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The Honolulu Advertiser
Posted on: Friday, December 23, 2005

O'ahu homeowners deserve a tax break

The trouble with a real-estate bubble is that property values — and the taxes that are assessed on that basis — are inflated with very little to support them. Certainly, the fixed incomes of many retirees, as well as many still in the workforce, can't support property tax hikes that could range around 30 percent.

So nobody can feel surprised at the clamor for tax relief from homeowners who have been receiving bad news in their property assessment notices. Exemptions are in place to help retirees and owner-occupants who don't profit from skyrocketing home values, but they're hardly enough to offset the current sticker shock.

The Advertiser has heard from many people who expect to see their tax bill rise by nearly $1,000 in a single year. And this follows hefty annual increases since the 2001 tax year.

The City Council won't set the tax rates until spring, but Mayor Mufi Hannemann already has said he's leaning against recommending much in the way of a rate reduction.

In more recent days, Hannemann has shown some willingness to hear the arguments for tax relief, on the condition that they come with ideas about how to manage expenses for city services.

And Hannemann is right: Fresh tax revenue is needed to fund overdue city maintenance chores.

But council members should winnow the city wish list based on the most critical needs, rather than merely expanding the budget to absorb an anticipated budgetary windfall.

And that budgeting process ought to include a plan to keep property tax increases under control. This could include a type of "circuit-breaker" provision that would cap the payments for those on fixed incomes. In addition, the council should expand on the idea of tax breaks for middle-income owner-occupants; if anyone bears the brunt of the inflated property values, it should be those who have bought speculatively for a profit.

The city must reap a tax increase in some measure to help pay the bills. But five years of increases without an end in sight is insupportable.