City's proposed $5.14B budget under Honolulu Council review

Yahoo

11-03-2025

The Honolulu City Council's budget hearings began Monday with an administrative overview of Mayor Rick Blangiardi's proposed $5.14 billion budget package for fiscal year 2026.
The city's new plan—which proposes a $3.93 billion operating budget and a $1.21 billion capital improvement program that, if adopted, begins July 1—will cover its costs without raising real property taxes, according to officials.
The latest spending plan is a more than 9 % increase over the city's current $4.7 billion budget, which the mayor officially signed and adopted in June.
Key city revenues were highlighted, including a projected $45.6 million increase in the city's real property tax revenue. Currently, those revenues amount to $1.72 billion but are expected to be at $1.77 billion in fiscal year 2026.
Those increases occurred due to changes in the assessed values for residential properties across Oahu, according to Andy Kawano, city Department of Budget and Fiscal Services director.
'The residential class assessed valuation was up only 1.4 %, and the Residential A classification was up over 5 %, ' he told the Council's Budget Committee. 'Those classes drive the increase in real property tax.'
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Under the city's long-term liabilities, Kawano noted $117 million is meant to fund the city's other post-employment benefit, or OPEB, activity. A portion of those costs will be funded via federal COVID-19 monies.
In recent months Honolulu Council and city officials pledged to repay eligible, unionized city workers employed during the pandemic 'temporary hazard pay '—compensation to employees who were temporarily exposed to unusually hazardous working conditions—in order to avoid legal entanglements.
To that end, Kawano noted negotiations 'to settle hazard pay ' wrapped for at least one city union. 'Our managing director recently reached agreement with SHOPO, and we're working with two other large unions as we speak—HGEA and UPW, ' he said.
Other long-term liabilities involve the over-$10 billion Skyline project expected to open for public service in Kakaako by 2031.
But Kawano said the rail's second of three segments—from Halawa, past the airport, to Middle Street—will open this year, likely by 'the October time frame.'
'With regard to rail operations and maintenance costs, our estimate for FY26 is $120.7 million, ' he added. 'The second segment going from the stadium to Middle Street … is estimated to be $31.6 million.'
Overall, Kawano noted, city departmental budgets will increase by $147 million.
Some of those include rising public transportation costs—for bus and rail—which are pegged at $48.9 million ; $39.1 million to fund Honolulu's green waste program and new wastewater billing system in sanitation ; and an increase in salaries due to overtime for public safety and staff recruitment at $34.2 million.
Kawano also asserted the city's next CIP budget targets $697.9 million for the construction of police, fire, ambulance and ocean safety facility improvements as well as upgrades to city-owned parks, streets and utilities.
At the meeting, Council members fielded a host of questions to the city budget director.
Andria Tupola queried how the city plans to generate more revenue to support its programs and services. 'Is there a strategy that you guys are implementing so that we can actually be able to break even at certain departments … so that we don't need to raise any taxes or fees ?' she asked.
Kawano replied that 'the city is bound by statute on where we can raise revenues.'
'Again, our primary source of revenue is real property tax, ' he said. 'We are in an economy right now where residents and businesses feel like they pay enough taxes. That's the feedback we get.'
'They either feel that they're paying enough or they shouldn't pay any more, ' he added. 'And certain groups actually feel that way—that they shouldn't be paying any property taxes. So that's the environment we live in, so we actually have very limited areas in which we can drive more revenue.'
Matt Weyer asked about the timeline for a pending city report over an empty-homes tax—one meant to penalize real-property owners who leave their Oahu residences vacant for extended periods.
In December and following hours of blistering public testimony largely in opposition to such a measure, Council Chair Tommy Waters garnered a full Council vote to postpone the latest version of EHT legislation—known as Bill 46—until a city-commissioned study on the matter could be completed.
As far as finalizing that study, Kawano said the city will provide an informational briefing on the EHT to the Council by late April with a final report to follow.
Meantime, Waters queried how the city plans to pay for a new solid-waste municipal landfill on Oahu.
On Dec. 10 the Blangiardi administration declared its intent to site the city's next dump on active farmland near Wahiawa owned by Dole Food Co. Hawaii.
The city's move comes as it faced a state-­imposed Dec. 31, 2024, deadline to find an alternate dump site, ahead of the planned closure of the 35-year-old Wai ­manalo Gulch Sanitary Landfill in Kapolei, in accordance with a 2019 decision and order by the state Land Use Commission.
That West Oahu dump is set to close in 2028, though the landfill will not reach full capacity until 2032, the city said.
Waters asked, 'Is there money in the budget for the new landfill ?'
Kawano noted $77 million is budgeted for the next garbage dump.
'So that budget line item is on the CIP side, but it's not cash-funded. If we do it, it would be bond-funded, ' he explained. 'And it's going to depend where we end up—whether or not we do an acquisition during the next two years to get things started.'
Kawano also claimed landfill funding—budgeted under the city Department of Environmental Services—relates to whether the city can get 'approvals in place ' and 'planning and design ' for the dump.
'But the complete development (and ) construction of the new landfill, if we can get there, will cost more than that, ' he added. 'We don't have a number yet.'
The Council is expected to review the budgets of individual city departments as well as the operating and capitol budgets for the Honolulu Authority for Rapid Transportation through much of this week.