Council looks into property tax cuts
But homeowners will likely save only about $228 at most
Home and apartment owners may get a property tax break after all, with several proposals being considered by the City Council.
But don't get too excited. Under one proposal, the owner of a $600,000 home may get a break of less than $100 -- and at best only about $228.
And yesterday, Mayor Mufi Hannemann's administration once again told the City Council Budget Committee that it would prefer to put $20 million in a rainy-day fund.
If that's not possible, the administration recommends using those funds to reduce the tax rate to $3.59 from $3.75 per $1,000 of assessed value for residential properties.
But Budget Chairwoman Ann Kobayashi wants to reduce the rate even further.
"We had hoped to go really low, but because of all the problems with the floods and the funding we're going to need for all the sewer repair, waste water, that's going to increase our debt," Kobayashi said.
"We were looking at close to $3.30, somewhere around $3.35. ... But we're afraid to really come out with a rate until we know the exact impact on the city with all the sewer costs and all the flood damage."
Public demands for reduced property taxes came after the third year of double-digit increases in property values.
Councilwoman Barbara Marshall is proposing lowering property tax rates to $3.37, which would decrease city revenues nearly $40 million. To accomplish the lower rate, she wants to use the mayor's proposed rainy-day fund and another $20 million in budget cuts.
"We're honing in to get as many pennies out of the budget," Marshall said.
Under Marshall's proposal, property taxes would be lowered by $228 for a home valued at $600,000. If the mayor's proposal is not enough, then Marshall's is too much for Kobayashi, who wants to settle for something in the middle.
Budget Director Mary Pat Waterhouse said the city has not finished doing an estimate of damages caused by the heavy rains, but they're expected to ask the Federal Emergency Management Agency and the state for money.
"Between the two, we hope that what the city will have to pay for out of pocket will be minimal," Waterhouse said.
But Waterhouse said the administration remains concerned about plans to cut the property tax rates by too much. Such a move could be risky because the administration doesn't know the budgetary impact of other new tax cuts that will go into effect next year.
"I hate to take that risk. Maybe next year, we'll have a better idea, but at this point we don't know. We just don't know how many out there are going to apply (for tax credits)," said Waterhouse, who has estimated the fiscal impact of a new tax credit to be between $3 million and $40 million.
Marshall, who has expressed skepticism at her high estimates, and the administration are also looking to reduce the agriculture tax rate.
Marshall's proposal reduces the rate to $8.07 and the mayor's proposal to $7.57, a dollar less than the current rate.
Several department heads also lobbied the Budget Committee not to move forward with suggested cuts to the $1.49 billion operating budget being proposed by the mayor. A council hearing has been scheduled for April 20.
