Kaua‘i resident homeowners have seen property tax increases totaling well over $3 million in the last three years. During the same three years, taxes paid by the tax classes other than resident homeowners decreased by more than $24 million! Let
Kaua‘i resident homeowners have seen property tax increases totaling well over $3 million in the last three years. During the same three years, taxes paid by the tax classes other than resident homeowners decreased by more than $24 million!
Let me say that again: Local homeowners are paying more, while out-of-state homeowners and tax classes other than resident homeowners are paying less — a lot less. In the same three years we have instituted a trash collection fee that will cost resident homeowners another $1.5 million this year, along with increases in drivers license, vehicle registration and sewer fees.
This has happened because the cap on taxes passed in 2003, initially very effective in keeping homeowner taxes low as values escalated, now is having the opposite effect.
Home values are falling, but tax bills keep rising, and residents who have changed or bought homes since 2004 have seen their taxes reset, often much higher than those of their neighbors.
Taxpayers other than resident homeowners are paying less because values are falling and rates have not changed.
So who is paying less? People from other states who own second and vacation homes here, TVR owners, large corporate landowners, commercial properties, industrial properties, and hotels/resorts.
Said another way — virtually everybody is paying less, with the only exception being local resident homeowners,
In this challenging economy, it is fitting that people and businesses pay less tax, and I am not proposing to increase anyone’s taxes. Yet shouldn’t resident home-owners share in the savings that everyone else has enjoyed?
I believe they should and I am making proposals to correct this situation in a way that will bring more fairness to the system while reducing taxes for the people who live and work here.
In the last three years, if resident homeowners were sharing the same tax reductions others have received their taxes would have gone down by $2 million to $3 million — not up by $3 million.
To correct this inequity, I am proposing to reduce resident homeowners’ taxes by $5.4 million in the fiscal year that begins this July.
Accomplishing this goal will take two steps.
First, increasing the homeowner’s exemption as I have proposed in Bill 2425, which is currently before the Council.
(The homeowner’s exemption is used in concert with each home’s assessed value and the tax rate to establish the actual tax bill for each home.)
Second, reducing the homestead tax rate during budget sessions in May.
While all resident homeowners will benefit, this two-pronged approach will focus the tax relief a bit more to the low and middle range of homes as opposed to the high end.
These proposals, if implemented, will result in a tax decrease averaging over $500 per year for more than 10,800 resident homeowners and will not increase taxes for anyone.
The existing cap on property tax increases will remain in place; but in addition, the baseline under the cap will be reset at a lower amount for most resident homeowners. The net result will be to reduce inequities that currently exist and to protect all resident homeowners going forward.
Now why might people oppose tax relief for local people? I’ve heard, “How can the county afford losing $5 million in revenue?” “What if the legislature takes our TAT?” “Resident homeowners and seniors should not have any exemptions and should be taxed the same as non-residents.”
It is curious that now that tax relief for residents is being proposed, I am hearing the concern about lost revenue if we give local people a break.
But I have not heard any concern about the $24 million in lost revenue that has gone — and continues to go — to the non-resident tax classes.
The county has dealt with reduced tax revenues by cutting spending, not filling vacant positions, employee furloughs, and increasing fees and reducing services.
Yet at the same time we saw our surplus grow to over $50 million dollars.
We have established a healthy reserve policy and could still pay for resident tax cuts for several years without touching the reserve set aside by our policy.
Bill 2425, designed to increase resident homeowner exemptions and set a lower baseline for many homeowners under the cap on property tax increases, is scheduled for public hearing at 1:30 on Wednesday in the Kaua‘i Council Chambers in Lihu‘e.
The bill will then be discussed in the Finance Committee the following Wednesday, Feb. 22.
Testimony for or against the bill can be sent to Council Services or emailed to counciltestimony@kauai.gov.
Check an estimate of how the proposal would affect your home by downloading the spreadsheet labeled “FY 13 Proposed Taxes” at www.kauaiinfo.org.
• Tim Bynum is a member of the Kaua‘i County Council.
