O'ahu residents would pay more in property taxes — and to ride the bus, golf at a municipal course, visit the zoo and use other city services — under a proposed budget unveiled yesterday by Mayor Mufi Hannemann.

Those and other steps, including the possible scuttling of the city's commuter ferry service, are needed to deal with a $50 million budget shortfall in the fiscal year that begins July 1.

Lower visitor arrivals, declining real estate values and rising unemployment are taking a toll on the local economy. For the city, that translates into flattening property, fuel and hotel tax income coupled with rising costs for emergency services, fuel and debt.

Under the mayor's plan, the city operating budget will rise less than 1 percent, to $1.8 billion. However, the capital improvement budget will jump 78 percent, to $1.7 billion. About $1 billion of that money will go to begin construction on a $5.4 billion commuter rail system.

"We must tighten our belts to face these tough times, but we will not create the illusion of savings by neglecting our community's needs in ways that would cost everyone much more in the future," Hannemann said. "We will continue our important infrastructure improvements and we intend to remain the nation's safest big city."

Among the fee and tax hikes proposed were:

• A residential property tax hike estimated at $10.34 a month for a typical homeowner and $ 8.21 a month for a typical condo owner.

• A hike in the adult cash fare for TheBus to $2.25, or $50 a month. That's up from $2 and $40, respectively. Senior and youth fares would remain unchanged.

• An increase in green fees and cart rental fees at city golf courses.

• An increase in admission and parking fees for the Honolulu Zoo.

A host of other fees would also increase including the city motor vehicle weight tax, the highway beautification fee, alarm permit fees, special duty police fees and admission fees for out-of-state visitors to Hanauma Bay.

If the proposed property tax hike is approved, the residential rate would rise from $3.29 to $3.59 per $1,000 of a home's assessed value. That would still be lower than when Hannemann took office in 2005, he said.

Hannemann's proposal is the first salvo in the city budget process. The City Council still must approve the budget and can make changes. The council has until June 15 to act on the budget ordinances and set property tax rates for the next fiscal year, which runs from July 1, 2009, to June 30, 2010.

Even if the council approves the budget as is, the city will face an estimated $176 million budget shortfall in fiscal 2011, Hannemann said. Without the proposed tax and fee hikes, the budget shortfall would jump to $265 million in fiscal 2011, based on an estimated 10 percent drop in real property tax revenues.

"So we're not out of the woods yet," Hannemann said. "Even if we solve this problem, we've got a humongous problem next year."

CUTTING COSTS

Other cost-saving initiatives include the elimination of pay raises for most city workers and a 5 percent pay cut for the mayor and his Cabinet. No layoffs are planned. The city also expects to decide in April whether to continue TheBoat, the Kalaeloa-to-Downtown ferry that costs $5 million a year.

Among the mayor's proposed construction expenses:

• $1.1 billion for Honolulu's planned elevated commuter rail from East Kapolei to Ala Moana.

• $142 million for the city's solid-waste-to-energy facility.

• $77 million for street repairs.

Hannemann said the city would consider other steps to deal with anticipated budget shortfalls, including charging a residential refuse collection fee and possibly merging fire and emergency services into one agency to take advantage of economies of scale. The city also will consider creating a homeowner class for real property taxes.

Council Chairman Todd Apo said the council will fully consider the mayor's proposed budget along with proposals from other sources, including other council members and the public.

"It's obviously realistic," Apo said. "It's one way of doing it.

"Its definitely tough. Everybody's going to have to accept this combination of an adjustment in the services they may have otherwise expected and had in the past with the realization that we're all going to have to pay a little bit more," Apo said.