$1.35 billion operating and capital budgets for Hawai‘i County pass final reading with amendments

The nine-person Hawai‘i County Council passed with amendments the nearly $1 billion Hawai‘i County operating budget and $358.7 million capital budget for fiscal year 2026-27 after their third and final readings.

During a special meeting on Thursday, both budgets passed 8-0 with Council Member Matt Kaneali‘i-Kleinfelder absent. There was no public testimony.

The budget now goes to Hawai‘i County Mayor Kimo Alameda for final signing.

On Thursday, Alameda said the budget reflects a strong team effort by the county’s Finance Department, County Council and department heads.

“We are committed to ensuring geographic equity and to delivering projects on time, on budget, and in a fiscally responsible manner,” Alameda said.

The operating budget, Bill 135, is $13.47 million more than the current one, with the additional funding to go to priorities that include public safety, infrastructure and recreation. It will take effect on July 1.

The capital budget, Bill 136, has 44 projects on the 2026-27 fiscal list, requiring a total of $375.7 million.

The current capital budget totaled $622.7 million with 40 projects. The reason it was so high was that it included improvements to the Hilo Wastewater Treatment Plant, which cost $337 million.

Alameda previously told Big Island Now that the capital budget is like a wish list, with some of the projects not yet funded.

Projects that get approved onto the capital budget stay on the list for three years as they await funding.

Amendments passed during the final reading of the operating budget included increasing the fund balance by $25,000 to increase the Animal Control budget for miscellaneous materials and supplies, including “dangerous dog” signs.

With the passage of the 2024 dangerous dog legislation, the law requires that signage be posted at properties where a dangerous dog is present.

Another amendment to the budget adjusted the Public Access, Open Space, and Natural Resources Preservation Commission maintenance funds based on the upcoming fiscal year’s real property taxes.

With these new tax rates, it will increase the preservation fund by $336,000 and another $42,000 for maintenance.

During a special meeting on May 21, the council adopted property tax rates for the upcoming fiscal year that include a 20-cent reduction per $1,000 of net taxable value for affordable rental housing and primary residences. The new rates also go into effect starting July 1.

The property tax rate for affordable rental housing and primary residences will be lowered from $5.95 to $5.75 per $1,000 of net taxable value.

The affordable rental program is meant to incentivize residents with housing to rent to people at a reduced cost. If the criteria are met by the homeowners in the program, the county provides the homeowner with a lower property tax rate.

The Tier Two tax rate now will cover second homes valued between $2 million and $4 million, with the first $2 million taxed the same as last year at $11.10, but the portion over $2 million will increase from $13.60 to $14.50.

The newly created tier three for second homes worth more than $4 million was set at $17 for portions over $4 million.

Additionally, the long-term rental tax rate classification was set at $7.75.

Read more detail about the budgets from previous stories:

• Hawai‘i County Council begins budget discussions for upcoming fiscal year
• This is what Hawaiʻi County public safety departments proposed for their new budgets
• Hawaiʻi County Department of Environmental Management outlines its budget for council
• Hawai‘i County proposed budget bills move forward; first readings in May