There were many who came out to testify against it, but in the end, the Honolulu City Council voted to increase real property taxes for certain classes. It was a close vote with 5 council members approving the hike.
One group who will be impacted is hotels and resorts. Those against the tax increase say there are ways to cut spending first.
Budget Chair Joey Manahan explained that the increases will apply to hotels and resorts, and condos and homes not occupied as an owner’s primary residence and valued at over $1 million.
The property tax rate on hotels and resorts will increase by a dollar, which would make it $13.90 per $1,000 of assessed value. Second homes are going up a $1.50, so the new rate would be $10.50 cents for any portion of the assessed value above a million dollars.
“These increases are again projected to result in revenue of approximately $17 million and $14 million respectively, Councilman Manahan.
In a statement, the city says, “The additional revenue will be used to remedy Honolulu’s unfunded healthcare and retirement liabilities, and to prepare us for future rail operations and maintenance.”
Manahan explains that operation and maintenance for rail are expected to cost $39 million next year for the first six months, and the year after that another $71 million.
“Given all that for us to maintain, all the core services the way they are, the way we are currently providing them without having to tax residents and homeowners this is the only way that we can come up with those revenues,” said Manahan.
Those against the increase say the city needs to cut spending, not raise taxes.
“I’ve pointed out numerous things where they can cut. There’s fat in every budget, I know that. I was a former mayor. Secondly, I said they can dip into their reserve fund,” said Mufi Hannemann of Hawaii Lodging and Tourism Association. “Reign in spending. Live within your means and do the right thing.”
Hannemann also claims that this comes at a time when tourism is slowing down, as they see hotel occupancy decreasing. The property tax increases will start on July 1st of this year.