Property tax plan has ups, downs
Commercial rates are scheduled to rise in a city panel's proposal
The City Council's Budget Committee approved a residential property tax rate yesterday of $3.29 for every $1,000 in property value, 30 cents lower than the current rate.
The committee also approved a higher rate of $12.50 for commercial, hotel and industrial properties, the rate currently being proposed by Mayor Mufi Hannemann.
Some councilmembers, however, said they would still like the residential rate to come down more.
The tax rate for single-family homes and apartments would go down by 30 cents under a proposed set of rates approved yesterday by the City Council's Budget Committee.
The committee voted to set the residential property tax rate at $3.29 per $1,000 in valuation to combat rising property values.
"It's a decent drop," Budget Chairman Todd Apo said. "We'd love to go lower, but ... I think it may be difficult to move it much lower than that."
The Council will hold a public hearing on the tax rates at 9:30 a.m. Wednesday.
COMPARING TAX BILLS
Here are examples of the amount of taxes under the current $3.59 tax rate and $3.29 rate approved by a City Council committee along with applicable tax breaks:
NO. 1: OWNER-OCCUPIED SINGLE-FAMILY HOME
» Valued at $650,000 for the current fiscal year with the current rate of $3.59 per $1,000 of value and tax breaks including a $40,000 exemption and $200 tax credit. Taxes: $1,990.
» A 15 percent value increase to $748,000 for next fiscal year with $80,000 exemption, $200 tax credit and proposed rate of $3.29. Taxes: $1,998.
NO. 2: OWNER-OCCUPIED CONDOMINIUM
» Owner-occupied condominium valued at $250,000 for the current fiscal year with current rate of $3.59, $40,000 exemption and $200 tax credit. Taxes: $554.
» Same condo with 15 percent value increase to $287,500 for next fiscal year with $80,000 exemption, $200 tax credit and proposed rate of $3.29. Taxes: $483.
NO. 3: CONDOMINIUM RENTAL
» Current value at $250,000 (no homeowner exemption or tax credit because condo not occupied by owner) at $3.59 rate. Taxes: $898.
» Condo valued at $287,500 for next fiscal year at $3.29 rate. Taxes: $946.
But other councilmembers said they still would like to see the tax rate go down even further.
"Is there going to be any more cuts to the budget so that residential rates could be cut a little more?" Councilwoman Ann Kobayashi asked during yesterday's meeting.
Also approved is a bill introduced by Kobayashi that would set taxes for homeowners age 75 or older who make $50,000 or less a year at no more than 3 percent of their income.
"I've always liked to help those who need the help the most, and that's why we did the circuit breaker, but then there's middle income and many who need tax relief, so lowering the rate actually helps everyone," Kobayashi said after the meeting.
The committee deferred deciding on a bill that would give homeowner-occupants a $200 tax credit for next fiscal year only. Apo said the measure will be taken up again at a Budget Committee meeting following Wednesday's Council meeting.
"I don't think we'll reduce it. The other question is, If there are additional moneys after we worked everything else through, what do you do with it? Do you give it in the form of a tax rate reduction? Do you increase the credit?" Apo said.
But Council Chairwoman Barbara Marshall said she believes that the money for the $200 tax credit should instead be used to finance a lower tax rate.
"I would rather see us do an overall tax-rate cut than the credit," Marshall said.
She said the tax credit would help only owner-occupants, while a tax rate cut would apply across the board and would especially help keep rents in check.
"I think we have a lot of good people being landlords, and I think they won't increase the rents if they don't see huge increases in their taxes," Marshall said.
The tax rates approved yesterday include an increase for commercial, hotel and industrial properties to $12.50 from $11.97, the rate that Mayor Mufi Hannemann is proposing. Apo said that any further savings in the budget could be used to fund a slightly lower business property rate.
But businesses said there should not be any increase in any rate.
"We don't understand the appropriateness of reducing the rate in one category while raising them in others," said Murray Towill, president of the Hawaii Hotel and Lodging Association. "The key, obviously, to this whole dilemma is to control spending."