Mayor's property tax plan stalls
A Council committee chooses to approve three other alternatives to stabilize rising rates
Mayor Mufi Hannemann's proposal for a one-time, $40 million cut in property taxes, along with his other ideas to ease rising property taxes, appear stalled in the City Council.
Instead, the Council's Budget Committee advanced three other bills designed to help property tax payers hit hard by rising assessments.
The bills will be up for a final vote at a special Council meeting on Thursday, the day before the mayor gives his State of the City address and about a week before he submits his budget to the Council.
The most controversial of the three is Bill 12, which sets up a new way to set the tax rate in each tax classification.
Budget Chairwoman Ann Kobayashi said the bill is designed to stabilize tax bills against the huge highs and lows of valuations.
"(Bill 12) levels it off so that everyone's tax bills remain pretty steady, and also it makes us more accountable because if we have to then raise the rates further, we have to have good reason for doing so," she said.
Hannemann's administration has opposed Bill 12. Gary Kurokawa, administrator of the Real Property Assessment Division, said Bill 12 "does not provide tax relief measures nor ensures the fiscal health of the city."
Budget Director Mary Pat Waterhouse also said that the bill would be a "nightmare" to administer.
Kobayashi amended the bill to try to address their concerns, but final language has yet to be drafted.
The bill, however, has support on the Council, as well as advocates seeking to lower tax rates.
"Bill 12 is really the way to go," said Kailua resident Bob Grantham.
Kobayashi said that with Bill 12, large pots of additional revenues, such as next year's projected $125 million in taxes, created by extreme increases in valuations would be a thing of the past.
"Bill 12 doesn't bring in extra money for us to give back," she said. "Bill 12 only brings only the amount of money that we need."
That is the reason, Kobayashi said, the committee decided against passing out a one-time tax credit like the mayor's $40 million tax cut.
If Bill 12 passes, "there is no extra money," she said.
No extra money also means that the mayor's proposal to put aside $20 million in a rainy-day fund is also quashed for now.
The committee also deferred the mayor's plan to create a homeowner's classification, which would have lowered tax rates for owner-occupied homes when assessments shoot up.
But that could mean that residential properties not occupied by the owners -- many of them occupied by renters -- could be subject to higher tax rates. "That might hurt renters," Kobayashi said.
The mayor declined to comment until after next week's Council vote because the final version of Bill 12 has not been drafted.
But Bill Brennan, the mayor's press secretary, said that in regard to the administration's proposals, the mayor "still holds out hope."
MEASURES MOVING ON
The City Council's Budget Committee approved bills yesterday to cut property taxes. A final vote by the Council is scheduled for Thursday. The measures are:
» Bill 1 (2005), which would double to $80,000 the minimum exemption taken off the value of a homeowner-occupant's property. Homeowners age 65 and older would get a $120,000 exemption.
» Bill 82 (2005), which would move up to this year the start of legislation that caps taxes at 4 percent of household income of $50,000 or less.
» Bill 12 (2006), which would establish a new method to set an initial tax rate in each tax classification, designed to stabilize tax bills and revenues with the rise and fall of assessments while taking into account the changes in the city's fixed costs. After the initial rate is determined, the mayor and then the Council would then be able to adjust the tax rate up, down or not at all depending on their budget proposals.