Hawaiʻi County Council Committee on Finance Meeting – August 4, 2026

The Hawaiʻi County Council's Committee on Finance held its 41st session on August 4, 2026, at 9:30 a.m. in the West Hawaiʻi Civic Center (Kona Council Chambers), with public courtesy sites in Ocean View, Pāhoa, and Waimea. The committee reviewed routine finance reports, resolutions for grants and multi-year agreements, and four budget bills. A single public testifier spoke in opposition to Bill 173, a proposed new "bed and breakfast home" property tax class. After substantial debate and an amendment to remove a 3% assessment cap, the committee voted 4–4 on Bill 173, forwarding it to the full Council with an unfavorable recommendation. The meeting adjourned at 11:48 a.m.

Public Comments & Testimony

• Terry Hawkins, a 73-year-old senior and 22-year small business owner of a hosted short-term vacation rental, testified in opposition to Bill 173. She stated that she works two jobs to pay her mortgage, that she recently received a 400% property tax increase, and that the proposal would put her out of business. She argued the bill fails to address unhosted rentals and proposed taxing only the commercial portion of her property, similar to agricultural mixed-use properties.

Consent Calendar

• Communications (files closed unanimously, 8–0, Council Member Inaba excused):
  • Comm. 23.39 and 23.40: Fund transfers for June 1–15 and June 16–30, 2026.
  • Comm. 24.37 and 24.38: Change orders authorized May 1–15 and May 16–31, 2026.
  • Comm. 27.6: Donations received from the Daniel R. Sayre Memorial Foundation.
  • Comm. 118.6: Fourth quarter reallocation report, April 1–June 30, 2026.
  • Comm. 574.3: Noncapitalized donations for April 1–June 30, 2026.
  • Comm. 970: Tabular summary of net funded debt as of June 30, 2026.
• Resolutions (forwarded to Council with favorable recommendation, unanimously 8–0, Inaba excused):
  • Res. 609-26: HGEA Bargaining Unit 15 contract costs, estimated at $1,819,315 over four fiscal years.
  • Res. 610-26: Five-year MRI Software LLC licensing agreement for PHA Pro software; approximate first-year cost $55,593.
  • Res. 611-26: Intergovernmental agreement for $129,033 in federal funds for police de-escalation (Verbal Judo) training.
  • Res. 612-26: Five-year online legal research services agreement; monthly costs starting at $13,522.08, then $14,245, with 7% annual increases.
  • Res. 627-26: Grant of $20,192 for four attendees to the National Alliance of Preservation Commissions Forum 2026.
• Budget bills (forwarded to Council with favorable recommendation, unanimously 8–0, Inaba excused):
  • Bill 177: Appropriates $129,033 for the Byrne State Crisis Intervention De-escalation Training Program.
  • Bill 178: Appropriates $20,797 for the Justice Assistance Grant Special Response Team Capability Enhancement account.
  • Bill 180: Appropriates $20,192 for the Certified Local Government Program travel stipends.

Discussion Items

• Communications:
  • On Comm. 23.40 (fund transfers), Council Members questioned Public Works about security services costs exceeding budget and about transfers for traffic signal materials; Parks and Recreation's Charmaine Felipe explained a transfer for higher electricity costs. Finance Director Diane Nakagawa agreed to compile a multi-year summary of security services costs across departments and to review whether homeless/housing funds could be used for security contracts.
  • On Comm. 24.37 (change orders), Council Member Hustace noted that the cumulative change order total for the Wilder Transitional House renovation is inaccurate and will be corrected. OHCD's Royce Shiro explained the project includes 88 bathroom renovations and a septic conversion, and that re-bidding caused a shortfall.
  • On Comm. 24.38 (change orders), Planning's Bethany Morrison described Hackbed's facilitation of general plan implementation focus groups, including community development plan framework discussions. Research & Development staff explained a reduced contract with the University of Hawaiʻi for a livestock agent and plans to use savings for food security. OHCD's Kiko Mercado detailed the Vibrant Hawaii community-based social navigators pilot program (funded by ARPA SLURF), noting it will end in August 2026; she shared its role in emergencies and expressed disappointment at the lack of continuation funding.
  • On Comm. 970 (net funded debt), Director Nakagawa stated the report reflects only payments made since the previous report. Council Member Onishi requested details on a $3.925 million water supply bond issued June 23, 2022.
• Resolutions:
  • On Res. 609-26, Council Member Kagiwada asked whether health insurance costs are included in the HGEA contract cost estimate. Director Nakagawa said she would confirm where those costs are reflected.
• Bill 173 (Bed and Breakfast Home Property Tax Class):
  • Real Property Tax Administrator Lisa Mira outlined the department's neutral but cautionary view: the proposed new class would be the 11th tax class (or 13th with tiers), and the 3% assessment cap would require additional software programming. She noted there are over 2,000 known properties that could qualify, that compliance staffing is difficult, and that public notification for a December 31 amnesty deadline would be challenging within the timeframe. She also noted that Maui and Kauaʻi have owner-occupied commercial/short-term rental classes without caps.
  • Council Member Kimball, the introducer, stated the bill originated from complaints to the Mayor about tax increases on hosted rentals and is intended to incentivize registration and differentiate hosted from unhosted rentals. She offered an amendment (Comm. 960.2) to remove the 3% cap, which was adopted unanimously (8–0).
  • Debate revealed mixed positions: Council Member Hustace opposed waiving rollback taxes as unfair to owners who complied; Council Member Villegas expressed internal conflict over balancing affordability and fairness; Council Member Kierkiewicz asked about community outreach and the distinction from long-term rentals; Council Member Onishi questioned the motivation and funding connections to the planning department's STVR program.
  • After the amendment, the motion to forward Bill 173 as amended with a favorable recommendation failed 4–4 (Ayes: Galimba, Kagiwada, Kimball, Kānealiʻi-Kleinfelder; Noes: Hustace, Kierkiewicz, Onishi, Villegas; Inaba excused). Consequently, Bill 173 will be forwarded to the full Council with an unfavorable recommendation.

Key Outcomes

• All routine communications, resolutions, and budget bills (except Bill 173) received unanimous favorable action (8–0, Inaba excused).
• Bill 173 was amended to remove the 3% assessment cap but failed to advance with a favorable recommendation; it will be reported to the full Council as unfavorable (4–4 vote).
• Finance Director Nakagawa committed to provide: (1) a multi-year summary of county security services costs, and (2) a review of allowable uses of homeless/housing funds for security-related contractual services, with results shared with Council.
• The Finance Department will provide details on the June 23, 2022 $3.925 million water supply bond.
• A correction to the Wilder Transitional House cumulative change order total will be made.
• The Planning Department will share Hackbed's work products and final report on general plan outreach focus groups.