Committee supports $604M county budget

WAILUKU – After nearly six weeks of deliberations and a clash between Mayor Alan Arakawa and County Council budget committee Chairman Mike White, the council budget committee Monday recommended approval of a $604 million county budget, which includes lower property tax rates but is 8 percent more than the current fiscal budget.

The council committee consisting of all nine council members sent the measure to the full council for two readings on an 8-0 vote, with Council Member Bob Carroll excused. First reading on the budget plan is scheduled for May 27. The council must pass the budget by June 10.

The proposed budget reduces property taxes about 3.1 percent across the board and includes no increases in trash pickup and tipping fees. The proposed budget also boosts funding to most nonprofit agencies and trims county operational costs and expansion positions.

The budget passed by the committee for the fiscal year that begins July 1 is 3 percent or $18.5 million less than Arakawa’s proposed budget of $623 million.

“I’m comfortable with what we did,” White said after the vote Monday.

Members met in a rare Saturday session to hammer out the budget proposal, wrapping up long days and nights of meetings and hours of testimony by the public and officials in Arakawa’s administration.

While the budget proposal trims back Arakawa’s plan by cutting proposed expansion positions and reducing overtime pay in some departments, White said the total is still higher than the current year budget by $45 million. He explained that much of the increases were due to higher negotiated contract agreements with unions.

“The mayor did a good job overall on the budget,” White said, adding that the committee put its focus on different areas than the mayor, including an emphasis on improving economic development.

In a statement Monday afternoon, Arakawa noted that the committee’s budget reflects only a small adjustment to his proposed budget.

“We appreciate the efforts of committee members over these last several days to pass a more responsible budget, one that takes into consideration the needs of the community and concerns brought up by the public and the departments,” Arakawa added.

Some expansion and vacant positions that initially were cut by White were restored by the committee. Some equipment funding requests, including from the Fire Department, also were put back into the budget.

Arakawa was not totally satisfied with the changes. He still had concerns and noted that he would have liked to see:

* More funding for upgrades to parks and for repairs to fire and other county buildings.

* Funding for capital improvement projects, including Public Works baseyard improvements in Makawao and Lahaina and planning and design for a consolidated baseyard and future regional park in Central Maui. All were included in the mayor’s budget.

*Restoration of new positions either mandated by charter amendments or to improve efficiency, including positions at satellite motor vehicle and licensing offices, parks security officers and staff to increase environmental protection.

“The administration will do our best with the resources provided and continue to provide the best level of public service possible for our community,” Arakawa said while thanking the committee for its work.

“I’m thankful that it’s over,” Council Chairwoman Gladys Baisa said after Monday’s meeting. “It’s been a long hard budget session and a very difficult session, because we had to make some really tough cuts to avoid tax and fee increases and, in fact, we were able to make cuts.”

The state Legislature’s decision to raise – but not lift – the cap on the transient accommodations tax brought in less money than expected, Baisa said. The decision by state lawmakers to raise the $93 million cap to $103 million brought the county another $2.2 million, but if the cap had been lifted the mayor expected another $17 million.

In his initial budget presented in March, Arakawa proposed a 6.5 percent across-the-board property tax increase, adding that if the TAT cap was lifted there would be no need for the property tax hikes. In the wake of the Legislature’s decision to raise but not lift the cap, Arakawa urged council members to not raise property taxes and to engage in some “creative cuts.”

Baisa also thanked White for his “leadership and information” during the budget session as well as the county administration and departments who “compromised” with the committee.

“My only concern is that I would hope that everyone will be able to live within the reduced budget, without any harmful impact in our community,” Baisa said.

She explained that the loss of expansion positions and the cutting of vacant positions could result in slower service in those departments.

“But (overall) we are trying to be fiscally responsible,” she said. “We heard the public. The public says ‘don’t raise taxes’ and that’s what we did.”

The property tax rates as proposed by the committee follow (values are per $1,000 of net taxable assessed valuation; the first dollar amount reflects current rates, the second amount is the proposed rate):

Residential, $5.75 to $5.57; apartment, $6.40 to $6.20; commercial, $7.05 to $6.83; industrial, $7.30 to $7.07; agricultural, $6.05 to $5.86; conservation, $6.25 to $6.06; hotel and resort, $9.40 to $9.11; time share, $15.55 to $15.07; homeowner, $2.87 to $2.78; and commercialized residential from $4.60 to $4.46.

Arakawa pointed out that while property taxes will decrease and benefit all taxpayers, “it seems to do more for the hotel industry than the average resident,” a possible dig at White, who is general manager of the Ka’anapali Beach Hotel. The mayor said that under the committee’s version of the budget, total property tax revenues from hotels will decline nearly $8 million compared to the mayor’s budget, while homeowner property tax revenues will decline only $2.1 million with the same comparison.

White’s office explained that the difference lies in White’s across-the-board percentage cut, with higher hotels rates receiving a larger raw cut than homeowner rates; the higher value of hotel properties; and the homeowner exemption that lowers property values for tax purposes.

White maintained through the process that as valuations decreased, property taxes were increased to maintain revenues. With valuations currently on the rise, he said that property tax rates should be decreasing.

Under the council’s proposed budget, property taxes will bring in nearly $238 million in the next fiscal year – an increase of about 7 percent over the current year’s take of $223 million.

Under Arakawa’s original proposal with 6.5 percent across-the-board increases, the county would have brought in nearly $260 million in property taxes next fiscal year – a 16.6 percent increase over the current fiscal year.

White noted other highlights in the committee’s budget:

* $10 million for countywide mainline and water infrastructure improvements, which will assist in providing new water meters Upcountry.

* A 3 percent across-the-board increase for most nonprofit groups over current appropriations.

* Nearly $17 million for a proposed gymnasium at the South Maui Community Park that will be developed as a multipurpose center.

* $500,000 for the Lanai Community Health Center facility.

* Melissa Tanji can be reached at