City Councilman Nestor Garcia said he was happy that state lawmakers had decided not to take hotel-room tax revenue from the counties, but he said there is still work to be done on the Honolulu City Council budget.

Garcia, chairman of the budget committee, is concerned because the council still needs to approve a change in property tax rates for owners of second homes to avoid a budget deficit.

The second-home category is new and affects 'ohana-zoned homes, where two homes are on one property and owned by one homeowner.

Without the change, the budget will be $18 million short, Garcia said yesterday.

"We've been spared, but everything is not hunky-dory," he said. "We're not out of the woods yet."

The council budget committee will meet to discuss the plan to tax property owners who own a second home at a higher rate before the next full council meeting on May 12. The proposal calls for charging second-home property owners $3.72 per $1,000 assessed value.

The average homeowner pays $3.42 per $1,000 in assessed value and no changes are being proposed to this rate, Garcia said.

"Without that (new) tax rate, that's a lot of money to find in our operating budget," he said. "Even though the TAT (transient accommodations tax, or hotel-room tax) has been spared, there are still county budget issues that need to be settled. Support is uneven among some of the council members on this tax category."

The council must decide on its budget for the new fiscal year by June 9. The city's current fiscal year ends June 30.