LIHU‘E — Dueling tax-relief proposals were the main topic of conversation at the Kaua‘i County Council meeting yesterday. While the county-sanctioned Real Property Task Force proposal, Bill 2108, was introduced to the council at the historic County Building yesterday, folks
LIHU‘E — Dueling tax-relief proposals were the main topic of conversation at the Kaua‘i County Council meeting yesterday.
While the county-sanctioned Real Property Task Force proposal, Bill 2108, was introduced to the council at the historic County Building yesterday, folks outside the meeting were wondering how the Ohana charter amendment would fare in the November general election.
“The two can’t survive simultaneously,” said Dr. Ray Chuan, one of the members of the county task force. “Everything happens December 31” when whatever bills are passed will be implemented.
If the Ohana amendment passes at the Tuesday, Nov. 2 and is implemented Dec. 31, he said, the task-force proposal would have to be greatly changed or scrapped.
Before then, on Thursday, Oct. 7 at 6 p.m., the council will host a forum on Bill 2108, and they are seeking input into the far-reaching tax plan.
“We ask and encourage people to come and give their opinion,” said Councilmember Jay Furfaro. “We encourage people to review the document and come to our public meeting.”
The two proposals are about as different as they can get.
The Ohana Kauai plan is a Kaua‘i County Charter amendment, which is on the ballot in November for voters to decide. The group has proposed limiting tax increases to 2 percent a year in 2006, as well as rolling back property tax rates for residents to pre-2000 levels.
For quite a few Kaua‘i residents who pay taxes on single-family residential homes, they will see a drop in their tax bills, Chuan said.
But other areas will be affected, such as businesses and agricultural land, said Eric Knutzen, county deputy director of finance, earlier in the week.
The Task Force proposal is more far-reaching, said Chuan. Instead of affecting just property-tax rates, sections of the tax code were re-written, made simpler, and will lower taxes to those who need it most.
“There are very few changes,” said Chuan, “but they hit the target right.”
The 70-page bill, with its changes to Chapter 5A of the Kaua‘i County Code, is available at the Council Services Office in the historic County Building.
“The simplicity of the changes testify to the experience of those on the task force,” said Chuan. “I am proud (of 2108), not because of my part, but because of what came out of it.”
Chuan, who called himself one of two “outsiders” on the task force, was impressed with the experience of those on the tax force, and their ability to put aside their business interests for the sake of the whole island.
The changes “are a lot more human-oriented, rather than system-oriented,” he said.
Chuan did say, however, that taxes for a significant number of homeowners will be slightly lower with the Ohana plan than the task-force plan.
“Our base, on assessed values is, on the whole higher,” he said.
But many others, including those who want to buy a house in the future, will suffer because of the Ohana plan, Knutzen said.
For those people who bought their houses after 1998, the rollback will be applied to the year they bought their homes. For homeowners buying new homes, the current assessed values would apply.
While homeowners who have had their homes for years stand to have a few more bucks in their pockets (Chuan stands to gain $300 in the Ohana plan over the task-force plan, he said), it will cause problems with the current exemptions, including the more common ones offered to the elderly and those with financial hardships.
Chuan said that since exemptions are currently applied through the assessed value of the home, and since assessments will be capped through the Ohana proposal, the county will have to make a new way to apply the exemptions with the plans.
The task-force proposal will also have a huge impact on homeowners, as assessed value will shift from property to buildings.
In the past, land values were the basis for most of a homeowner’s taxes. But with the proposal by the task force, buildings would be assessed at three times the land. The bigger the house, the more taxes one would pay.
Also, long-term-rental units would be awarded as well.
Renters with a 12-month lease will be considered long-term residential, and subject to half the tax rate of all other buildings, including businesses, timeshares and vacation rentals.
Meanwhile, at the meeting, the Council extended for another year its stop-gap amendments, the “circuit breaker” tax credit and the exemption for the ‘ohana unit, or additional dwelling unit. Those eligible for the credit have real property taxes assessed on the property over 3 percent of their yearly gross household income.
Councilmember JoAnn Yukimura said that homeowners should apply for their exemption by calling the Real Property Tax Office to see if they qualify.
The credit “was meant to be temporary until we got a new plan,” said Councilmember Mel Rapozo, and the task-force plan is what they have been waiting for. The council and the public have the opportunity to read the bill. They will hear testimony Oct. 7, and then decide if any changes need to be made. The bill then goes back to the council for a vote at its second reading. No date for that vote has been set yet.
Tom Finnegan, staff writer, may be reached at 245-3681 (ext. 252) or mailto:tfinnegan@pulitzer.net.
