Council debates using Oahu transient accommodations tax to offset sewer costs; administration warns of bond risk

Council members and city finance officials debated Bill 43 (2025) — a proposal to reallocate a portion of the Oahu transient accommodations tax (OTAT) to reduce a proposed large increase in sewer rates — during the Committee on Executive Management meeting May 28 in the City Council chamber.

The committee heard competing fiscal and policy views about whether to use OTAT revenue, vacancy savings or other cash to reduce the amount the city must bond for sewer upgrades. Andy Kawano, director of Budget and Fiscal Services, told the committee the administration strongly opposes using OTAT or other general-fund cash to pay sewer operations, maintenance or capital improvements because doing so would conflict with sewer bond covenants and could cause a downgrade. "We strongly oppose this bill," Kawano said.

The issue matters because the Department of Environmental Services (ENV) projects large capital needs for wastewater upgrades, and the proposed rate path in the department's study would substantially raise sewer fees for residents. Proponents of Bill 43, including Council Chair Waters, argued redirecting visitor-paid OTAT revenue would reduce the burden on households while still allowing the city to meet upgrade and consent-decree obligations. Opponents — including the Budget director — said diverting general-fund resources…