Mayor Mufi Hannemann yesterday allowed the city's $1.8 billion operating budget to become law without his signature, triggering a series of increases in everything from property taxes to vehicle registration fees, bus fares to Waikiki parking rates.

Hannemann said he is still unhappy that the City Council passed a budget plan that does not include a tax credit for homeowners, as he had originally proposed.

"Part of being in government is to be compassionate and understanding of the most vulnerable parts of our population," he said.

The mayor said he would have vetoed the $3.42 per $1,000 valuation for residential property taxes that was approved by the council but was told by city attorneys that he could not veto a resolution.

The mayor also renewed an earlier call for the council to pass a bill creating a homeowners property tax classification so that owner-occupants can be taxed at a different rate than other residential property owners.

Yesterday was the deadline for Hannemann to act on the budget.

The budget is only 0.28 percent larger than the budget for the fiscal year that ends Tuesday, yet includes hikes in various fees and taxes to meet anticipated losses in revenues and allow major city services to continue, the administration said in its original submittal in March.

Hannemann said he dislikes the council tax plan for residential property owners, which increases the tax rate from $3.29 to $3.42 per $1,000 of valuation and does not provide a tax credit.

The mayor had been supporting a residential tax rate of $3.59 per $1,000 valuation with an owner-occupant tax credit of $150.

People will pay more for other city services and programs come Wednesday, the first day of the 2009-2010 fiscal year.

The adult bus fare will go from $2 to $2.25, then jump to $2.50 on July 1, 2010. The adult monthly bus pass will go from $40 to $50 Wednesday, then to $60 the following year.

Parking fees at the Honolulu Zoo will go to $1 an hour, up from 25 cents, beginning Wednesday. Rates along Kalakaua Avenue in front of Kapi'olani Park will go from 25 cents to 50 cents an hour. The administration initially proposed going to $1.50 an hour.

Golfers will pay more to play at municipal courses, and admission fees to Hanauma Bay Nature Preserve and the Honolulu Zoo will rise.

The vehicle weight tax will rise from 3 cents to 4 cents per pound on Jan. 1, 2010, and then to 5 cents per pound on Jan. 1, 2011.

$147M SHORTFALL

Hannemann said city lawyers told him he could not veto the tax rate plan because it was changed via a resolution. He said he will introduce legislation requiring that the tax rate be changed only through a bill, which would give the mayor a chance to veto it.

By passing a tax rate plan as a floor amendment, the council did not give the public time to examine and testify on it, he said.

Council Chairman Todd Apo, however, said he, Budget Chairman Nestor Garcia and other members had been discussing different rates publicly for weeks.

Hannemann said the lower property tax rate means the city will start the 2011 budget planning process with a $147 million shortfall, $23 million more than originally forecast. That could get even worse, he said, if the Legislature decides to withhold an estimated $43 million in hotel room tax revenues, he said.

To further help homeowners next year, Hannemann said he will renew his push to create a separate owner-occupant tax rate classification. Hawai'i, Maui and Kaua'i counties all created a separate owner-occupant tax category in the early 1990s.

NEW TAX CATEGORY

City officials say about 140,000 residential properties get owner-occupant exemptions out of about 250,000 single and multifamily units on the island. Hannemann said people who own residential properties that they do not live in are "the guys I want to go after, investors and speculators who have the means and ability to pay more."

Hannemann failed in a previous attempt to get an owner-occupant tax category through the council.

Yesterday, Apo and Garcia said they are willing to take a second look at a new tax category.

However, Apo said he's always had reservations about creating an owner-occupant tax category. "It's too easy to shift the tax burden to non-residents" and does not take into consideration that tax increases could be passed on to renters, he said.

Hannemann said rents are largely market-driven and that there's no conclusive evidence property tax hikes are passed onto renters.

The mayor yesterday also signed a $1.7 billion capital budget for the next year that includes $917 million for the city's mass transit project.