LIHU‘E — Mayor Bryan J. Baptiste said yesterday the county will very likely challenge the legality of the Ohana Kauai charter amendment if it is adopted by voters in the Tuesday, Nov. 2 general election. Approval of the property-tax-reduction ballot
LIHU‘E — Mayor Bryan J. Baptiste said yesterday the county will very likely challenge the legality of the Ohana Kauai charter amendment if it is adopted by voters in the Tuesday, Nov. 2 general election.
Approval of the property-tax-reduction ballot measure will raise legal questions as to whether it can affect the taxing authority of the county, Baptiste said.
Ohana Kauai proponents forecast a loss of up to $1.5 million in the first year if their proposal is approved, but noted that the loss could be made up by taxing businesses, hotels and other properties at higher rates.
County officials, who have analyzed the impact of the Ohana Kauai proposal, say $3 million in revenues could be lost in the first year, and up to $44 million in 10 years, thereby jeopardizing police services, garbage service and other government services.
“I have grave concerns about the legality (of the proposal),” Baptiste said.’ We are still searching that out,” he said during a meeting of the Kaua‘i County Council’s Committee of the Whole at the Lihu‘e Kaua‘i War Memorial Convention Hall.
The committee, headed by council Chair Kaipo Asing, held the meeting to flesh out the pros and cons of the measure and a competing council bill to drastically reform the county taxing system. The bill is based on a report done by the Kauai Real Property Tax Task Force.
Fewer than 10 residents attended the meeting.
The council wants to bring significant property-tax relief to homeowners who have been socked with skyrocketing property-tax bills over the last five years.
The situation has evolved due to high-priced and repeat sales that have pushed up property assessments.
The Ohana Kauai proposal advocates reducing property taxes for residents who occupy their homes to the tax amount they paid in 1998.
The initiative also would limit tax increases to 2 percent a year in 2006, a year after the proposal would take effect.
The county proposal calls for major changes in the current taxing system, including:
- Levying higher taxes for buildings and lower taxes for the land, by a three-to-one ratio, based on the belief that larger homes would require more public services than smaller homes;
- Establishing land assessments of each land parcel at a five-year average from 1999 to 2003;
- Having only two tax classifications as opposed to the eight that exist today;
- Implementing fair and equitable taxing for all properties on Kaua‘i, not just owner-occupied parcels.
Baptiste said it was his belief the Ohana Kauai proposal will bring about “unattended consequences” that will hurt the island.
As he sees it, the measure has an inflexibility about it, and could only be repealed by voters with a subsequent charter amendment.
The measure also will result in a shifting of the tax burden from Kauaians who own and live in their homes to other taxpayers.
Baptiste said he appreciated the work of the Real Property Tax Task Force because it represented the work of nine members who represented the diverse makeup of the community, while the Ohana Kauai measure was developed by a small group of folks.
The group, however, was said to have worked two years to secure thousands of petition signatures to have the proposal put on the election ballot.
Eric Knutzen, a representative for the county’s Finance Department, said analysis of the Ohana Kauai proposal showed:
- The Ohana Kauai measure only addresses the needs of owner-occupied properties, and would be detrimental to owners of businesses, single-family residences, apartments and agricultural properties;
- The county would lose $3 million in revenues from owner-occupied parcels in the first year the proposal is initiated, and $44 million over 10 years. Ohana Kauai folks have said, however, that the proposal would only affect owner-occupied parcels, and that $1 million to $1.5 million would be lost in first year. Ohana group member Glenn Mickens said suggestions that $9 million in revenues could be lost through the Ohana Kauai measure were false. That figure is based on all “residence” categories, and that the Ohana Kauai measure targeted only owner-occupied homes. Mickens also said that nobody seemed upset when two property- tax-relief measures approved by the council and Baptiste resulted in a loss of $2.5 million in county revenues for this fiscal year.
“That is more than what we are projecting in losses,” Mickens said before the council committee meeting.
Councilmembers Furfaro and Daryl Kaneshiro successfully pushed through those measures. Yesterday, Furfaro said the council and Baptiste showed, through the measures, that they reacted proactively to find temporary tax-relief measures before larger tax-reduction measures are put into effect;
- The North Shore has perhaps the most expensive homes on the island, and would require more services than smaller homes. The area boasts only about 12 percent of the structures on the island, but under the Ohana Kauai proposal, property owners there will be paying 32 percent less in property taxes each year, or about $1 million less;
- The Ohana Kauai measure will not result in much greater savings if implemented. In eight out of nine cases, property-tax bills would be lower under the county-endorsed plan than under the Ohana Kauai measure. The owner of a smaller house who currently pays $517 in property taxes would pay $517 under the Ohana Kauai measure, and would pay $444 should the county tax reform bill go through;
- The county tax proposal will benefit farmers by assessing their land and charging taxes only when a homesite goes up. The homesite will be assessed uniformly with residential or agricultural parcel assessments;
- As the property-tax revenues decrease and the cost of government rises, the county will have to cut back certain services, including police services, under the Ohana Kauai proposal;
- 12 percent of residents move out of their homes on Kaua‘i each year. If the Ohana Kauai measure were in place, the county could see more revenues, since the cap on the assessments would be reset for each new house sale.
Council Vice Chair James Tokioka and Councilwoman JoAnn Yukimura said while they appreciated the work Ohana Kauai proponents put into their proposal, they said the biggest problem with that it doesn’t define what a resident is.
If that isn’t done, and the measure is approved by voters next month, the county could be sued by non-resident property owners, and the county’s taxing system could be left in disarray, the legislators contended.
Yukimura said that it has her belief that the charter amendment would be inclusive, and that without a definition of which resident could benefit from Ohana Kauai proposal, the situation “leaves us in a difficult place.”
Lewis said the provision in the charter amendment clearly states the council is tasked with passing a law or laws to make the amendment work.
Lewis recommended the council adopt language to define that term, and if not, he said, “perhaps the term of residence should be left alone?”
Regardless of what the Ohana Kauai measure doesn’t do, the measure is aimed specifically at helping those who own and live in their homes, Lewis said.
Yukimura asked how the Ohana Kauai measure would help young people buy their first homes.
“We don’t know, and it depends on what the property-tax department does in the future,” Lewis said. Lewis also asserted that no legal connection existed between the Ohana Kauai proposal and the county tax bill.
Knutzen’s presentation will be put on the county’s Web site, www.kauai.hawaii.gov, today, and will remain there until the Nov. 2 election. Go to the icon “Real Property Tax Update” at the bottom of the Web site for more information on the county tax bill.
Yesterday’s committee meeting will be shown in its entirety on Ho‘ike Kaua‘i Community Television. Please call 246-1556 for channel and air dates and times.
