Kaua'i tax-relief proposals compete
By Jan TenBruggencate
Advertiser Kaua'i Bureau
LIHU'E, Kaua'i — The way real property will be taxed on Kaua'i in coming years is as uncertain as it has ever been.
Competing and very different tax proposals are working their way through the courts and through county government, and while both Mayor Bryan Baptiste and the County Council are promising tax relief to residents, neither has pledged support for either of two major taxation options.
The one thing everyone seems to agree on is that some kind of revision of property taxation is needed. Nobody's sure what it's going to look like.
Like much of the rest of the state, Kaua'i has experienced an explosion in property values in the past couple of years due to an overheated real-estate market and an influx of wealthy residents buying or building homes.
"We need to provide equitable relief in a timely manner," said Baptiste. Council Chairman Kaipo Asing said the council is committed to working on an existing proposal, but he stopped short of endorsing it.
The two major competing proposals are referred to as the
'Ohana Amendment, which was approved by the voters in the November elections, and the Real Property Task Force Proposal, which was developed by a group of residents and county officials to overhaul the system.
The 'Ohana Amendment would roll back property tax bills for owner occupants to the 1998-99 level and would not be allowed to rise more than 2 percent a year. Opponents of the measure suggest it helps a comparatively well-to-do class of residents — those who own their own homes — and that rental housing and other property classes would be forced to pay more.
Walter Lewis, one of the architects of the plan, concedes it might cost the county $1.5 million or so a year, but complains that officials won't provide the detailed financial data that would permit an accurate assessment of its impact.
The 'Ohana charter amendment was declared unconstitutional last week by 5th Circuit Court Judge George Masuoka, but Lewis said his group will appeal, perhaps with the help of the Pacific Legal Foundation. The judge has not issued a written ruling explaining his decision, but county attorneys had argued that taxation powers are reserved for the County Council.
The county Real Property Task Force Proposal aims to dramatically simplify county taxation, and to ease the burden on homeowners and long-term renters of modest homes, at the expense of those with palatial properties. Roy Oyama, a citizen member of the task force, said the proposal aimed at simplicity, and protecting people who have lived on the island, in the same properties, for long periods of time.
Under the plan, property values would be based on an average of the values for the past five years, and would not be allowed to rise more than the Honolulu consumer price index. If a house sells for a huge sum, it would not affect the neighbor's taxes.
"It has not been fun for us (long-term residents) always getting penalized when new people came in," Oyama said.
The task force plan came out of the county administration, and went through a public hearing before the council, but has been deferred in the Committee of the Whole since October.
Lewis said his group is fighting for its plan in part because it does not believe the county is serious about wanting tax relief.
"I don't have a lot of faith in the sincerity of the mayor and council in solving our tax problem," he said.
The existing real property taxation system — the one everyone says they want to fix — is a convoluted program with multiple property types, taxed at several different rates, often with buildings and land in each class taxed at different rates, and with numerous classes of tax relief based on the owner's age or income, whether an agricultural property is being used for agriculture, whether the owner is willing to dedicate a home to long-term residential use, and more.
Real estate appraiser Steve Hunt, who served on the task force, said he likes his group's clear, easy-to-understand classification scheme.
"It's either your residence or it's not, and if it's not, it's considered income-producing" for tax purposes, Hunt said.
County Finance Director Mike Tresler said he can't predict where the tax discussion will end up. He said the county is in a difficult financial period and there are no magic fixes. Property taxes provide 75 percent of the county's general fund revenues, and they are critically needed, he said.
"We can't continue on a deferred maintenance program. There are things we need to pay for and things we need to do. Property taxes we spend are an investment in our community," he said.
Reach Jan TenBruggencate at jant@honoluluadvertiser.com or (808) 245-3074.
