LIHU‘E — The budgetary reviews for Fiscal Year 2013, which starts June 1, have reached the final stretch. Nearly two months of deliberations by the Kaua‘i County Council’s Committee of the Whole resulted in property tax rates reductions for some
LIHU‘E — The budgetary reviews for Fiscal Year 2013, which starts June 1, have reached the final stretch. Nearly two months of deliberations by the Kaua‘i County Council’s Committee of the Whole resulted in property tax rates reductions for some and increases for others, and a final budget of more than $230.6 million, including $166.31 million in operating expenses and $64.21 million in capital improvement projects.
The committee will vote this morning on two bills and a tax-rate resolution related to the budget. But the vote by the seven-body committee is rather a formality — all decisions have been already made. Once the bills make it out of committee, the full council (made up of the same seven people) will have a final vote before sending the bills to Mayor Bernard Carvalho Jr. for his signature.
Resolution 2012-30 establishes real property tax rates for FY 2013. Three out of the eight property tax classes will see changes.
The single-family residential class of taxpayers (non-resident homeowners) will have their land rates increased. Hotels and resorts will also see their land rates increased, as well as their building rates. However, these two property tax classes will not pay more taxes collectively — declining market values paired with the increase in rates will keep their contribution a revenue neutral.
Kaua‘i is the only county in the state that divides tax rates on land and building values. Pre-approved changes will unify property values in the following fiscal year, FY 2014.
Homesteaders (resident homeowners) will have their land and building rates reduced, thus avoiding an increase of roughly $1 million in taxes next year.
A cap based on Honolulu’s Consumer Price Index limits increase in property tax for qualifying homeowners. This year’s CPI was set at 3.7 percent.
The CPI-based cap, however, is replacing a 2 percent cap that has been in place for the last nine years and has allowed resident homeowners to avoid $70 million in tax increases since it was first implemented, according to calculations by Council Chair Jay Furfaro.
The council had approved the 2 percent cap years ago as a measure to protect resident homeowners from consequences of the boom of the real state market in the last decade.
Since 2008 real estate values have decreased. But as long as a property’s appraised value each year is higher than its value when it was capped, its taxes still will climb.
Bill 2431 sets the operating budget for FY 2013, and Bill 2432 sets the Capital Improvement Projects and their financing for FY 2013.
‘Is that OK with you?’
Councilman Tim Bynum earlier this year introduced a bill that would give resident homeowners $5.4 million in tax reliefs. After weeks of deliberations, the bill’s final version proposed a $2.7 million in tax reliefs.
On March 28, Council Vice Chair JoAnn Yukimura, seeing an imminent defeat of Bynum’s proposal, asked her colleagues right before the final vote if there was a possibility of approving a lower relief, but no one answered. The bill was then defeated by a 2-5 vote.
On April 3, the opening day of this year’s budget review sessions, Bynum told Carvalho that resident homeowners have paid more than $3 million in increased property taxes and fees over the last three years, while non-resident homeowners paid $24 million less in taxes over the same period.
“Is that OK with you?” Bynum asked Carvalho. Carvalho answered that he and Bynum had gone over this issue several times.
Bynum asked the same question again, but Carvalho just stared back.
When county Finance Director Wally Rezentes Jr. tried to answer on Carvalho’s behalf, Bynum said he wanted the mayor to answer the question. At that point, Furfaro called for a 10-minute break.
During the recess Bynum approached Carvalho, who told the councilman, “Don’t even come near me.”
With the meeting back in order, Bynum pressed Carvalho once more.
“I already answered that question, Mr. Bynum,” Carvalho said.
Furfaro intervened, saying he would be adding two hours to April 17’s revenue forecasting meeting, when the council would scrutinize real property taxes and other fees.
As dialogue continued between Furfaro and Bynum, Carvalho stood up and, without excusing himself, exited the council chambers, letting the heavy wood door slam shut behind him.
On May 10, when the council began reviewing Carvalho’s supplemental budget submittal, Bynum announced he would be proposing a $1.9 million in tax relief for resident homeowners.
On May 15, the last day of this year’s budget deliberations by the Committee of the Whole, the relief approved was down to $1 million.
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