LIHU'E, Kaua'i — The Hawai'i Supreme Court has ruled that the state Constitution does not give voters the authority to address property tax issues through the ballot box.

The original ruling came in a lawsuit involving the 2004 'Ohana Kaua'i County Charter amendment, in which nearly two-thirds of voters approved a measure to roll back residential property taxes.

The court agreed with 5th Circuit Judge George Masuoka that the Hawai'i Constitution grants property taxation power to the county councils, but does not extend that authority to voters.

The county government, faced with the legal requirement to enact a charter amendment it considered illegal, essentially sued itself to get the case before a judge. 'Ohana Kaua'i appealed the case in part by arguing that it was inappropriate for the county to sue itself.

"Instead of implementing the charter amendment, Kaua'i officials sued each other to invalidate it, with the county attorney representing both sides of the case," said Pacific Legal Foundation attorney Robert H. Thomas, who represented 'Ohana Kaua'i in the appeal.

DIVIDED COURT

A Supreme Court majority of Justices Ronald Moon, Steven Levinson and Paula Nakayama allowed the suit. But in a minority opinion, Supreme Court Justices Simeon Acoba and James Duffy chided the majority for "manipulating the lawsuit so as to create a controversy that did not in fact exist."

Acoba and Duffy argued that the case should have been dismissed because there is no difference of opinion between the county officials who are suing and those who are being sued.

"There is no actual controversy among the parties to the amended complaint because they all agree that the subject Charter Amendment is 'invalid,' " they wrote. They argued that the appeal should have been dismissed.

"We're disappointed that the court allowed this fabricated lawsuit to go forward," said Thomas, who filed the appeal for the 'Ohana Kaua'i leadership, made up of Gordon G. Smith, Walter S. Lewis, Monroe F. Richman and Ming Fang.

The court "has told (voters) that their votes don't count, and that if government officials disagree with a result, they can create lawsuits against themselves, funded by public money, asking a court to strike down a vote," he said, in a released statement.

Mayor Bryan Baptiste said the county was just looking for a way to get a ruling on the legality of an issue it questioned.

"There are no winners or losers in this issue. It's simply a matter of clarification on the laws we have to function by," he said in a news release.

TAX CUT URGED

County Council Chairman William "Kaipo" Asing added: "I am grateful to the Hawai'i Supreme Court for providing clarification on this critical issue and for confirming that the county's position is in line with the Hawai'i Constitution since we, as elected officials of this county, have a duty and responsibility to uphold the Hawai'i Constitution."

'Ohana member Lewis said the decision was a disappointment, but that the County Council and administration should take notice that a significant majority of people voted to change tax policy, and that reform is needed.

"We hope to work with the people of Kaua'i and the County Council on an equitable taxation system to ensure that the rates are of the greatest benefit to Kaua'i property owners," Baptiste said.

The 'Ohana measure would have rolled homeowner property taxes back to 1998 levels and limited tax increases to 2 percent per year after that, as long as homeowners continued to own their houses. When sold, the tax on the properties would be revalued at prevailing levels.

Reach Jan TenBruggencate at jant@honoluluadvertiser.com.