Changes in property tax valuations could raise accountability
The City Council is considering three property tax measures.
HOMEOWNERS hoping to catch a break on property taxes
this year may get some help through two measures advancing at the City Council. A third bill aimed at eliminating the link between tax assessments and skyrocketing home-sale prices could stabilize tax bills in the long term.
What's missing from the Council's discussions, however, are calculations of revenue reductions the measures would produce, leaving to Mayor Hannemann the politically ticklish burden of deciding what city services, if any, would be affected by losses.
Property owners have seen their taxes rise sharply in the past few years as home sales in Hawaii's robust real estate market have pushed prices up, increasing the values of similar properties. In response to their complaints, the Council has fielded a number of measures.
One of them would reduce by $80,000 the valuation of owner-occupied homes with those age 65 and older getting a $120,000 exemption. The broader exemption is aimed at real estate speculation, but could hurt renters if owners pass on the higher tax, which they are likely to do. The age-based exemption is flawed in that it does not take into consideration ability to pay.
The third bill changes the way in which property taxes are set. It establishes base rates or "initial tax rates" for various classes of property, which would remain the same from year to year except for inflation adjustments.
Taxes also would depend on how much city officials say is needed to pay employees and its debts and to provide services, which advocates say will hold officials more accountable for spending.
The bill carves a more reactive role for the Council by requiring the administration to propose an increase -- or even a decrease, though that's unlikely -- to the rate first. After that, the Council -- which has the politically onerous tax of setting tax rates -- can accept the administration's rate or propose its own.
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