State high court to hear Kauai property tax suit
A Kauai County Charter amendment passed by voters in 2004 to cap property taxes, then declared unconstitutional in 2005, is scheduled to get its day in Hawaii Supreme Court this week.
The case could have a direct effect on whether voters on other islands can pass property tax caps, a lawyer for homeowners says.
The Ohana Amendment was passed by a 2-1 margin of Garden Island voters in 2004. It would have rolled back property taxes for resident homeowners to a 1998 level, and capped any tax increases at two percent. But it was never implemented.
Kauai Circuit Judge George Masuoka decided in 2005 that, according to the state Constitution, counties have the power to adjust property taxes, and the Kauai charter makes the County Council the sole authority to amend or repeal them.
The lawsuit, which pits the county and the county attorney against the county's politicians and finance director, was appealed by four Kauai homeowners. Their lawyer says they were granted intervenor status because neither defendant nor plaintiff in the lawsuit represented the will of the voters.
On Thursday at 9 a.m., the state Supreme Court will hear the homeowners' case, as well as the county's.
According to Robert Thomas, managing attorney for the Pacific Legal Foundation Hawaii Center, which is representing the homeowners, there are three issues in the case.
The first is whether the county can actually sue itself "to get a Kauai law struck down," Thomas said last week.
The former county attorney Lani Nakazawa filed the lawsuit to keep the mayor, the County Council, and the county finance director from implementing the law, which she believed was unconstitutional.
The problem, Thomas said, is that "the county attorney was suing her bosses" whom she also represents. Therefore, there is no controversy, and no jurisdiction to sue the mayor.
The county has since hired outside council to represent the mayor, council, and the finance director.
Also, when Masuoka rejected the four homeowners' motion to dismiss the case in 2005, he ruled there was no jurisdictional problem and the county had standing to try the case.
The second issue is whether the state Constitution, when it gave authority to the "counties" over property taxes, meant specifically that the councils had the sole power over property taxes.
The county has argued that state law is clear -- voters can not authorize or repeal taxes through referendum, and that the charter amendment was, in fact, a referendum, and therefore unconstitutional.
Thomas retorted by saying that, if the county attorney believed so, she should not have certified the election or even had it appear on the ballot.
However, the county attorney, in her brief, said she just made a determination of the amount of signatures, not the legality of the amendment.
The third aspect of the case, Thomas said, is that since there is no precedent to this issue, there is a good chance the ruling will affect any county that tries to cap property taxes.
If the case stands, and the court decides only the County Council has the ability to enact property tax policy, the rest of the state will be unable to enact charter amendments to cap taxes, Thomas said.
"If this case goes forward," Thomas said, "any time government officials feel the people ... enact a law (they) don't like, they can concoct a case."
The county attorney, through a spokeswoman, said only that they are looking forward to their day in court.