Homesteaders to get $1M in tax relief

LIHU‘E — The Kaua‘i County Council Committee of the Whole approved the administration’s budget for Fiscal Year 2013, reflecting more than $166.4 in operational expenses and $78.3 in capital improvement projects.

But the budgetary decision was nearly pushed back another week after a stalemate on a proposal from Councilman Tim Bynum to give $1 million in tax rate reduction to homesteaders.

After much discussion and a vote reconsideration, the homesteaders will see their tax rates reduced.

There are eight real property tax classes on Kaua‘i. Homesteaders (resident homeowners) currently pay $4 per $1,000 of land value and $3.44 per $1,000 of building value. The proposal decreases their tax rates for land and building, unifying them at $3.05 per $1,000 of value.

Bynum’s proposal initially gathered support of only four out of seven council members.

To vote to increase the budget, the council needs a supermajority of five out of seven votes, as a preemptive measure to override a potential veto by Mayor Bernard Carvalho Jr., according to Council Chair Jay Furfaro. To vote to decrease the budget, the council needs only a simple majority of four votes.

County Attorney Al Castillo said Bynum’s proposal needed a supermajority because the council was actually voting on the budget that Carvalho submitted on March 15 rather than voting on the supplemental budget submittal of May 8.

Castillo’s reasoning was that the May 8 submittal was merely a communication from the mayor, surprising council members who had voted Thursday to consider the supplemental budget as the one they would be working with. But the actual bill, submitted by Carvalho on March 15 , was never amended by the council, Castillo said.

Therefore, Bynum’s proposal would actually represent an increase in the budget, since the May 8 submittal was higher than the original budget — it also included tax rate increases for certain tax classes — according to Castillo.

Despite that Castillo’s opinion was contested by Bynum and some of his colleagues, the voting proceeded.

Gathering only four votes, Bynum’s proposal failed to advance. A proposal from the administration, similar to Bynum’s but without the homestead class relief, also failed to advance. A third proposal, to approve the March 15 submittal, also failed.

“We’re at a point that the mayor might actually write his own budget,” Furfaro said.

Furfaro suggested that a new meeting be scheduled for May 23 to solve the standoff, and asked twice if any of council member who voted against Bynum’s proposal would reconsider.

Council members Nadine Nakamura, KipuKai Kuali‘i and Mel Rapozo had voted against Bynum’s proposal.

After a long recess, and with Kuali‘i absent due to leaving on a council-related trip, Nakamura decided to reconsider.

She said she originally rejected Bynum’s proposal because homesteaders already pay the lowest property taxes and the real measure should look into all tax classes. Also, several tax changes have been recently implemented, requiring time for the impacts to be understood.

“In the spirit of compromise,” Nakamura said she would like to move forward and reconsider her vote.

With the motion back on the floor, the council approved by a 5-1 vote the tax rate reduction for homesteaders.

Rapozo kept his vote, on the basis that he would not support a budget that does not reduce spending, increases the size of government and includes tax increases for certain tax classes.

The May 8 proposal raises tax rates for land values for single-family residential class and land and building values for the hotel and resort class.

Councilwoman JoAnn Yukimura said the council was not raising taxes, it was raising rates on declining market values.

Before leaving the Council Chambers, Kuali‘i said he was opposed to tax rate changes because he felt the council should wait a year to see the impacts of all tax programs that have been recently implemented.

The budget will now go to full council for a final vote.

Visit www.kauai.gov for more information.

• Léo Azambuja, staff writer, can be reached at 245-3681 (ext. 252) or lazambuja@ thegardenisland.com.

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