Farmers’ tax break
may cut city budgetThe measure could lower tax
revenues as much as $12 million
City Council members fear that the $1.22 billion operating budget could be out of balance by millions of dollars because a farmers tax relief measure could reduce revenues as much as $12 million.
But Council Budget Chairwoman Ann Kobayashi, who supports the measure, said she isn't worried because she believes that city tax revenues will be strong enough to make up the difference.
"I think that it should be OK because I believe they (the administration) will bring in the amount they projected," Kobayashi said. "And if not, it just has to be absorbed."
The 2002 City Council passed an ordinance that was supposed to make sure agricultural lands were being used for their intended purpose by imposing a higher tax rate on agricultural lands not used for farming, such as "gentlemen farmers."
The city now appraises agricultural lands at fair market value and assesses a certain percentage of their value depending on the length of time the land will be dedicated to agriculture.
As a result, farmers and large agricultural landowners who weren't able to dedicate their land saw their tax bills skyrocket.
Kamehameha Schools representatives testified that the assessed value for land being farmed in Waialua went up tenfold, which led to taxes going up to $4.2 million from $514,000 because it was unable to get a dedication.
"Please come out to Waialua and see what we do. We are not in the housing business, we are in agriculture and we have been for the last 10 years," said Kapu Smith, who said consumers will pay more as a result.
The Council Budget Committee approved a bill yesterday designed to give a tax break for one year only -- paying taxes on only 5 percent of the value of the land -- to all lands zoned agriculture whether or not farming is done.
"It's a one-year, stopgap bill that will help us through this fiscal year," testified Alan Takemoto, executive director of the Hawaii Farm Bureau, which helped draft the bill.
But Mayor Jeremy Harris' administration and some councilmembers are concerned about the effect the bill will have on the operating budget.
"I'm very concerned about this bill ... about including vacant land for an (agriculture) designation," Councilwoman Barbara Marshall said. "Essentially, what we're saying here is that anything that zoned ag is going to get this tax break."
Budget Director Ivan Lui-Kwan said: "It's not just the question of a balanced budget, it's a question of, 'Are there sufficient revenues in the budget?' That's the real question -- are there sufficient revenues to pay for expenditures?"
Councilman Gary Okino noted: "Do we have a legal budget if we don't adjust the revenue numbers? You know what the mayor is going to do -- it's unbalanced, you can't pass this."