Mayor Mitch Roth submitted his final budget to the Hawaiʻi County Council this afternoon, proposing reduced tax rates on nearly all real property tax classes. The final budget reflects an $89.8 million increase from the draft budget he submitted to Council in March. The increase is predominantly due to grant revenue and includes funding to tackle some of Mayor Roth’s priority initiatives like affordable housing, sustainability, and homelessness. Other reasons for the increase include employee fringe benefits and a drastic rise in utility costs.
“We have seen our residents and on-island businesses struggle through the pandemic, and we are committed to doing all we can to ensure they bounce back stronger than ever,” said Mayor Mitch Roth. “Our communities have been more resilient because of the work of our small businesses, who never once wavered, and providing them a small reduction in real property tax in the coming fiscal year is the least we can do to help them recover cost from a rough two years. We hope the Council will agree with our suggested rates and join us in uplifting those who have uplifted us.”
The budget also includes necessary County improvements such as a new engine for our fire helicopter to ensure community and employee safety, adding positions to provide better and more responsive services, and improving the reliability and safety of our critical systems and data. The Administration has also committed to innovative solutions for long-term success, such as converting the County fleet to hybrid and clean energy vehicles, taking care of our facilities and parks, and increasing grant funding for recycling.
“This proposed budget represents our departments’ best efforts to meet our residents’ needs quickly and responsibly while striving to maintain the level of services our residents deserve,” continued Mayor Roth.
Proposed Real Property Tax Rate Changes
Real property tax projected revenue was prepared using the following proposed tax rates.
Proposed Real Property Tax Rates for FY 2022-23
| Property Class | Current Rates/$1,000 | Proposed Rates/$1,000 |
| Affordable Rental | $6.15 | $6.10 |
| Residential | $11.10 | $11.10 |
| Residential Tier Two | $13.60 | $13.50 |
| Apartment | $11.70 | $11.10 |
| Commercial | $10.70 | $10.50 |
| Industrial | $10.70 | $10.50 |
| Agriculture | $9.35 | $9.10 |
| Conservation | $11.55 | $11.10 |
| Hotel & Resort | $11.55 | $11.10 |
| Homeowners | $6.15 | $6.10 |
The proposed rate changes reflect an almost across-the-board reduction. Understanding that a sustainable economy relies on the success of all sectors, from residents to businesses, we offer the following reasoning for the proposed rate reductions:
Apartment: The rate for the apartment class is being proposed to match the residential rate since this classification includes multifamily residential units, primarily apartments, and condominiums.
Residential: The residential tier two rate is being proposed to decrease slightly, and the amount included in the Homelessness budget was based on 75 percent of the revenues calculated using this rate.
Commercial and Industrial: Commercial and industrial properties have seen significant value increases, and these businesses aided our island community during the recent pandemic; now, it is our turn to help them recover.
Agriculture: Our agriculture class allowed us to be more self-sufficient during the pandemic and provided much-needed food for our residents. We need to continue to support this classification as the agricultural industry remains vital to our island’s future.
Hotels, Resorts, and Conservation: The hotel and resorts and the conservation class are also being proposed to decrease for the current year to assist them in recovery as they experienced a significant reduction in revenues during the pandemic.
Homeowner and Affordable Rental: We recognize that all of our residents have seen their cost-of-living increase, so the homeowner and affordable rental classifications are also being proposed to have a slight reduction. These classifications are protected by a three percent cap which limits their increase in market value.
The residential rate is the only rate remaining unchanged. This classification consists primarily of second homes and investment properties and includes many short-term vacation rentals.
While setting these rates, we kept in mind the impact these rate reductions could have on our federal funding. The rate reductions are justified as they are offset by the increase in real property tax values.