Hawaii County Council adopts 2024-25 budget after scaling back proposed property tax cut

The Hawaii County Council on May 30 adopted the county's fiscal 2024-25 operating and capital budgets and approved a scaled-back property-tax reduction that county leaders said balanced relief for homeowners with financial prudence.

Vice Chair Ray Nava's original resolution to cut homeowner and affordable-rental real property tax rates to $5.75 per $1,000 — a 40-cent drop from the current $6.15 rate — failed on a 4-5 roll call after extended questioning about impacts to the county's unassigned fund balance and potential effects on its bond rating. Nava had told the council that the $5.75 rate would translate into roughly $40 less per $100,000 in assessed value and, if adopted as initially proposed, would reduce property-tax revenue by roughly $22.7 million compared with current collections.

Finance Director Diane Nakagawa and real property tax staff told council members they had prepared estimates of revenue and the distributional impacts of the options before the body. Nakagawa told the council the administration's budget had assumed a smaller, 20-cent per $1,000 reduction (to $5.95), and she warned that dipping too far into reserves could lower the county's bond rating. "We want to make sure we're prepared for anything that comes our way," Nakagawa said during the discussion.

After the initial vote failed, the council moved to reconsider and then amended the resolution to set the homeowner and affordable-rental classes at $5.95 per $1,000 — the figure used in the mayor's operating budget. That amendment passed and the amended resolution was approved by an 8-0 vote (one member excused). Vice Chair Nava framed the compromise as the option most consistent with the administration's assumptions and said it allowed the council to deliver tax relief while keeping the overall budget balanced.

With revenue assumptions aligned to the $5.95 rate, the council approved Bill 136 Draft 3, the county's operating budget for the coming fiscal year, which includes estimated revenues and appropriations of $921,068,024. The council also adopted the capital-improvement (CIP) bill, Bill 137 Draft 3, which lists 67 projects totaling $531,335,000. Both measures passed after a series of amendments and recorded roll-call votes.

Members who opposed deeper cuts cited concerns that a larger reduction would push the county's reserve ratio below levels rating agencies favor. Council member Ashley Kirkwitz said she was "very nervous" about falling below 10 percent and noted the county had recently undergone a bond-rating review in which reserves were scrutinized. Supporters of reduction, including Council member Evans, argued that putting cash back into residents' hands could help the local economy, particularly if tourist numbers soften.

The council recorded final adoption votes for the operating budget and the CIP package after approving a set of budget adjustments that used the $2.6 million difference tied to the $5.95 assumption to restore items previously added at first reading and to allocate funding for departmental needs. Those adjustments included a deposit into the budget stabilization fund and targeted operating increases the council described as intended to avoid program cuts.

The council's action sets the tax rates and the budget framework before the June 20 statutory deadline for adopting rates and the June 30 deadline for adopting a budget. Council and administration officials said they would monitor revenues and expenditures closely in the coming months and that any further adjustments would follow the procedures that govern rate-setting and budget amendments.

The council adjourned at 1:37 p.m.