Tax workshop set

LIHUE — County of Kauai officials have agreed to take another look at key changes made to real property tax laws last year by hosting a public workshop at the end of this month.

The Kauai County Council on Wednesday unanimously approved a measure that set up the Thursday, Aug. 28 workshop and highlighted some of the many complaints made by homeowners who saw noticeable increases on their property tax bills. 

Some homeowners reported increases that were thousands of dollars higher than their 2013 bills. 

“The Kauai County Council has become increasingly concerned by testimony received from Kauai real property owners regarding the increase on their real property tax bills,” the approved County Council resolution read. “The Kauai County Council feels that there is a need for increased educational opportunities for the public regarding available tax exemptions and credits.”  

A measure approved by the County Council last year created a broad range of changes in tax laws that increased homeowner’s exemption amounts and created a new tax credit program, called the Home Preservation Tax Limit.

The bill also repealed the Permanent Home Use tax credit, which capped future tax increases on owner-occupied homes, with the proper exemptions, at 2 percent beginning in 2006.  

County Finance Director Steve Hunt said tax revenues collected from property owners in the homestead class, with the proper exemptions, decreased by $432,000 between the 2013-2014 and 2014-2015 fiscal years.

The average tax bill, he said, dropped by about $39. 

“I guess fairness depends on the point of view of the taxpayer,” Hunt said. “I think what the administration proposed and the council adopted is more or less what we saw in the results. I think there are, certainly, properties that were dramatically impacted and skewed — there was some anticipation that those property owners would in fact reach out for some of the relief measures that were available but did not apply for or maybe not know about.” 

About 48 percent of the people in the county’s homestead class, or 5,293 individual property owners, received increases on their tax bills. Another 51.5 percent, or 5,651 county taxpayers in the homestead class, received decreases on their taxes.  

The remaining 0.5 percent received no change on their tax bills.

Among those property owners in the homestead class who received increases, 1,816 of them received tax jumps that were less than $100. Another 3,027 property owners, Hunt said, received increases that were no more than $200. 

A total of 495 property owners across all tax classes, including those in the homestead class with the proper exemptions, witnessed increases on their tax bills that were greater than $1,000. 

“I consider those outliers to be instances where potential relief measures could have been available,” Hunt said. “I think there are relief measures that can handle it, and I think a workshop would be wonderful and I would love to see it as potential means where we can reach out to some of the outliers for the current fiscal year.”

Councilman Tim Bynum said he still supports the tax law changes approved by the seven-member board last year but acknowledged that he wants to find relief for those who were mistakenly placed in the wrong tax category. Bynum said he also wants to assist those who saw large increases through graduated tax credits.  

“I’m very conscious of the history where we created extraordinary burdens for our tax people by going outside of the box and doing something that felt good, and was well intended, but had bad outcomes,” Bynum said. “I think it’s important for us to remember that whatever solution that we come up with has to make sense, is fair and doesn’t create an excessive burden to administer it.” 

Councilman Gary Hooser, meanwhile, said he is working on a trio of bills that seek to rollback many of the tax changes implemented last year. 

One of those bills, he said, will seek to extend tax bill payment deadlines without penalties or interest and extend the deadline to apply for exemptions and appeal assessments. 

A separate bill, he said, would also reset the Permanent Home Use credit, retroactively eliminate increases for homestead class taxpayers and allow new homestead class taxpayers to apply for the tax credit.

Another bill would amend county tax laws by applying tax rates on properties based on highest and best use proportionately based on the square footage of improvements and land used for the use. 

Councilman Mel Rapozo was absent from the meeting.

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