LIHU‘E — Hanalei community activist Ray Chuan urged the Kaua‘i County Council yesterday to act judiciously and decisively in deciding which tax reform bills to adopt. If council members don’t, thousands of Kaua‘i homeowners will continue to remain in the
LIHU‘E — Hanalei community activist Ray Chuan urged the Kaua‘i County Council yesterday to act judiciously and decisively in deciding which tax reform bills to adopt.
If council members don’t, thousands of Kaua‘i homeowners will continue to remain in the dark about the best way to deal with high taxes.
Chuan made those comments during public hearings the council held yesterday on two property tax relief measures. The hearings were held at the historic County Building.
One bill calls for extending a circuit breaker credit program until December 2005.
The second bill proposes extending a six percent yearly cap on property taxes for an additional dwelling unit, as long as the first house on the property is eligible for exemptions and the second unit is leased to a relative for three or more years.
The intent behind both measures is to help property owners from being taxed off their lands as more property sales occur and tax bills rise.
Various council members indicated, however, more tax relief will occur sooner than later with probable approval of temporary fixes until the county’s tax structure is revised.
Chuan, however, asked the council to use caution in approving temporary tax measures before deciding on a permanent solution. He said some measure should be in place before the next tax year.
Chuan said any of four proposed tax-relief programs could be adopted by county officials:
- Extension of the circuit breaker credit program.
- The exemption for the ohana unit, or additional dwelling unit.
- A pending ordinance to revise the county’s tax structure, based on recommendations by a county tax reform task group. One recommendation calls for requiring wealthy folks to pay more taxes on large homes they build.
The council is waiting for a bill from Mayor Bryan Baptiste on the tax package developed by the task force.
- A proposed charter amendment from Ohana Kauai that will be put on the November election ballot.
Ohana Kauai has submitted to the County Clerk’s Office the required number of signatures for a petition for a charter amendment proposal to roll back and cap county property taxes.
The charter amendment proposal intends to reduce property taxes for residents who occupy their homes to the tax amount they paid in 1998-1999.
The initiative also proposes to limit tax increases to 2 percent a year in 2006, a year after the proposal takes effect.
Chuan said the council has to use right judgment in deciding when to amend one, throw out one or two or accept another.
“The window is very small,” he said. Council chairman Kaipo Asing said he didn’t necessarily see a problem and that adjustments could be made when the council decides which options are the best for island taxpayers.
Asing said he and his colleagues will address Chuan’s concerns when the Baptiste administration is finished reviewing the recommendations from the county task force and introduces an ordinance for the council to consider.
“Then we would need to consider what happens to those two bills,” Asing said.
The subject of yesterday’s public hearing, one bill proposes to extend the county’s circuit breaker credit program until Dec. 31, 2005. The program has been implemented for the past two years.
The existing law targets homeowners with property tax exemptions and limits the taxes in the homestead classes to a percentage of the adjusted gross income of the household.
The provision applies to a homeowner and a spouse who live in their home and qualify for a tax exemption.
Kaua‘i resident Richard Stauber asked why the program extension was needed. “Why are we doing this,” he said. “This board was supposed to solve the property tax problem during this period.”
He said it was his impression the task force was directed to develop a plan to restructure the county tax system so there would be “revenue-neutral” situation.
He said $250,000 tax savings for residents derived through the circuit breaker credit program or other tax relief programs is minuscule in light of what he claimed were $7 million in surplus county funds.
“We need the big fix, not the small fix,” he said.
Council Chairman Kaipo Asing said the figures Stauber tossed out and information he has passed out during many public meetings were erroneous.
County officials said they had received 600 applications for participation in the circuit breaker program this year, and only about 420 parcels were eligible for the program.
Related to the circuit breaker program, another 11,000-plus parcels on Kaua‘i also qualified for the permanent home use dedication program, officials also said.
County finance officials then decided which program – the circuit breaker or the permanent home use dedication – worked in the best interest of a property owner. Related to the other proposed tax relief measure that was the subject of the public hearing, Anahola property owner Leslie Larsen said the measure in its current form would not help her if adopted.
She said she lives in one home and rents out another home on the same property to two women and two children who are not related to her.
But the women have lived on the island for 30 years, and they are like family to her because “they live so close” to her, Larsen said.
She said she has kept the rent low in recognition of spiraling rental prices across the island.
But with higher taxes, she indicated she may have to raise rents.
She said she paid $846 in taxes last year, and will be paying $1830 this year.
Councilwoman JoAnn Yukimura said something has to be done to help people like Larsen. Yukimura, who has become an outspoken advocate for more affordable housing on Kaua‘i, also thanked Kaua‘i landlords who rent to people on a long-term basis and keep rents affordable. The council is expected to take action on both bills in the near future.
Lester Chang, staff writer, can be reached at 245-3681 (ext. 225) and lchang@pulitzer.net
