Measures aim to ease property tax burden
But the cuts fall short, some say
THE City Council is working on a package of measures that could level out or reduce property taxes for many homeowners.
Council Budget Chairman Todd Apo said he is looking at reducing the residential property tax rate to about $3.25 per $1,000 in valuation. The current tax rate for single-family and apartment homeowners is $3.59.
That will come as part of a package of measures aimed at softening the blow of rising residential valuations.
Next year, owner-occupants will see a doubling of the homeowner's exemption to $80,000, which is taken off the assessed value. And a proposal to continue a $200 tax credit -- applied to the tax bill for one more year for owner-occupants -- is pending at the Council.
"I think if we're able to cut off at least 10 percent of the (current) rate, then we will kind of flat-line or reduce the actual real property tax bill to a majority of the people," Apo said.
Apo said commercial property tax rates probably will still go up, but he is trying to bring in the nonresidential rate below $12.50, which is where Mayor Mufi Hannemann is proposing to raise that rate from the current $11.97.
THE City Council is not going far enough in dropping real property tax rates, say advocates for lower rates.
The Council Budget Committee proposes lowering the residential tax rate to $3.25 per $1,000 valuation, from $3.59.
PROPERTY TAX MAY GO DOWN
The current tax rate per $1,000 in valuation for a single-family home: $3.59
The proposed new rate: $3.25
A public notice will be published by this week. A public hearing is tentatively slated for May 23.
» Owner-occupied home valued at $650,000 with a $40,000 homeowner exemption, $200 tax credit and rate of $3.59 per $1,000 in valuation. Tax bill for the current fiscal year: $1,990.
» Same home with increased value (average islandwide increase) of $748,000 along with an increased homeowner exemption to $80,000, a proposed $200 tax credit and current rate of $3.59. Tax bill next year: $2,198.
» Same home with value of $748,000 with increased $80,000 homeowner exemption, proposed $200 tax credit and possible new rate of $3.25. Tax bill next year: $1,971.
"That is totally unacceptable," said Kailua resident Bob Grantham, a founder of Property Tax Relief Now, who wanted the rate to go down to $2.76, as proposed by Council Chairwoman Barbara Marshall. "A reduction of (34) cents is just another example of trying to throw us a bone, and we just don't like that."
Councilman Charles Djou made proposed cuts to next fiscal year's budget that would have equaled a tax rate of about $2.95.
"I was hoping we could get down to below $3," Djou said. "A tax cut is a good thing, and I'm not going to oppose a tax cut, but I think we could do better."
Council Budget Chairman Todd Apo said the way the budget is heading, getting below $3 might not be realistic.
Apo proposes funding the lower rate through nearly $70 million in cuts to the proposed $1.6 billion operating budget offered by Mayor Mufi Hannemann. Those cuts include:
» Halving the $62 million set-aside to pay for future health benefits for city retirees.
» Lowering a proposed tax credit for homeowner-occupants to $200 from $376, for a savings of $25 million.
» Scrapping a $150 credit for renters that costs $11 million in the budget.
» Deleting about $2 million in vacant, funded positions.
What could ultimately decide how much savings could apply to tax cuts is how much the city will be billed to pay for future retiree health costs.
The city administration said the figure is believed to be about $93 million, and $62 million is currently being budgeted.
Apo is looking at a rate of $3.25 per $1,000 in valuation, but that number is "fuzzy" and could shift a little depending in part on how much the city will be asked to kick in for those health-care costs next fiscal year.
Both Djou and Grantham say that while they understand the city might be obligated to cough up the money for future retiree health-care costs, there is no urgency to fund it right now.
"In my opinion, the administration has taken this thing and they have gone right off the deep end," Grantham said. "For some reason or another, the city administration is going full steam ahead and putting a lot of money in there, and I don't think it's totally necessary at this time. And what they're doing is they're taking it out of the pockets of the property tax payers."