Groups debate tax
reforms at city forum

By Mary Adamski
Star-Bulletin

Homeowners get a $40,000 exemption on their real property tax, but maybe that should stop for people who can afford to live in million-dollar digs.

Hundreds of nonprofit charities, hospitals and churches pay $100 a year instead of property tax, but is that a fair share for police and other city services?

Apartment owners howled last month when their rates were hiked more than for house owners so would it work to consolidate the categories?

About 30 representatives from taxpayer and homeowner groups, real estate, hotel and agricultural organizations and others were invited yesterday to begin a review of the city property tax structure with an eye to possible reform.

City Council Budget Chairwoman Rene Mansho and Vice Chairman Duke Bainum summoned the task force to discuss philosophies and perspectives about the the city's primary source of operating revenue.

"We are not looking at the need to raise or lower the tax rate," Bainum said. "The mission is to come up with changes in the structure of the real property tax to make it more fair."

Attorney Jay Fidell, spokesman for the Taxpayer Coalition, chafed at the limits on the task force. "Why not discuss tax increases and government spending? A lot of us here believe those are the issues."

Homeowners -- not commercial, industrial or hotel owners -- pay the largest portion of property taxes. They get some breaks, the basic $40,000 homeowner exemption and additional exemptions as they get older, starting at age 55.

Lowell Kalapa of the Tax Foundation of Hawaii said the homeowner exemption is out of date. A modern twist used in 27 states is the so-called "circuit breaker" exemption.

If the property tax bill rises beyond a given percent of the household income, "it is an overload," he said. The homeowner does not have to pay beyond that ceiling.

Arlene Kim Ellis of the League of Women Voters said the group favors a homeowner exemption based on the value of the home because income is difficult to verify. "Give the $40,000 exemption on a house up to $300,000 value, then eliminate it. If you can afford a million dollar home, $40,000 isn't going to matter much to you."