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Honolulu City Council Approves Hotel Real Property Tax Hike, Budget Increases

Honolulu Hale/Creative Commons

The Honolulu City Council on Wednesday approved increases in property taxes for hotels/resorts and residential condos and houses over $1 million not used as primary residences -- all to help cover a $12.8 billion operating budget for the next fiscal year.

The council adopted multiple funding bills, including the 2019-2020 operating budget that amounts to a $375 million increase over this year's spending plan. A $1.1 billion capital budget was also approved, a boost of about $211 million over the current fiscal year.

The council split 5-4 in approving the property tax rate increase for hotels and resorts that would add $1 to the existing  rate of $12.90 per $1,000 in valuation. Investment condominium units and single-family homes in excess of $1 million that owners don't primarily live in would pay $1.50 more per $1,000 in valuation, or $10.50 per $1,000.

Acting Mayor Roy Amemiya Jr., stepping in for Kirk Caldwell who is out of state, said in a news release: "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.” 

Amemiya said the administration is "extremely grateful to the five City Council members that had the political courage to vote yes on increases," a reference to council members Ikaika Anderson, Tommy Waters, Joey Manahan, Brandon Elefante and Ron Menor who voted for the rate increases. 

The Hawai‘i Lodging and Tourism Association heavily opposed the hotel/resort property rate increase, which the group said will hurt the industry. Erna Baquiel, an employee at the Aston Waikiki Beach Hotel, expressed fears that she and many of her co-workers could be laid off in wake of higher taxes.

“Working most of my life at the hotel industry, I consider my co-workers and my employer as my family, and the hotel as my second home,” said Baquiel. “Raising the hotel taxes will affect job opportunities and eventually hurt my co-workers, and indefinitely change our lives.”

Voting in opposition to the tax increases were Heidi Tsuneyoshi, Kymberly Marcos Pine, Carol Fukunaka and Ann Kobayashi.

Pine, who is expected to run for mayor in 2020, says the city should look for places in the budget to save money rather than move to increase taxes. “I’m concerned that the philosophy of the administration to spend, spend, spend and raise taxes and raise fees on local people. And that is not sustainable,” she said.

Council member Waters who supported the rate hike, although he represents the Waikiki area, said the increase will help pay for the Honolulu rail system, the cost of which has grown to $9 billion.

“When it comes down to leaning on our visitors or leaning on our local residents to pay for this, I’m always going to side with the local residents,” Waters said.

The council also approved the operating and capital budgets for the rail system, including $25 million in city funds. The amount was required by the federal officials before they would agree to release more funds next year to help pay for the troubled 12-mile rail project.

Several constituents expressed concerns with money allocated to areas mentioned in the capital budget bill. Some of their opposition centered on improvements to infrastructure in Waianae, development plans for Waimanalo Beach Park, and proposed improvements to Ala Moana Beach Park.

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