike in real property taxes across Hawaii Island, sparing only affordable rental properties.
Deputy Director of Finance Deanna Sako said the administration considered several options including hiring freezes, layoffs, furloughing state employees not involved in public safety, cutting vacant positions, fee increases, closing transfer stations and reducing maintenance and facilities.
“In the end, it was a combination of all (that),” she said. “But mostly, it ended up being raising real property taxes.”
The tax hikes prompted several questions from community members in attendance, some of which were aimed specifically at proposed tax breaks for seniors, one when they hit the age of 75 and another at 80. Breaks already exist at the ages of 60 and 70. Sako said the proposed tax exemptions cost the county roughly $450,000 in lost revenue.
Discussion also revolved around the increase of the minimum property tax from $100 to $200, the second such hike in the last two decades.
Some questioned whether that was enough of an increase on the roughly 35,000 properties countywide that qualify — or about 25 percent of the county’s property tax base — as it leaves the lion’s share of the tax burden to the other 75 percent of homeowners, many of whom live in West Hawaii. Property taxes currently account for more than 70 percent of county revenue.
Rates are determined exclusively by property values, and Sako explained regulations on the assessment process implement a 3 percent cap on yearly valuation increases to keep the tax burden from becoming overly undue.
As to eliminating vacant unfunded positions as a pathway to cutting expenditures, Sako said those options were examined on a case-by-case basis. She added that some positions were funded for only portions of the upcoming fiscal year based on when the corresponding departments felt they could fill the open jobs.
“There are some (vacant unfunded positions),” Sako said. “If we talk about non-public safety positions, it’s probably (costing the county) between $1-$2 million.”
Another suggestion was increasing user fees for county assets such as the Hilo Municipal Golf Course, which offers low fees and operated last fiscal year at a deficit of roughly $650,000. Another recreational site — the Panaewa Rainforest Zoo, which is free to the public — was also mentioned.
Director of Parks and Recreation Charmaine Kamaka said the county is not considering fees for the zoo, as it would hurt less fortunate populations. She left open the possibility of increased user fees at the golf course.
“We’ve been in office six months,” she said. “We may consider that.”
The mayor stood up for the current paradigm of user fees.
“I love the fact that most of our parks are free,” said Kim, adding that swimming pools, transfer stations and other high-usage sites are also free. “This is something I think the people have to decide. I believe the system we have now is a good one.”
The wide-ranging, two-hour discussion eventually traversed down the path of whether the county government has grown too large for the citizens who support it to afford.
Forum moderator Sherry Bracken noted the county budget increased by $228 million between 2000-08. From 2008-16, it jumped by another $60 million.
It also increased this year by $28 million, although a considerable portion of that can be attributed to the state government’s decision to raise salaries statewide by 4 percent — something to which Kim was outspokenly opposed.
“I’m proud of our county government,” he said. “I believe that a user fee for everything is not a good thing. I support the exemptions for seniors. I support the agricultural tax breaks. … If the community feels that your county government is too big and not affordable, then you will make your viewpoint known to the county council and the administration.”
Also discussed Thursday was Kim’s proposed gas tax hike, which could go a long way toward helping the battle of leveling expenditures with revenues — a stipulation mandated by the county charter.
The 116 percent gas tax increase, which would be enacted within the next fiscal year, would bump the tax per 8.8 cents per gallon to 19 cents. That number would rise to 23 cents over the following two years.
The hike is not currently factored into the revenue portion of the budget as the state is responsible for its implementation and collection on behalf of the county.
“It usually takes (the state) six months or more,” Sako said. “So if the fuel tax increases pass, we’ll then work it out with the state. When they tell us what month they can implement it, we’ll go back into council with a budget amendment at that time.”
The next county council budget hearing is scheduled for June 5, after which the council has until the middle of the month to approve the mayor’s proposal or send him a revised budget. Kim will then have until the end of June to veto or sign the budget into law.
