Council measures needed to rein in tax

THE ISSUE The City Council has approved legislation to bring property tax assessments under control.

WITH taxpayers boiling about soaring property taxes reflecting Oahu's surge in real-estate values, the City Council has approved a package of bills to bring needed controls. The veto-proof votes on the Council should result in Mayor Hannemann seeking compromises to accommodate his budget plans.

Although the state's unique role in operating the school system has resulted in the city's property tax rates being the nation's lowest, soaring home prices have fueled increases averaging 26 percent, jarring homeowners with low or fixed incomes. The Council's action is intended to soften the effect on those residents while setting a formula for dealing with future tax rates.

With only one dissent, the Council agreed to double the exemption on valuations of owner-occupied homes to $80,000 for homeowners up to 65 years old while reducing age to qualify for $120,000 from 70 to 65. A bill gaining unanimous acceptance would begin this year to cap property taxes at 4 percent of household income.

Hannemann had proposed putting $20 million of the $125 million windfall in property tax assessments into a rainy day fund and giving owner-occupants a one-time tax cut of $40 million. The remainder would be spent on city salary and debt increases that are fixed. The city budget proposed by the mayor through the next year is nearly $1.5 billion, up from the last year's budget of $1.3 billion.

The third bill, with one dissent, would allow the tax rate, now fixed at $3.75 per $1,000 for homes, to fluctuate in accordance with the city's budget needs. "It doesn't automatically lower the tax rate," said Councilwoman Barbara Marshall, who supported the bill. "It certainly sends a strong message from this Council to the administration that we expect expenses to be held in check."

That is all that can reasonably be expected. Heat from homeowners should continue as the Council scrutinizes the budget proposed by the mayor last week.