Posted on: Tuesday, May 24, 2005

Kaua'i budget a record $122M

By Jan TenBruggencate
Advertiser Kaua'i Bureau

LIHU'E, Kaua'i — The Kaua'i County Council yesterday unanimously approved the biggest-ever county operating budget at $122 million, raising real property tax collections 26 percent while at the same time calling it a huge tax-rate cut.

"This is the largest tax decrease ever in the history of Kaua'i ... It's quite a lot," said council Chairman Kaipo Asing.

The comment angered some residents, who expect their actual tax bills to be higher because values have risen faster than rates have been cut.

"They tell us they're lowering the rate, and then they call it a tax decrease. It's unbelievable. For the average guy on the street, a tax decrease is whether or not your tax bill has gone down. If not, it's an increase," said Louie Abrams, vice president of the Koloa Community Association and a member of the county's Charter Review Commission.

The county this year had an unprecedented rise in property values — the county's appraised value of all property soared from $10.5 billion to $15.4 billion from last year to this year.

"I'm really concerned about old family parcels, where they're not trying to capitalize on their properties. The county could simply drive them off the properties because they won't be able to pay," said real-estate man Eric Wing, who serves on the County Issues Committee for the Kaua'i Board of Realtors.

What has gone up is the value of individual properties as well as the actual cash amount property owners will pay. The rise has been driven by a hot real-estate market and active new construction. The assessed value of all property on the island this year — before the results of tax appeals — is $15.4 billion.

What has gone down is the tax rate — percentage of property values that the county collects. The council established a series of tax breaks that council members said saved taxpayers $11.9 million. Without those, the island's property owners as a whole would have paid a 48 percent increase rather than 26 percent.

Council members said they're putting the windfall to good use, providing benefits islandwide.

"Overall, the budget will benefit the whole island," said Councilman Daryl Kaneshiro.

More of the money could have been turned back to taxpayers, but that would have been "pennywise and pound foolish" given the county's needs, said Councilwoman JoAnn Yukimura.

"The additional real property tax revenues this year allow us to make an investment in our future," she said.

Councilman Jay Furfaro said the county faced significant cash needs for solid waste, sewers, planning, employee costs, deferred maintenance and such things as increased gasoline and electric bills. There was also money to conduct a $500,000 pair of audits of the police and public works departments and additional staff for various agencies.

"We did a lot of things that, unfortunately, in the past we just didn't have the funds to do," said Councilman Mel Rapozo.

The funding of more than $1 million for repairs and renovation to the neighborhood centers are important, said Councilman Shaylene Iseri-Carvalho, because the facilities "have really become the heartbeat of our community."

Several council members said having to budget in a time when lots of cash is available turned out to be more difficult than they had expected.

"In the nine years I've been here, this probably was the toughest one, because of the additional monies," said Councilman Jimmy Tokioka. He said he was pleased that "we gave a lot of tax relief back to the citizens."

Asing outlined the tax relief measures:

• A reduction in the tax rate on land in most property categories will reduce the county's potential take by $6.4 million.

• A 2 percent cap on tax bills for resident property owners cuts revenue by $4.4 million.

• A measure that allows low-income residents to cut their property tax bills costs $890,000. and a break for rental properties with long-term rental contracts costs $290,000.

The $12 million in rate relief represents a reduction in "what we could have spent if we wanted," Asing said.

Reach Jan TenBruggencate at jant@honoluluadvertiser.com or (808) 245-3074.