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The Honolulu Advertiser
Posted on: Saturday, February 25, 2006

Two property tax bills won't help some seniors

By Greg Wiles
Advertiser Staff Writer

Relief from O'ahu's escalating property taxes won't be the same for everyone under measures passed by the City Council, especially for homeowners age 70 or older who have income of more than $50,000 a year.

"There's nothing for us old geezers," said Marian Grey, 71, who along with her husband, Jim, has seen property taxes more than double on their Hawai'i Kai home to $3,176 over a three-year period. "We're still stuck."

Grey was referring to two of the three bills passed by the council Thursday that boost property tax exemptions for younger homeowners and enact a cap on taxes for people making $50,000 or less. A third measure should lower property tax rates if signed by Mayor Mufi Hannemann.

Homeowners have been lobbying for relief from property taxes that have soared as Hawai'i's real estate market jumped in recent years. If nothing was done, the property tax collections would have risen by $125 million this year.

For someone under age 55, the amount of home value exempted for property tax calculations was increased to $80,000, while there was no change for taxpayers age 70 or more. Their exemption remained at $120,000.

The second measure caps property tax payments for those earning $50,000 or less to 4 percent of their income.

Lanikai resident Dudley Foster, 78, said his tax bill jumped $5,000 this year to $16,000. He said over the past decade property tax on a beachfront home that's been in his wife's family for 58 years has risen 589 percent.

"My income hasn't gone up 589 percent, I'll guarantee you that," he said. Property tax exemptions that knocked off about 23 percent of the house value 20 years ago now decrease it by less than 3 percent, he said. "I frankly don't know what we're going to do."

Many of the property owners who are 70 or older that are on fixed incomes of $50,000 or less should benefit from the measures, said Council Budget Chairwoman Ann Kobayashi.

She said the exemption was increased for younger homeowners because the council wanted to close the gap with those granted to older people and that increasing it by a similar amount for senior citizens wouldn't have solved the discrepancy.

"This brings everybody closer together," said Kobayashi. Closing the gap will cost the city $10 million in lost revenue. If the council had increased the exemption for older property owners, more revenue would have been lost and lower the amount the city could reduce the rate at which properties are taxed.

Kobayashi said the biggest relief for the plus-70, more than $50,000 income group, will come from the measure that ties property tax increases to the city's basic budget.

The measure, Bill 12, should shave $60 million from what property owners are scheduled to pay this year, she said. Currently they are taxed at $3.75 per $1,000 of taxed value.

"We won't be collecting any more than we need to run the city," Kobayashi said. "If we gave too much away in home exemptions then the tax rate would not go down under Bill 12."

Bob Grantham, an Enchanted Lakes homeowner who lobbied for tax relief, said the expansion of a property tax credit for those making less than $50,000 could prove significant for retired people on fixed incomes and that he will continue monitoring how the city sets new property rates under Bill 12.

Grantham, whose property tax bill went up to almost $3,700 this year from about $2,700 last year, said he and others want to see a meaningful reduction in the rate.

"If they don't, they'll end up with some sort of tax revolt," Grantham said.

Reach Greg Wiles at gwiles@honoluluadvertiser.com.

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