LIHU‘E — Real estate values on the island are expected to drop, and that could look like $30 million in reduced revenue for the county as just another part of the fallout of the COVID-19 pandemic.
Mayor Derek Kawakami shared this projection with the County Council at its first budget meeting earlier this week.
This number is from the county Department of Finance Real Property Assessment Division, which is projecting a 20% drop in real estate taxes in fiscal year 2022.
Kawakami is taking a realistic approach to the county’s budget, explaining that the numbers submitted by department heads earlier this month were from a different socio-economic time.
“The COVID-19 pandemic has placed a number of new operational and financial considerations that did not exist two to three weeks ago,” Kawakami said. “The budget outlook at this present time does not look promising.”
In addition to property taxes, the state transient accommodations tax, which Kawakami said was expected to be about $14 million in county revenue, will be less now that tourism has come to a screeching halt. Kawakami is planning to submit a bill to revise the current year’s budget to reduce spending.
These are the talks the council will have in the coming weeks as they examine department budgets amid this global crisis.
The council is tasked with analyzing the budgets, putting an eye on what is truly necessary. This could look like not purchasing new vehicles for the county, not filling vacant positions, reducing overtime and putting a hold on infrastructure projects.
“We’re going to lose a lot of revenue,” council Chair Arryl Kaneshiro said. “A lot of those are going to affect the type of projects we can fund. So, there is going to be a lot of re-prioritization, a lot of cost-cutting on the admin side, with the new, submitted budget.”
In-person departmental budget reviews scheduled for now through early April have been canceled, and councilmembers will take a look at budgets individually. They will continue to follow the budget timeline, asking questions of department heads each day. Questions and answers will be posted to the county’s budget website.
The council is also looking at community-based development grants and urging departments to look at new federal grants as revenue sources.
Kawakami issued a presentation via video chat to the council. Earlier this month he shared his State of the County address on video.
“Never could I have imagined that today we would be delivering yet another video address to inform all of you that our proposed March budget, that our team has worked hard on for months, is no longer realistic,” Kawakami said. “These are dynamic times.”
In May, the mayor and his office will submit a supplemental budget that will look drastically different as more projections and revenue numbers become more concrete.
“We cannot move forward in a bubble and think the world will adjust to us,” Kawakami said. “We need to adjust to the world.”
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Sabrina Bodon, public safety and government reporter, can be reached at 245-0441 or sbodon@thegardenisland.com.
