The Hawai‘i Supreme Court has invalidated a voter-approved charter amendment its proponents say was intended to save millions in tax bills for thousands of property owners who own their homes and live in them. In an Aug. 6 ruling, the
The Hawai‘i Supreme Court has invalidated a voter-approved charter amendment its proponents say was intended to save millions in tax bills for thousands of property owners who own their homes and live in them.
In an Aug. 6 ruling, the court permitted the county to file a lawsuit to prevent Mayor Bryan Baptiste, then-finance director Michael Tresler and the Kaua‘i County Council from implementing the Ohana Kaua‘i measure, which was approved in the November 2004 General Election.
The court also ruled the charter amendment violated a provision of the Hawai‘i Constitution that gives exclusively taxing authority to the county councils from each island.
But Ohana Kaua‘i won on one count — that its measure didn’t violate the county charter, as contended by the county.
By a 3-2 decision, the court ruled in favor of the county. But Associate Justice Simeon R. Acoba Jr., in offering a dissenting opinion with Associate Justice James E. Duffy Jr., scolded his colleges for siding with the county.
Acoba states the majority manipulated “the lawsuit so as to create a controversy that did not in fact exist when the suit was filed, when it was decided by (the 5th) Circuit Court, when it was appealed to this court.”
Pacific Legal Foundation attorney Robert Thomas, who represented Ohana Kauai, said the situation where the county sues itself is “unprecedented” in Hawai‘i.
“By suing itself, the county can challenge any referendum and initiative generated by the public,” he said yesterday.
Walter Lewis, a retired attorney and an Ohana Kaua‘i member, was dismayed with the decision.
“I am disappointed for myself and for the many people who worked hard for the Ohana Charter amendment by the adverse decision by three of the five Supreme Court judges,” he said in an e-mail yesterday. “The amendment would have limited the skyrocketing property taxes payable by resident homeowners.”
Lewis also voiced three concerns about the decision. “First, the results of the election supporting the amendment by a clear majority should remain as a wake up call for our county officials of the deficiencies in Kaua‘i’s real property tax laws and the need for reform of them,” he said.
Second, he said, the court’s decision will have a tragic effect on the incentive of our citizens to act to try to improve the way we are governed.
“Third, I am disturbed that in reaching its conclusions the majority of the court had to shuffle the parties and rely on statements made at the oral hearing by the county’s lawyer that were neither evidence nor accurate,” he said.
The charter amendment, approved by 75 percent of the voters in the 2004 election, proposed lowering homeowner property taxes to 1998 levels and limiting yearly tax bill increases to 2 percent. Lewis said the measure would have benefited 10,000 residents.
While waiting for the issue to run through the court system, the council, led by councilman Jay Furfaro and Daryl Kaneshiro, a councilman at the time the lawsuit was filed, approved a 2 percent cap that attained the same goal as in the Ohana Kaua‘i measure. Baptiste then signed the county ordinance into law.
The council also approved other property tax relief measures that generated millions in tax savings for long-time property owners and have helped them keep their properties in the face of spiraling assessments between 1999 and 2004.
But even with the tax-relief measures in place, the residents won’t derive the same benefits as they would have had with the validation of the Ohana measure, Lewis said.
“Our measure had the rollback (in taxes to 1998),” he said. “The council’s law didn’t have that.”
Implementation of the Ohana Kaua‘i measure would have saved homeowners another $1- to $2-million a year, Lewis said.
Ohana Kaua‘i has not conceded defeat, he said, and may ask the court to reconsider its decision or appeal the decision to the U.S. Supreme Court.
The court ruled the Hawai‘i Constitution exclusively reserved the property tax functions to the county councils in Hawai‘i.
The majority of the court also ruled it was appropriate for the county to name the council as a defendant because it would be severely hampered in setting tax rates if the charter amendment went through.
Thomas said it was not appropriate for the county, as a plaintiff, and the county officials, as defendants, to be represented by same law firm, Goodsill Anderson Quinn & Stifel of Honolulu.
But the County Attorneys office has said the plaintiffs and the defendants were represented separately.
Gary M. Slovin, an attorney from the firm that presented arguments for the government before the Hawai‘i Supreme Court, was not available for comment yesterday.
In its decision, the court found the charter amendment didn’t violate the county charter provision relating to a referendum or initiative.
The impetus for the Ohana Kaua‘i measure came about in 2003 because its proponents felt the county government was not doing enough to help property owners with tax relief.
The citizen group secured enough petition signatures for its measure to be put on the November 2006 ballot.
On Oct. 25, 2004, the County Attorney’s office filed a complaint for declaratory relief, asking 5th Circuit Judge George Masuoka, who is now retired, to declare the amendment be voided because it violated a county charter provision that set limitations on laws created by initiatives that affect taxes, violated the state constitution and was vague.
Two days later, the county sought an order to determine the legality of the measure before the general election was held.
Masuoka denied a request to hold the hearing any sooner, and set the hearing for Nov. 22, 2004, weeks after the general election was held.
After voters approved the measure, the County Attorney’s office filed an amended complaint, suing the mayor, the finance director and the council to prevent them from implementing the proposal.
Ohana Kaua‘i intervened and sought to have Masuoka dismiss the county’s amended complaint, prompting the county to file for a summary judgment, the court ruling states.
Masuoka denied Ohana’s request to dismiss the county’s complaint and ruled in favor of the county, the ruling states.
In appealing the decision, Ohana Kaua‘i said the state judge made a mistake in not dismissing the county complaint, contending the county lacked standing in the issue.
Ohana Kaua‘i also contended its proposal was not void under the county charter nor was it in violation of the state constitution, as residents should have shared power in deciding county finances.
