LIHU‘E — The Kaua‘i County Council started the annual budget process on Wednesday by considering proposals put forward by Mayor Derek S.K. Kawakami.
The council received the initial budget bills from Kawakami this week — Proposed Draft Bills No. 2896 and 2897 — which both passed first reading on Wednesday. Each year, the mayor submits a proposed budget to the council, which reviews it in a series of department meetings, before voting to amend and approve in May.
The bills propose a $312 million operating budget and a $90 million capital improvement projects budget for fiscal year 2023-24.
In a submitted message to the council, Kawakami described the budget as “an effort that must reshape the county as an organization that is nimble, resilient, and empathetic to the ever-changing needs of our community and our people.”
In contrast to last year’s budget, which was focused on dealing with the fallout of the COVID-19 pandemic, the mayor said the fiscal year 2023-24 proposal “reflects a more footed position to shape deliberate policy on how our resources are obtained and how they are spent.”
Key to the proposal is shaping the way the island handles tourism.
“It’s clear our people want to see tourism-related and nonresident activities managed properly and those existing activities bearing more of the cost for our services on island given the impacts to our people,” wrote Kawakami. “I believe it is our job in this budget to set the tenor of how we deliver on this financial policy and be intentional about communicating a premium for paradise.”
The budget shoots for a benchmark of at least 60 percent of revenue coming from nonresident or transient-related tax sources.
Despite skyrocketing property values, the budget proposes to keep taxes stable for most Kaua‘i homeowners over the course of the next fiscal year.
The council considered Resolution No. 2023-33 from the mayor on Wednesday that would cut taxes 10 percent for properties in the Homestead and Residential tax classes — offsetting an identical 10 percent average increase in gross tax
valuations in those classes.
Under this measure, the tax rate for homesteads would drop from $3.05 to $2.75 per $1,000 of assessed value. The council has the power to amend these proposed rates and set the measure for a public hearing on May 10.
Conservative thinktank Grassroot Institute of Hawai‘’i submitted comments on the proposal, presenting a series of options for more substantial tax cuts, freezing revenues, and adding tax cuts to other tax classes like hotels and vacation rentals.
Council Chair Mel Rapozo, who will lead the budget process this year, suggested considering tax breaks for commercial properties.
“You have all these local small businesses, like Ishihara Market, that are slowly shutting down,” Rapozo said. “If there’s a year to provide relief to all of these local small businesses, this is the year to do it.”
He added that any additional tax breaks would mean cutbacks elsewhere in the budget.
“If we decide to lower rates, we need to find the cuts,” Rapozo said.
Through both the operating budget and capital improvement budget, the total cost of the budget will jump $90 million over the previous fiscal year. The budget is structurally balanced, meaning it doesn’t use general fund money for recurring expenditures.
About half of that budget increase comes in the form of one-time expenses in the capital improvement projects budget.
These expenses are largely focused on infrastructure, with nearly $7 million allocated for bridge upgrades and repairs, and millions more dedicated to various road improvements.
Some other notable expenses listed in the CIP budget are $2.6 million for new landfill development and engineering, $6.5 million to match state funding for Vindiha Stadium improvements and $1.5 million for improvements to the cart paths at Wailua Golf Course.
The departmental budget reviews begin Thursday morning and continue through April until decision-making in mid-May.
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Guthrie Scrimgeour, reporter, can be reached at 808-647-0329 or gscrimgeour@thegardenisland.com.
