The Honolulu City Council has approved a $5.2 billion city budget along with a new plan to increase sewer fees.
The council wrapped up its votes Wednesday night after a discussion that often centered around how it would fund billions of dollars of Oʻahu sewer infrastructure upgrades in the coming years.
Ultimately, the council approved a city budget about 10% bigger than the $4.7 billion budget passed last year.
It also finalized a six-year plan increasing sewer fees under Bill 60 that places a relatively greater burden on heavy water users.
The final plan was able to squeeze through the council via a 5-4 vote. It trimmed the City and County of Honolulu administration’s original proposal so residents wouldn’t have to face such high sewer rate increases.
But for nearly half the council, the plan wasn’t enough.
“This remains a heavy lift for many families,” said Councilmember Augie Tulba, who opposed the bill. “I encourage continued efforts to find additional ways to assist residents so that while we meet our infrastructure obligations, we do not lose sight of the very real financial challenges faced by our community members.”
A consent decree the city entered with the U.S. Environmental Protection Agency in 2010 requires $10.1 billion in sewer infrastructure upgrades by 2035. The administration has reached out to the EPA, hoping to clarify and possibly modify those requirements.
In the meantime, to pay for those projects, the city initially proposed a 10-year plan to increase sewer fees. The council trimmed that, and moved to a final plan that would lower the fees for those who conserve water, and charge more for heavy users.
The new sewer plan would kick in on Jan. 1, with annual increases of 6%, 7.5% and 8.5% for the first three years and then 9% for each of the last three years.
After that, the council plans to continue with necessary annual increases, according to Councilmember Tyler Dos Santos-Tam, who chairs the council’s Budget Committee.
The sewer plan was intertwined with the council’s budget discussions on Wednesday.
The council was able to pass its $1.3 billion capital improvement budget in Bill 23 relatively painlessly, but had to deliberate over its $3.9 billion operating budget in Bill 22 as it tried to find other ways to fund upcoming sewer projects to place less of the burden on residents.
Councilmembers considered moving money from the city’s general fund, in particular from salaries meant for vacant city positions. At one point, it identified about $25 million in long-term vacancies that could be set aside for the sewer projects.
There had been pushback on that idea, most vocally from the city Department of Budget and Fiscal Services Director Andy Kawano.
He said using general funds for the sewer projects would hurt the city’s bond rating, meaning that it would have to borrow money at a higher interest rate — costing the city in the long run.
Kawano added that the EPA agreement requires sewer projects to be paid for from the self-funding and dedicated sewer fund.
Still, Council Chair Tommy Waters, in a floor draft submitted Wednesday morning, proposed moving $19 million from the general fund to the sewer fund.
But he withdrew it following concerns about the funds for other efforts that would be lost, including park improvements and ambulances.
After the council passed the budget at around 9 p.m. Wednesday, Waters said the council “ran out of time” to come up with another solution.
“Today we ran out of time, but we have to keep thinking out of the box and push for what's best for our residents. I recognize that I was asking you all to do something bold, creative and ultimately difficult, but my attempt was rooted in trying to lower the cost of living for our residents,” he said.
The budget and sewer fee plan will go to Mayor Rick Blangiardi to be signed into law.
