New Honolulu revenue boosts Mayor Rick Blangiardi’s city budget

Honolulu Mayor Rick Blangiardi’s second annual State of the City address, slated to be delivered this morning, is expected to lay out top priorities that include more money for police and a focus on homelessness and affordable housing.

Due to an increase in revenue from property taxes and a new county hotel tax, Blan­giardi’s budget proposal, which is now before the City Council, would boost the city’s ope­rating budget by 14% without raising fees or increasing property tax rates.

The $3.3 billion proposed overall budget would implement a $420 million increase to the operating budget over last year’s funding but decrease the capital improvement budget for infrastructure projects by $609 million for the upcoming fiscal year, which begins July 1.

The climb in city revenues is expected from an approximately 9% increase in real property valuations and a new 3% transient accommodations tax implemented in December. The city expects the new hotel tax will bring in about $86 million, with about $50 million going to the general fund.

The rest of the TAT revenue is to be split between the rail project and a special fund for natural resources.

“Our top priorities start off with homelessness, they start off with affordable housing,” Blangiardi said last week during a City Council briefing on his proposed budget.

“We’re also very committed to working on safety … first responders — the budgets that go out towards that are tremendous. We have big infrastructure needs … and we’re also very interested in helping our kupuna,” he said.

Among the allocations to city departments focused on first responder services, the Honolulu Police Department is slated to get the largest increase in funding: about $12 million, according to Blangiardi’s proposal.

The Honolulu Fire Department would see an increase of about $720,000, while funding for Emergency Medical Services would drop by about $3.5 million.

Also, the two key city departments that address homelessness would see budget cuts. Funding for the Office of Housing and the Department of Community Services would drop by 22.54% and 8%, respectively.

Addressing the matter on Friday’s Honolulu Star-Advertiser “Spotlight Hawaii” livestream program, City Council Chair Tommy Waters said he’s “really concerned” about the cut to Community Services because “this is the department that deals with homeless folks.”

He added, “There’s homeless folks living in the doorways in Kaimuki, and, by the way, this is happening everywhere, from Hawaii Kai to Haleiwa. … When we’re cutting their budget, that concerns me a great deal.”

Some major expenditures within the proposed operating budget include $11.5 million for the city’s Housing First initiative, $1.5 million for the Hale Mauliola Housing Navigation Center at Sand Island and $1 million for Punawai Rest Stop in Iwilei.

Testifying at a City Council budget briefing last week, Office of Housing Director Trish La Chica said that 1 of 4 people being hired as full-time employees on her staff will be dedicated to seeking outside funding beyond the city, such as federal grants. She also emphasized that the Office of Housing is more of a policy-making agency rather than an on-the-ground provider.

During the same briefing, Blangiardi said a housing plan the Council had requested during the last budget cycle in 2021 would be available soon.

“I have a lot of confidence in that we’ll come to you with a very, very good plan,” Blangiardi said.

He described the ongoing effort as his administration’s “top priority from the standpoint of the need. The need is so great and we’re so behind, and it’s been years and decades in the making.”

The proposed capital improvement budget includes $7.2 million for an Affordable Housing Strategic Development Program focused on renovating or developing housing for low-income households to be managed by both city and private developers.

Waters pointed out that although the Council budgeted $170 million in 2021 to acquire land and build affordable housing on city property, that directive has stalled.

“I was really sad to hear that the Department of Land Management is not using that money. They don’t really have any plans in the future to use the bulk of that money,” Waters said during the “Spotlight” program.

“The Council can only do so much. We can make a law, appropriate money. But ultimately, if the departments aren’t going to use it, that’s a problem to me.”

The proposed budget gives the Land Management Department an increase of about $112,000.

Among all Honolulu Hale departments, Transportation Services would receive the largest dollar-figure increase to its budget: a bump of about $61 million. The Department of Design and Construction would see the largest-percentage hike: a 28% increase totaling about $4.97 million.

The Council must pass a budget by July 1. If the panel is unable to pass a revised budget by June 15, the mayor’s proposed budget will be automatically enacted.

Additionally, an issue that is still being debated between the Council and Blangiardi administration is the use of federal American Rescue Plan Act funding, which was allocated to help mitigate the public health and economic impact of the COVID-19 pandemic.

The city was awarded $386 million in ARPA funding and received the first half in July. It is expected the receive the second half in May. So far, the city has spent $15.5 million on modernizing city operations and providing community and economic support. However, it is not yet clear what the process will be to determine how the rest of the money will be used.

During the past budgeting cycle, the Council earmarked about $28 million in ARPA spending, mostly for homeless and housing services.

The mayor’s State of the City address will be livestreamed at 11 a.m. on his Facebook page and Olelo Channel 49.