Big Island may get tax relief
By Kevin Dayton
Advertiser Big Island Bureau
HILO, Hawai'i — The Big Island County Council is advancing three bills to reduce homeowners' tax bills by slowing increases in tax assessments and allowing larger tax exemptions for owner-occupants.
Yesterday the council's Finance Committee unanimously approved the tax proposals by Mayor Harry Kim's administration, sending them to the full council for further consideration.
One proposal would increase the existing $40,000 tax exemption for owner-occupied homes, exempting another 20 percent of the assessed value of each home from county calculations for tax purposes.
To use a simplified example, an owner-occupied home with an assessed value of $100,000 is now allowed a $40,000 exemption, meaning the taxable value of the home is only $60,000. The county then multiplies the tax rate by the taxable value of the home to calculate the taxes owed.
Under the administration's Bill 174 Draft 2, that same home would be granted an additional 20 percent or $20,000 exemption, meaning the taxable value of the home would drop to $40,000, reducing the tax bill.
The administration bill would cap the additional 20 percent exemption at $80,000 per home.
County Director of Finance William Takaba estimated the measure would cost the county about $1.75 million in lost tax collections the first year.
The council Finance Committee approved that measure along with another administration bill to slow the annual increases in assessed value for owner-occupied homes.
The assessed value of homes increases as the market value of the homes rises, but Bill 175 Draft 2 would limit increases in assessed valuations to no more than 3 percent a year.
The owner-occupied properties would once again be assessed at market value when the owners sell.
Takaba said that measure would cost the county about $2.2 million in lost tax collections the first year.
Yet another tax relief bill would allow homeowners to dedicate their property for residential uses for five-year periods, freezing the assessed values on the properties for those five years.
Currently, homeowners who want to dedicate their property for owner-occupant uses are required to dedicate for 10 years, and only about 1,600 homeowner have been willing to make that commitment. Tax officials said the county has a total of almost 33,000 owner-occupied properties.
The nine-member council is considering the tax relief measures at a time when five of them are running for re-election. A sixth, Mike Tulang, was appointed to his council seat and is standing for election to the same seat.
Kim submitted the tax proposals last October, but the council deferred the measures until now. However, dealing with the issue now may also be of some political benefit to Kim.
Dominic Yagong, Kim's leading opponent in the mayor's race, has seized on the Kim administration's property tax increases in 2002 as a campaign issue, arguing those increases and other Kim proposals for tax and fee increases show the mayor is "out of touch" with the concerns of ordinary Big Island residents.
Property taxes have been a particularly sore subject for voters in Kona, where property values and property tax bills are generally higher than in East Hawai'i. Kona voters have long complained that those higher values force them to pay more than their fair share of property taxes.
Kim yesterday said his administration is concerned about "people caught up in this extremely spiraling type of inflation factor" of rising property tax assessments in a hot real estate market. "I really feel good about it, and I feel this can be a real important and good tool to make sure that we protect our homeowners," he said.
Reach Kevin Dayton at kdayton@honoluluadvertiser.com or (808) 935-3916.
