HONOLULU -- Mayor Mufi Hannemann on Friday announced that he will allow the City Council's budget and new tax rates to become law.

However, he called for higher tax rates next year on residential property owned by investors.

"After much deliberation, I've decided to allow the operating budget bill to take effect without my approval. Despite a major flaw in the property tax rate that will have a profound impact on taxpayers and the City in the months ahead, I believe our domestic and local economic conditions demand that we move forward," Hannemann said in a written statement.

The mayor said he was disappointed that the council members did not include tax credits for homeowners.

The council passed a hike in motor vehicle weight tax that will increase by 67 percent.

Council members also passed increases for bus fares, golf fees at municipal courses and zoo entrance fees, metered parking prices in Waikiki.