Property
tax relief
put off

Changes the Council
is considering will not
take effect until 2006

Don't expect tax relief this year from soaring property assessments, even though the City Council is considering ways to lessen the tax burden for homeowners.

Ann Kobayashi: The budget chairwoman says the Council is open to ideas

That's because the measures before the Council, if passed, will not take effect until July 1, 2006, the start of the 2007 fiscal year.

And one of the few ways left for the Council or Mayor Mufi Hannemann to provide tax relief this year is to lower the tax rate, currently $3.75 per $1,000 valuation for residential properties.

But that also appears unlikely.

"I don't think so," said Ann Kobayashi, City Council budget chairwoman, when asked if the Council is going to consider lowering the tax rate. "What we're looking at is a whole systems change in the way we look at assessments, so that this problem doesn't come up again."

City Budget Director Mary Pat Waterhouse, the acting mayor while Hannemann is out of town, said the administration is open to the ideas being proposed for tax relief in the 2007 fiscal year.

But specific discussions about what to do about the tax rate for the 2006 fiscal year, which begins on July 1, could be hampered by a projected rise in the city's fixed costs, such as debt and employee retirement and health coverage expenses.

"We're considering what the Council is proposing for '07 -- we're open. As far as '06, we do have to look at everything -- not only our revenues, but our expenditures," Waterhouse said.

Waterhouse told the state Legislature earlier this week that the city is projecting an additional $83 million in tax revenue, but rising costs will use all but $1 million.

"We're still working on our numbers, but based on what we've done so far, it doesn't look like (there's) going to be any surplus," Waterhouse said.

The Council's Budget Committee discussed several tax relief bills yesterday, including one to double the exemption given to homeowners who occupy their residences, and another that gives an exemption based on the number of years a homeowner has lived in a home.

The committee also discussed the option of capping tax increases at a certain percentage each year from a base valuation set by the Council.

Kobayashi said the Council is open to several proposals.

Assessments mailed to Oahu property owners last month showed residential property values climbing 26 percent, with some neighborhoods seeing higher spikes.

Homeowners like retired state tax research and planning officer Robert Koike are worried about the impact the rising valuations will have on longtime residents.

"For the last four years, my property tax bill has gone up over 60 percent, and it's not funny at all because I'm retired, I'm immobile, I have a limited income," Koike told the committee.

"What I'm saying is that to satisfy us who don't want to see 40 percent increases, if we live there for five or 10 consecutive years, at least you can give us a break."

But all of these discussions will likely not lead to a tax rate decrease.

Kobayashi acknowledged that there probably will not be any immediate relief, but hopes the Council can come up with a long-term fix.

"They just have to pay (this year) knowing that there will be relief, and they can feel secure that whatever increases after that are going to be a set increase and much lower than the 26 percent we're looking at," she said.