The mayor's proposed capital budget is 15 percent more than what he proposed last year.

Hannemann is also asking for a $100 real property tax credit for qualifying homeowners.

The City Council has until June 15 to act on the budget ordinances and set the property tax rates for the next fiscal year, which runs from July 1, 2008, to June 30, 2009, the city said.

Hannemann said he is not seeking any increase in tax rates or fees. Last year, the budget decreased the property tax on an average single-family home, but increased the average sewer fee by a much greater amount.

The mayor said this year's budget "places a premium on financial prudence and accountability, with a steadfast commitment to basic city services like public safety, sewers and solid waste, parks and public facilities, and transportation."

Initial reaction was mixed.

"It's a good starting point," said councilmember Todd Apo. "I think people were concerned about the need to raise rates but the administration has put together a budget that doesn't raise rates. That's a good starting point."

"At the council we're going to take a look and see where we can trim. The question is where are the areas where we can be a little more discretionary," said Apo, who represents Wai'anae and 'Ewa.

Councilman Donovan Dela Cruz criticized the increased operating budget.

"This is the fourth time the budget has increased by double digits and people are paying more but are they receiving an adequate amount of government services? I hear complaints about potholes, about how we need more police officers, and sewer maintenance," said Dela Cruz, who represents the North Shore area to Wahiawa.

SOME RESERVATIONS

Councilmember Charles Djou said he is worried that the increased spending will affect residents well into the future.

"I am happy for the first time in my career as a city councilmember there are no new tax increases proposed in the city budget," Djou said. "I am disappointed, however, that the city is continuing its massive increase in government spending. ...

"These massive government spending increases simply can not be sustained by the public, who is already overtaxed," said Djou, whose district runs from Waikiki to Hawai'i Kai.

Hannemann rejected Djou's criticism, saying the councilman has voted against every budget since 2004, but that currently more than $45 million is being spent or budgeted for road, sewer and park improvements in Djou's district.

"As usual, we will carry on the city's important work despite the contrarian councilman's shallow posturing, and we will continue to serve his East O'ahu constituents well," Hannemann said.

The administration attributes the increases in operating costs to increased debt service, pension and health-insurance payments, and arbitrated pay raises. The budget also proposes $91.8 million for other long-term benefits, such as health insurance for retirees.

"Simply put, governments must now account for their long-term obligations to retirees on their financial statements," Hannemann said. "It's the responsible thing to do because we can't in good conscience leave a costly obligation for future generations to pay. It's only prudent that we save as much as we can, rather than spend everything as we go."

Reach Peter Boylan at pboylan@honoluluadvertiser.com.