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Honorable Stacy K. Higa <br />Page 5 <br />May 5, 2006 <br />REVENUE CHANGES <br />General Fund <br />Real Property Taxes. Real property tax revenues increased by $33,108,000 from the <br />current year to reflect the certified net taxable real property values and new tax rates <br />being proposed. <br />Public Service Company Tax. The estimated public service company tax has increased <br />by $1,000,000 to reflect our current rate of collection. <br />Transient Accommodations Tax (TAT). The estimated TAT increased by $479,000 <br />based on the most recent Council on Revenues projections. <br />Grants-in-aid. Adjustments made to the Assistance to Firelighters grant <br />(4301,000), the Juvenile Accountability grant (-$100,000), the Wireless E-911 grant <br />($200,000), the Marijuana Eradication grant ($70,000), and other miscellaneous grants <br />($56,340). <br />Highway Fund. The Highway Fund projection increased by $2,924,245 <br />Sewer Fund, The Sewer Fund projection decreased by $791,850. <br />Solid Waste Fund. The Solid Waste Fund projection increased by $537,527 <br />REAL PROPERTY TAX RATES <br />The net valuation of real property on the Big Island increased to $22,829,515,000 from <br />$16,539,238,100 (current year). This 38.03% increase can certainly translate to <br />significant property tax revenues for the County and provide almost unlimited <br />opportunities to address our goals. But we also recognize that services and facilities that <br />are funded today must be maintained in the toughest of economic conditions. Because of <br />this, although the budget being submitted proposes significant expenditure increases to <br />improve County services and facilities, it also sets funds aside for future needs, and <br />proposes property tax rate reductions to keep growth at a more sustainable level. <br />We are proposing new rates based on the following guiding principles: <br />• Rates should be uniform island -wide. <br />• Rate reductions tend to be permanent so decisions should consider long-term effects. <br />Rates should not be established solely to counteract short-term valuation increases. <br />• Rates should relate to who actually pays the tax, what benefits the class already <br />receives, and what reductions are needed to appropriately help taxpayers in the class. <br />