All Oahu taxpayers will have more time to pay the bulk of their August tax bills under a plan unveiled by Mayor Kirk Caldwell on Wednesday.
“Instead of having to make a lump sum payment over six months in August, it can be paid over a longer period in four installments without penalty or interest,” Caldwell said.
Meanwhile, city officials have announced that they expect the next fiscal year 2021 budget to be hit by a $ 130 million shortfall due to the economic downturn caused by the pandemic, but said that ‘they had already made plans to deal with it.
City budget manager Nelson Koyanagi said businesses, residents and those in other property tax categories would be eligible for the one-time, interest-free deferral. They will receive “coupons” with their August bills, which will allow them to pay on August 20, September 20, October 20 and November 18.
All real estate owners experience some sort of economic hardship, so no evidence of a financial burden needs to be presented to get the deferral, Koyanagi said.
“If you are a taxpayer, you qualify,” he said.
Property taxes are the main source of income for the city. Landowners typically pay their taxes in two installments – in February and August.
The new plan doesn’t allow people to be forgiven for their property tax bills, and Caldwell and other officials have stressed the need for the city to maintain its revenue base.
Property taxes are “used to pay the salaries of police, firefighters and all other city employees. It is used to pay debt service on bonds issued by the city and for all expenses we incur to provide basic city services, ”Koyanagi said.
While there are no immediate plans to exclude landowners who do not pay their taxes, city ordinances allow it, Koyanagi said.
“But there is a process that you go through, and it’s not something that happens overnight,” he said. “We try to work with taxpayers to help them be up to date on their taxes… but after a certain point there is a possibility that there is a foreclosure.”
The plan does not need to be approved by council members, Koyanagi said.
Caldwell noted that council members deliberated on a proposal that would allow businesses affected by the coronavirus to defer the payment of their property taxes for an indefinite period.
He thanked board members Carol Fukunaga and Ann Kobayashi for pitching the original idea, but said his plan included deferral of payment for everyone.
Kobayashi said she liked Caldwell’s plan, but hopes he will consider providing grants to small businesses out of the planned $ 387 million in cash expected under the aid, relief and economic security program. from the federal government by $ 2.2 trillion.
“They can pay in installments, but if they don’t have the money… they can’t do anything,” Kobayashi said.
Caldwell said he will work with the Council’s new special committee on economic assistance and revitalization on how the city will spend the CARES money. Administration does not need Board approval to know how the money is to be spent.
“We are looking for ways to use CARES money to help small businesses,” the mayor said. “As the retail business (traders) opens next week, they’ll have to spend money on changes, and if they don’t have money to spend, how do they get them to can start making money? “
Caldwell Chief of Staff Gary Kurokawa said about 32% of CARES money, which is only to be spent on COVID-19, is for the needs of first responders.
As for the $ 130 million shortfall in next year’s $ 2.8 billion operating budget, Budget Council Chairman Joey Manahan said the city expects a revenue loss of several sources, including the motor vehicle weight tax and parking fees.
Koyanagi said his staff had already made cuts of around $ 135 million in various branches in the city in recent weeks. The Ministry of Transportation Services is taking a hit, including a reduction in funding for rail operations.
Asked after the meeting whether this reduction in the SDR budget was due to the city not anticipating that the first East Kapolei-to-Aloha Stadium segment of the $ 9.2 billion rail project would be ready to open by the As scheduled end of the year, city officials said they would not be able to answer that question on Wednesday.
Officials with the The Honolulu Rapid Transit Authority told council members last month it expected its own shortfall of around $ 80 million in construction funds due to lower than forecast dollars from state excise duties and hotel room taxes.
Koyanagi said funding for TheBus and HandiVan services was also being cut, but noted that an additional $ 91 million in CARES money the city receives can only be used for transportation-related costs. “So the bus and HandiVan services should not be affected,” he said. This money cannot be used for rail operations, he said.
Caldwell assured council members that the town would not be laying off any of its 10,000 or so employees because of the shortfall.