The Kaua‘i County Council has approved a property tax relief bill that would allow longtime homeowners to remain in their homes in the face of spiraling property assessments. At a Thursday meeting held at the historic County Building, the council
The Kaua‘i County Council has approved a property tax relief bill that would allow longtime homeowners to remain in their homes in the face of spiraling property assessments.
At a Thursday meeting held at the historic County Building, the council passed legislation that granted exemptions to homeowners who don’t plan to sell their homes and want to dedicate their properties for “permanent home use.”
The bill would help keep their homes as they face higher assessments and higher tax bills that have been driven up by high-priced sales and repeat sales of neighboring properties over the last four years, county officials have said.
The legislation also would cap increases in tax bills at no more than 6 percent a year, although former council chair Ron Kouchi, who attended the meeting, urged the council to set a rate at 3 percent or less.
That figure would provide homeowners better relief at a time when the cost of living index is 3 percent or less and help homeowners who don’t extra jobs to make extra money to pay higher taxes.
The legislation also would remain in effect until a county tax reform group has developed options, which would be sent to the council for review and possible adoption.
The council applauded the legislation introduced by councilmembers Daryl Kaneshiro and Jay Furfaro, and supported it to give interim tax relief while the task force looks at more equitable taxing methods.
Furfaro said the council and Mayor Baptiste’s administration are looking towards what the task force does as a way to “really restore the confidence in the assessment system (of the county).”
Until that day comes, the council should approve the 3 percent cap on the annual tax rate increase for homeowners, Kouchi said.
Kouchi was instrumental in introducing and passing legislation in the past that created a 10-year home dedication program. It expired in 2001.
He said law contained a 6 percent cap and that the new bill should not follow suit.
The times are different now, and a 3 percent ceiling or less is more appropriate now, Kouchi said. “It was a time of double-digit interest rates, and the cost of living was at 6 percent annum,” he said. “And if you study the history of the bill, it referred to the cost of living of the day.”
In the opinion of Alan Greenspan, the chairman of the Board of Governors of the Federal Reserve Board, “we have almost no inflation,” Kouchi said, ” and we have not seen the Feds move to raise interest rates.”
The collective bargaining process at this point doesn’t appear to be working in favor of the county workers at this time, Kouchi said.
“I believe you would be offering between a zero to two to three percent raise for year and in the next year,” Kouchi said. “So how could you, in good conscience, offer a bill that would increase the taxes at twice the level of their cost of living increase?”
The three percent, Kouchi said, would be more fair and equitable way to go for homeowners.
“Again, I am back for what is going to be a fair number for our homeowners, who don’t have the opportunity to earn outside income and other opportunities as they compete to own their land from these people who are buying from off our shores and have incomes from other than Kaua‘i,” Kouchi said.
Kouchi also said the county has taken in this year more than a13 percent increase in property tax revenues from seven other county tax categories.
The extra funds make a good argument for a tax ceiling of 3 percent or less, Kouchi said.
Furfaro said Kouchi made knowledgeable and pointed observations. But the six percent ceiling from the previous home dedication program from the 1990s was not floated over to the new bill by chance, he said.
Rather the council, with input from the community, gave much thought to the issue before deciding to use the 6 percent cap.
Furfaro said there are uncertainties that make it necessary to have the 6 percent cap, including questions related to collective bargaining and retirement contributions to the county.
Furfaro also said there is concern over “where the state Legislature is going with the TAT (the Transient Accommodation Tax).”
Furfaro said $170 million has been generated in the state for TAT, $17 million of which was generated by Kaua‘i County.
Of the $170 million, a good portion goes to the Hawaii Tourism Authority, the operation of the Hawaii Convention Center and “miscellaneous environmental DLNR (state Department of Land and Natural Resources) contributions,” Furfaro said.
Of the remaining 44 percent not used, Kaua‘i County gets 11.2 percent of that, accounting for $10. 2 million. That amount could be changed if the Legislature approves other taxing plans for the Neighbor Island counties, Furfaro said.
Councilwoman JoAnn Yukimura said the 6 percent cap will help generate revenues that will provide sufficient relief to homeowners and will provide income needed to maintain public services.
“I think that we all want a system of real property taxation that doesn’t create a heavy burden on our residents,” she said. “But it also has to be a system that generates revenues so that we can have a good quality of life as a community.”
Yukimura noted homeowner exemptions have gone up about 8 percent, and that if they have “gone up tremendously, then other areas are much less than 8 percent.” That figure will be up in a few years when assessments catch up,” she added.
Yukimura said she believed assessments are down at this point, possibly because of the lack of computer equipment due to county budget constraints, and the lack of county workers to do field work related to the assessment process.
Should all eligible homeowners apply for the program, the county could lose $172,000 in property tax revenues in the first year of the legislation, and $197,000 in the second year.
But the losses would probably be offset because of additional construction and growth on the island, Furfaro has said.
Council members also said the 6 percent cap will do as the task force works on alternate taxing plans.
But Kouchi said the scenario may be such that the council may not like anything the task force produces.
“I am concerned that nothing will come from the task force that will be to the liking of the council,” Kouchi said. “And then what happens, and how do we figure it out from there?”
Prior to approval of the legislation by the council, Kouchi said the county may be stuck with two systems, one with the 6 percent cap and one developed by the task force that could be approved by the council.
That scenario would create burdensome problems for the county finance division, Kouchi said.
Kouchi also asked a two-year dedication program under the bill be eliminated so other taxing options could be considered and implemented.
Furfaro acknowledge Kouchi made a sound suggestion, but that he, Kaneshiro and others had considered eliminating the two-year time period even before Kouchi bought up the matter.
Furfaro said they looked at a three-year dedication period, and eventually decide none was better.
“The message was not to make it so tight as to put undue pressure on the task force,” Fufuro said after the meeting.
Residents also would be able to avail themselves of a circuit-breaker, property-tax-relief program initiated by council chair Kaipo Asing and which was approved through legislation by the council.
With help from Finance Director Michael Tresler, residents could sign up for that program or the home dedication program. Their selection would be based on which program would provide the better benefits.
Hanalei resident Ray Chuan, who attended the meeting, said one way of dealing with the home exemption issue is to have government cut expenses.
Vice council chairman James Tokioka objected to such characterizations, saying the council methodically goes over the county budget each year to try to save money.
Kaua‘i County has far fewer resources and department staff employees than do other counties, but the county makes do, Tokioka said.
“I sit on the board that represents the state of Hawai‘i, the Hawaii State Association of Counties, and when I go other counties … you would be amazed by what we don’t have on this island,” Tokioka said.
Staff writer Lester Chang can be reached at 245-3681 (ext. 225) and mailto:lchang@pulitzer.net
