Posted on: Thursday, July 15, 2004
Council OKs farming tax break
By Johnny Brannon
Advertiser Staff Writer
Despite warnings that their actions would be illegal and unworkable, the City Council yesterday approved a controversial tax break for agricultural land and overturned all but one of Mayor Jeremy Harris' 11 vetoes related to the city's $1.5 billion budget.
Harris said he would refuse to implement the tax measure and several spending restrictions in the overturned vetoes, and would likely take the council to court over vetoes that cut $703,000 from the budget.
"This immature and irresponsible behavior by City Council members has got to stop," he said. "They have to realize that they are elected to uphold the law and act responsibly for all the citizens on this island."
The council voted 7 to 2 in favor of the tax break after hearing from dozens of farmers who packed City Hall with signs. The legislation was also backed strongly by some of O'ahu's largest land owners, including the Kamehameha Schools and other trusts and big estates.
Many farmers said they face huge tax increases because of changes that took effect this year and base agricultural taxes on property values rather than crop yield.
Melvin Amantiad, a lotus and taro farmer, said the tax on his family's North Shore property increased from $1,500 to $9,000.
"Because of all this, our family is pretty much going to be forced to sell the property, because there is no way we can actually pay this amount," he said.
About 250 of O'ahu's 900 farmers face increased tax bills this year, and the stakes are high for some big land owners who could pay millions of dollars more. Owners can usually qualify for a tax break of up to 95 percent if they agree to restrict, or "dedicate," the property for farming for five to 10 years. But many won't agree to do so because they hope to develop the property, and small tenant farmers are left caught in the middle.
"The key issue that faces the Laotian farmers is that they don't have the power to dedicate the land. They farm leased land," said Poungpun Sananikone, spokes-man for the Laotian Farmers' Association.
Another problem is that the recent changes to the tax structure don't automatically provide a discount for ravines, gullies and other chunks of land that can't be farmed. Owners can seek to have their property's assessed value lowered to reflect such "waste land" but complain that the process is cumbersome and can still be unfair.
Higher tax bills drain away money that owners could spend improving roads, electricity and other infrastructure that would help farmers, said Kapu Smith, project manager for Kamehameha Schools' Kawailoa Plantation.
The plantation's assessed value rose from $48 million to $445 million, resulting in a tax bill that jumped from $514,500 to $4.27 million.
"Please help us save agriculture and quit trying to split the farmers and the landowners," Smith told the council. "We are one in the same, and that's why, at least at Kawailoa, ag has been successful."
Council budget chairwoman Ann Kobayashi, who sponsored the legislation approved yesterday, said immediate tax relief is vital.
"We want to help the farmers now, so they don't have to go to the bank to borrow money to pay their property tax," she said.
But Councilman Gary Okino, who opposed the measure along with Councilwoman Barbara Marshall, called it a giveaway to powerful special interests.
"They used the farmers as a smoke-screen to give the large land owners a tax break," Okino said.
Harris said he would veto the measure and refuse to implement it if the council overturns the veto. Granting the tax relief would unbalance the budget approved last month and violate the City Charter, he said.
"The sad thing is the council knows as we speak that the bill they passed will have no impact and provide no relief to the farmers this year," Harris said. "They simply passed it because there was a room full of angry farmers. Well, you can't govern that way."
He said the council could have lowered the tax rate for agricultural land and balanced the budget accordingly rather than grant a rebate later.
"They misled the farmers," he said. "The farmers are going away thinking that their tax issue for this year is solved, and that is simply untrue, and unfair to them."
But council Chairman Donovan Dela Cruz blasted Harris for calling earlier this year for the repeal of the new tax structure for agricultural land and failing to follow up and propose an alternative.
"His words of wanting to help the farmers are inconsistent with his administration's actions," Dela Cruz said. "We want to find a solution. We want to keep farming afloat. We've heard promises, but haven't seen action."
Harris said he would propose changes to the tax law before he leaves office at the end of the year.
Regarding the budget vetoes, Harris said he would refuse to implement council spending restrictions he believes are illegal.
The restrictions would ban a key recycling contract from going to a company that has been cited for various code violations; require that a popular private trolley that runs from Kaimuki to Waikiki be subsidized with $240,000; and require that money be set aside for several cultural and arts groups.
Dela Cruz said Harris' cuts to the council's budget could jeopardize a National Association of Counties conference that Honolulu will host next July. But Harris said the council can cut other spending that won't affect the conference.
The council did not overturn Harris' veto of a restriction on the form of sludge treatment planned for the sewage plant at Honouliuli.
Reach Johnny Brannon at jbrannon@honoluluadvertiser.com or 525-8070.
