The city is bracing for federal cuts, but the mayor said there are no plans to increase property taxes.

Honolulu Mayor Rick Blangiardi is proposing the city set aside millions of dollars to brace for potential federal funding cuts, though he says it’s too early to know exactly how the city will be affected by policies emanating from Washington.

The mayor’s proposed budget for the next fiscal year includes $3.93 billion for normal operating costs like salaries and retirement benefits and $1.21 billion for capital improvement projects , including road fixes and wastewater treatment plant upgrades.

The budget earmarks up to $20 million to shore up projects if federal grants fall through. Andy Kawano, the city’s director of the Department of Budget and Fiscal Services, said the city also adds money each year to its fiscal stability fund, which holds a little less than $200 million and can be tapped to make up for other shortfalls.

President Donald Trump’s second term has so far been marked by big slashes in federal funding. The city is expecting about $313 million in federal funding this year and — similar to the state as a whole — is facing uncertainty about how future cuts could impact its budget moving forward.

The mayor said his office is monitoring the situation, but he’s not worried about big cuts hurting the city.

“We’re not in any sort of panic, the sky’s not going to fall, and we’re capable of making the necessary adjustments if and when we have to,” he said.

Federal Cuts Uncertain

Some departments depend on federal funding more than others.

The Department of Transportation Services, for example, spends a lot of money on big infrastructure projects and a public transportation network that thousands of people depend on. It’s aggressively seeking $1.5 billion in federal grants in anticipation of a drop in future funding, the mayor’s proposed budget packet says .

The Department of Community Services, which handles things like homelessness services, workforce development, early childhood and elderly affairs and nonprofit funding, also receives a lot of federal grants. Though the transportation and community services departments are some of the more vulnerable to shifts at the federal level, Kawano said operations should continue as expected.

“I’m not aware of any of the larger programs being curtailed,” he said.

Blangiardi said the Office of Economic Revitalization was expecting some grants that have since fallen through, but the office aims to make up the difference with private grants.

Federal funding makes up a relatively small portion of the budget, about 3.8% of the city’s operating budget and about 13% of its budget for capital improvements.

The bulk of city funding comes from property taxes, which are expected to fund 38.5% of the city’s operating budget this year — a slightly smaller portion compared to last year. Part of the difference comes from the city having more money left over from the previous budget, which was $4.5 billion.

Property tax rates are expected to stay the same next year. Sewer rates, however, are expected to rise dramatically over the next decade. The average single-family home’s bill could increase from about $110 per month to almost $250, with the extra revenue meant to fund billions of dollars in upgrades to the island’s wastewater treatment plants .

The planned upgrades are part of a 2010 settlement with the United States Environmental Protection Agency after millions of gallons of the city’s untreated sewage entered the ocean.

In addition, the mayor is proposing spending $657.2 million on public safety through the Fire Department, Police Department, Department of Emergency Services and the new Department of Ocean Safety.

He’s also proposing $118 million for parks operations, $697 million for debt service and $977 million for retirement, healthcare benefits and miscellaneous expenses.

The budget would also double spending on homelessness from $14 million to $28 million for services like its mobile resource center and an ambulance team that responds to nonviolent homeless people in crisis.

The city also has budgeted $145 million for Covid-19 hazard backpay for workers who could have been exposed to the virus during the pandemic. A final agreement on the hazard pay come as soon as the City Council’s next full meeting on March 19, spokesperson Ian Scheuring said, and whatever money is left over could be used to cover federal funding shortfalls.