Thousands of Hawaii residents could lose their jobs amid the coronavirus pandemic, but Honolulu property owners are still expected to pay their property taxes as usual.

If they don’t, the city may take their homes, the city’s budget director said on Thursday.

Councilwoman Kymberly Pine asked Nelson Koyanagi, the director of the Honolulu Department of Budget and Fiscal Services, how the city might be impacted by the outbreak of COVID-19. Economists at the University of Hawaii recently projected a loss of nearly 4,000 jobs as visitor spending drops.

Nelson Koyanagi Director of Budget and Fiscal Services discusses Caldwell's strategy on raising the $44 million for rail.
Nelson Koyanagi, Honolulu’s director of budget and fiscal services, expects city revenues to keep steady even in a coronavirus outbreak. Cory Lum/Civil Beat/2018

“What if people choose not to pay their property tax as they’re trying to balance so much?” Pine asked. 

“I hate to say this, but we have their property as collateral,” Koyanagi said. “If they don’t pay their taxes, then we foreclose on the property. They need to pay their taxes.” 

Asked for further comment, city spokesperson Brandi Higa said the budget director noted that the process of foreclosure can take two years or more.

“This is not something that happens as soon as the taxpayer is delinquent,” she said by email. “Also, the City does not look forward to foreclosing on properties but instead tries to work with delinquent taxpayers to get them current on their taxes.”

After the meeting, Pine said it would be wrong for the city to seize property from people who have suffered financially because of a public health crisis. Any property owner who can demonstrate that they were economically disadvantaged because of COVID-19 should be given leeway, she said.

“There are going to be people that aren’t going to be able to pay because they’re going to be losing their entire businesses because of the coronavirus,” said Pine, who is running for mayor.

Honolulu City Council Kymberly Pine.
Councilwoman Kymberly Pine said the city needs to do more to prepare for COVID-19 impacts. Cory Lum/Civil Beat

The Hawaii Council on Revenues warned yesterday that the state could lose out on $300 million in state revenue. Hawaii counts on general excise and transient accommodations taxes which are closely tied to tourism.

Koyanagi said he expects the city’s budget to keep steady because real property taxes are the city’s single greatest revenue source.

“Property is pretty steady,” he said. “It’s not like the state that, with GET and TAT, if the tourists don’t come, it goes down right away. Real property is more stable.”

The rail project, however, does depend on the GET and TAT for the majority of its $9 billion budget.

“If that goes down, then HART may not be able to collect as much as they would have,” Koyanagi said. “This is an issue.”

Pine asked administration officials if they’ve requested flexibility from the federal government regarding rail funding considering the circumstances.

Managing Director Roy Amemiya said the city will continue communication with Federal Transit Administration officials.

“The impact of coronavirus is on everybody’s mind, not just for our project but for many projects,” he said. 

Pine also worried that the coronavirus could reduce revenue from the city’s vehicle weight tax, which was expected to make up almost 5% of the city budget in fiscal year 2021, which begins July 1. According to Koyanagi, there shouldn’t be much of an impact because it only kicks in during registration.

It would have to be a lot of people not buying automobiles,” he said.

After the meeting, Pine said it’s “concerning that they’re not concerned.”

“Say you have four family members who live in a home and they all work in the hotel industry and all got laid off,” she said. “They’re not going to renew their vehicle if they don’t have the money. That line item is at risk of decreasing.”

As a result, Pine said council members will have to take a red pen to Mayor Kirk Caldwell’s budget proposal. For starters, she wants to reduce vacant positions and completely eliminate $43.6 million Caldwell wants in the capital improvement budget for a partial development of Blaisdell Center.

“That’s not a must-have item,” she said. “We’re going to have to put buffers in our budget.”

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