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The Honolulu Advertiser

Posted on: Saturday, December 18, 2004

EDITORIAL
Needs should drive property tax debate

Soaring property values on O'ahu this year once again present the City Council with an intriguing problem:

Should it leave property tax rates where they are and rake in the 26 percent or so increase that higher values will provide? Or should they offset the hit by lowering rates?

The council's first reaction might be: "Hey! There's new money coming. Let's spend it!"

Not so fast. True, at the end of the day, there may be a need for this so-called windfall. The city faces substantial obligations in the coming year that it will have difficulty paying without higher tax collections.

But right now, the key is to shift the policy gaze from how much, or how little, money the city will have and toward what needs to be done in 2005. That is, the first step is to determine budget needs and then set rates to cover those needs.

And there are substantial needs ahead. In particular, there are huge bills coming for long-delayed work on the city's basic infrastructure, sewers, roads and the like.

The first task is to sit down and add up all these obligations and then put a price on it. Then, and only then, should the conversation begin over whether to keep the property tax windfall by leaving rates the same, return it by cutting rates or — and this may become necessary — even add to it by raising rates.

Hawai'i's property taxes are relatively low, because we don't support public education with property taxes, as is the case in most Mainland jurisdictions. In Hawai'i, it's state taxes that take the bigger bite.