LIHUE — A property tax cap scrubbed from the books two years ago could make a comeback. County Councilman Gary Hooser said he will introduce a bill at Wednesday’s council meeting that would limit the growth of property taxes on
LIHUE — A property tax cap scrubbed from the books two years ago could make a comeback.
County Councilman Gary Hooser said he will introduce a bill at Wednesday’s council meeting that would limit the growth of property taxes on Kauai for owner-occupied properties and for those utilized as long-term affordable rentals.
“I think that homeowners that live in their home need to be protected from the continuous increase in property value and in property taxes,” Hooser said. “I also believe that we need to provide further incentive and reward those people who rent out at those affordable rates.”
If passed, any future tax increase would be limited to the most recent actual cost of living increase as reflected by the Consumer Price Index.
Property taxes are calculated by taking the assessed value of a home and multiplying it by the tax rate.
“What happens is even if the rate doesn’t change, the value keeps going up, and so people’s taxes keep going up,” Hooser said. “If you’re a business or a hotel, you can raise your prices to pay for your increased expenses. If you’re a homeowner who lives in your house, there’s no one to pass it on to, and there are a lot of people on fixed incomes, retires and just regular working people who have no way to recover that money.”
A similar tax cap to the one Hooser plans to propose, which was removed by the County Council in 2013, protected resident homeowners during the boom of the real estate market in the 2000s, when property values and property tax assessments were soaring.
Originally, the cap allowed a maximum 2 percent increase. Later, the increase was dictated by Honolulu’s Consumer Price Index.
After a decade in place, however, many properties of comparable value had disparaging tax bills. Hooser said that’s why he supported the cap’s removal in 2013. Canceling the cap helped deliver equity and fairness among taxpayers of similar tax classes.
But now, Hooser said, property owners need it back.
“The nature of a cap is that over time there becomes this disparity,” Hooser said. “So a person who starts out at the beginning of the cap, their taxes are essentially frozen. And then a person who comes in 10 years later pays a higher rate because they haven’t been protected for 10 years. So over time the taxes are skewed.
“Basically, we had to reset it. I was convinced that we needed to do it and it was the right thing to do because of the inequities, but now I think we need to bring it back because there doesn’t seem to be any end in sight to property tax increases.”
The passage of such a bill, Hooser said, would require community support.
“This is a reasonable proposal that protects homeowners and allows small increases over time,” he said.
The council meeting begins at 8:30 a.m. at the Historic County Building.
