Calls for tax relief answered
By Loren Moreno
Advertiser Staff Writer
Three new bills called a "step toward substantial relief" have been proposed to help Honolulu residents alarmed by soaring property assessments and bracing for another year of higher property taxes.
City Council Vice Chairwoman Ann Kobayashi said there likely will be more proposals to come.
City Council members have received dozens of phone calls and e-mails from concerned taxpayers since property assessments were sent to 273,550 homeowners on Dec. 15. Some residents have suggested legal action or a ballot initiative to force the city to roll back tax rates while others have complained in newspaper editorial pages and on radio talk shows.
Kobayashi and Council Chairman Donovan Dela Cruz said they agree that homeowners need help and responded yesterday with tax relief bills they said they will introduce in January.
The bills would:
If passed, the proposals would take effect in fiscal year 2007.
Kobayashi said the proposals are targeted to retired seniors on fixed incomes, single parents and low-income families.
"We realize the increase in property tax assessments has an effect on everyone. However, we must focus our attention on those who are facing extreme hardship due to a robust housing market," Kobayashi said.
Council members are not the only ones attempting to help burdened homeowners.
The O'ahu County Democratic Party joined the growing call for tax relief yesterday by announcing the creation of a task force to seek "a fair and equitable real property tax system."
Mike Abe of the O'ahu County Democrats said the party will work with families and elected officials to come up with tax solutions.
He said property owners are not the only ones affected by potentially higher property taxes.
"Property tax increases will be passed along to renters," said Abe. He said the bills proposed by council leaders do not address that issue.
But Kobayashi said she has been exploring ways to prevent the cost of property taxes from being passed along to tenants.
The first bill proposed by Dela Cruz and Kobayashi would raise the maximum income to qualify for a county tax credit from $50,000 a year to $75,000. The bill would cap property taxes at 4 percent of a person's income provided their income does not exceed $75,000 in the previous year.
The City Council earlier this year set the maximum income at $50,000. That proposal isn't set to take effect until fiscal year 2008, but Kobayashi said that she is seeking to make it effective immediately.
"We're trying to prevent people from taking money out of their savings to pay their first installment," said Kobayashi.
The proposal would help those living on fixed incomes by eliminating the fear that their property tax could rise, said Kobayashi.
"If your income doesn't change, your property tax remains the same," she said.
Another bill would allow homeowners to dedicate their property — or essentially promise to not sell — for 10 years, and in return the assessed value of the property will not exceed the rate of increase in the Consumer Price Index of the previous calendar year.
"People shouldn't be afraid to dedicate their home," she said. "For 10 years you are saying, 'I am not going to sell my house.' If you do, then there will be a rollback of taxes and possibly a penalty," she said. There would be no penalty if a person died, she said.
The third bill would provide an immediate, one-time property tax credit for the 2007 tax year provided the owner's household income does not exceed a federally set average income. The amount of the tax credit has yet to be determined, said Kobayashi.
The public will have an opportunity to discuss the bills during the first budget committee hearing of the year on Jan. 23, said Kobayashi.
She said there will likely be more proposals, including one to increase the basic homeowner's exemption from $40,000 to $80,000. That proposal would likely help the rich and poor but for now, Kobayashi said, she wants to reach those facing extreme hardship.
When she saw her own property assessment rise, she became worried for retirees and other people on fixed incomes living in her district.
"I just don't know how they are going to do it," she said.
Reach Loren Moreno at lmoreno@honoluluadvertiser.com.
