Reforms may bring tax relief

By Deborah Adamson
Advertiser Staff Writer

Elected officials and taxpayers are suggesting ways to provide relief from soaring property taxes.

One idea is to cap property taxes along the lines of California's Proposition 13, which was prompted by a taxpayer revolt in 1978 against higher taxes linked to rising home prices. Prop 13 limited yearly assessment increases to 2 percent and limited increases in the property tax rate to 1 percent.

"We are looking at some kind of relief and I will be working with the other counties," said Ann Kobayashi, Honolulu city councilwoman and chairwoman of the council's budget committee. "It's kind of based on California's Prop 13 but we are going to tailor it to our own counties and also to make sure it isn't burdensome for the county general fund."

The easiest way to provide relief to taxpayers would be for the City Council to lower the tax rate, which would offset the rise in property values. But the vote on the rates is seven months away and with a new mayor coming in, it's too early to say definitively where rates will go.

The need to service the county's debt could also prompt council members to leave rates unchanged.

"I don't think we're going to lower the rate," said Kobayashi. "Our debt service is so high. We have so much debt to repay."

In the current fiscal year, the county's debt service took up 15.8 percent of the $1.22 billion operating budget — or about $193 million.

The Neighbor Islands are further along in property tax reform, spurred by a grassroots tax reform movement.

On Kaua'i, a group called Ohana Kaua'i backed a ballot measure to curb property tax increases to 2 percent a year. Voters approved it last month, but the measure is being challenged in court, said Walter Lewis, spokesman for Ohana Kaua'i.

In Hawai'i County, the council recently approved a 3 percent cap on property tax increases per year for homeowners.

In Maui County, a group called Committee for More Equitable Taxation is lobbying the county to adopt a 4 percent cap. Maui already increased its property tax exemptions, among other modifications, for next year.

Reach Deborah Adamson at dadamson@honoluluadvertiser.com or 525-8088.