Tax cuts top Council's to-do list
Officials weigh many options for reducing the financial burden on isle homeowners
City Council Budget Chairwoman Ann Kobayashi says property tax reductions might go to homeowners across the board and could come sooner than expected.
"I was leaning toward helping those who really need help and trying desperately to help renters, but then there is this cry to help everyone, to give tax relief to everyone," Kobayashi said.
That cry came from people like Diane Beck, who told Kobayashi's Budget Committee yesterday that rising assessments and taxes are on everyone's mind.
"I've been here over 30 years, and I've never experienced so much outrage and anger and frustration and anxiety. This island is like a pressure cooker ready to explode," said Beck, part of a group that has been circulating a petition calling on the City Council to reduce the property tax rate.
The committee discussed 16 proposals to cut property taxes that deal with everything from exemptions, credits and rates and that target longtime homeowners, senior citizens, renters and low-income households.
Mayor Mufi Hannemann's administration introduced a 17th proposal yesterday: a bill that details his plan to create a classification with a lower tax rate for owner-occupied homes.
"It will help all of us that have lived here and have made Hawaii home," said Budget Director Mary Pat Waterhouse.
Kobayashi said the list will probably be whittled down at next week's Budget Committee meeting when the committee will likely approve a package of bills.
Those at yesterday's meeting had their own opinions of the bills.
"Many of them are gimmicks," said Lowell Kalapa, president of the Hawaii Tax Foundation, who questioned what someone's tenure on a property has to do with the ability to pay property taxes.
He also said called the homeowner's exemption "an archaic relic left over from the 1930s" because "they really mean nothing when you have your assessment go up." Some proposals call for increasing the exemption up to $100,000 from the current $40,000.
Bob Grantham of the group Property Tax Relief Now, which is advocating a decrease in the residential tax rate, said some of the bills did not meet the immediate needs of taxpayers. "I was disappointed in some respect to see that some of these bills had been submitted have an effective date of July 1, 2007, which is going to be no help to the people who need the relief now."
Kobayashi said that is a concern to the Council.
"If we're going to pick a bill that can't kick in until '07, then we're going to have to do a tax credit so that there is immediate relief now," she said.
She also said plans are to move up the start date to this year of an ordinance that caps property taxes at 4 percent of up to $50,000 of household income. That was not slated to begin until next year, but Kobayashi said low-income households need the help sooner.
"A lot of those circuit-breaker things will still stay in place because we need to help those who really need it," she said.
But Kobayashi said that she hopes to come up with a way to help taxpayers across the board and is looking possibly at Bill 12, which aims to link adjusting tax rates with the rise and fall of assessments and also with the city's budgetary needs. "Then we're accountable," she said.
Committee members also indicated they would rather spend money on tax cuts and not necessarily on the mayor's plan to beef up the city's rainy-day fund to $20 million.
MEMBERS OF THE MAYOR'S TAX POLICY COMMITTEE
Mayor Mufi Hannemann has appointed members to a Tax Policy Committee to advise the city on tax policies and laws:
» Steven Ai, president and CEO of City Mill
» Paul Brewbaker, Bank of Hawaii senior vice president and chief economist
» Karl Essig, advisory director with Morgan Stanley
» Former City Councilman John Henry Felix
» Lowell Kalapa, president of the Tax Foundation of Hawaii
» Denise Konan, University of Hawaii economics professor and Manoa interim chancellor
» James Mak, UH economics department chairman
» Seiji Naya, former state Department of Business, Economic Development and Tourism director
» Marcia Sakai, director of the UH-Hilo College of Business and Economics