Posted on: Thursday, December 23, 2004

ISLAND VOICES

By Fred Hemmings

Recent Advertiser headlines documented that real property tax assessments have exploded. Unless there is a substantial rate reduction, which is highly unlikely, there will be a dramatic property tax increase throughout the Islands.

Exploding property taxes are hurting families and affecting everyone. Senior citizens on fixed incomes, college-attending lessees who get taxes passed through to them, kama'aina farmers and even young families trying to buy a first home need the certainty that next year's tax bill will only increase by inflation, not a booming real estate market.

Reforming the property tax system is the easy part. The more challenging underlying problem is twofold:

• First, we must control the needless spending and budgetary uncertainties that the state and counties in Hawai'i face. This is apparent in the City and County of Honolulu budget, where necessary maintenance has been foregone for overpriced Vision Team projects. Those projects curiously enough often fill bank accounts of major campaign contributors, but that is another sad story.

Good government requires courageous leadership, and maybe more importantly, innovative thinking by the state and county legislators. We must end the cycle of "give us more money if you want better services!" At the City and County as with the state level, political leaders need to prioritize the importance of projects.

What are more important, Vision Team projects or fixing sewers so they don't spill sewage into our ocean? As much as I love the beautiful trees down the median of our streets, I do not want to have raw sewage fouling the ecosystem of Kailua Bay. A property tax cap with an annual increase pegged at the rate of inflation would yield revenue reliability that has thus far eluded O'ahu County for generations.

• Second, we must seek innovative solutions to costs, take advantage of new technologies and public-private partnerships, and increase service levels. I, too, love Brunch on the Beach at Waikiki or watching a movie on the beach as well, but there are public costs associated with these programs. One such innovative solution could lie in public-private partnerships. The public provides the land and the infrastructure and a private company provides the service. These sorts of arrangements turn taxpayer liabilities into taxpaying assets.

The great thing about Hawai'i is that we have all the resources we need to accomplish these tasks immediately. Hawai'i has the blessings of nature and, of greater consequence, the capable and warmhearted people to get the job done. The best way to stop the inefficient growth of government is to provide government with a predictable and adequate revenue-generating framework and then demand accountability. This would take the smoke and mirrors out of the spending and taxing process.

Here is how we can make a system like this work: Your property tax will have the base valuation that you purchased it. You will be taxed a fixed percentage of that price annually. Your property tax would increase only by the amount of inflation.

This simple change alone will eliminate the whimsical tax assessment processes that drive property-tax payers crazy. The government then will be able to budget on a reasonable and consistent basis. Government needs to play by the same rules we all do. Government budgets should not grow faster than our economy.

Does all of this make sense? It should. It has worked in California for 26 years.

I am quite sure a choir of Chicken Littles will cry out in protest to this proposal. Hopefully a coalition of proponents of tax reform will work together in the near future to implement these changes. Progressive tax reform is just that and should not have a political label either.

Fred Hemmings is a Republican state senator representing Kailua, Waimanalo and Hawai'i Kai.