Council questions tax hike

By Nancy Cook Lauer

Stephens Media

Two West Hawaii council members are asking why Mayor Billy Kenoi’s administration had urged the County Council to raise property taxes in 2010 to the tune of $23 million when the county ultimately ended that year with a $24 million surplus.

“Given the fact that we had a budget surplus of $24 million, I would wager we would probably not had to have the property tax rate hike in that year,” said Kohala Councilman Pete Hoffmann.

Hoffmann has repeatedly asked the Finance Department for how much the tax hike actually raised, but he has been provided only the budgeted amount of $23 million.

“I think it’s an honest question, and I don’t see why we seem to be stymied by this,” Hoffmann said Thursday.

Finance Director Nancy Crawford said the similarity of the two numbers is a coincidence. The $24 million fund balance was carried forward to help balance the 2011-12 budget that ends in June. Of that, $18 million is forecast to be applied to the 2012-13 budget the council is currently working on.

“They are coincidentally similar,” said Crawford, who went on to explain the extra fund balance came about because of unexpected revenue increases in utility taxes, grants and other sources, coupled with departments’ belt-tightening. “We closely monitored expenses.”

Hawaii County’s property tax revenues for the 2012-13 fiscal year are estimated at $198.5 million, a 4.3 percent drop over this year’s $207.3 million. That figure will become more firm next week, when the county Real Property Tax Division certifies the rolls for the new fiscal year.

“This continuing slide in tax collections has been coupled with years of (unavoidable) cost increases,” Kenoi told the council Finance Committee on Wednesday. “In short, it will cost us more to deliver the same services next year, and there will be less money to provide these services.”

Taxes were raised on selective property categories in 2010 to offset declining property values. Kenoi has repeatedly stated that he has held the homeowner tax rate steady, and he reiterated that before the committee.

But West Hawaii council members are still sensitive about the selective increases that remain in effect for the new budget presented by Kenoi.

West Hawaii has the highest proportion of properties in the nonowner-occupied residential class, a category subjected to steep tax increases in 2010. A full 82.3 percent of 2011 property value in the residential category is in West Hawaii, according to data provided by the county Finance Department.

“It doesn’t feel like a coincidence,” said South Kona Councilwoman Brenda Ford, chairwoman of the Finance Committee. “The fact that this has been so long and the administration won’t provide the information that Mr. Hoffmann has asked for causes me concern.”

Almost 29.3 percent of the entire county’s total property value was in North Kona County Council District 8 last year, home to just 12.3 percent of the population.

Of that, 26.8 percent of the assessed property value and 11.6 percent of the population came from the Kohala District 9, and 12.7 percent of the property value and 11.6 percent of the population came from South Kona District 7. Add Ka’u District 6 to the mix, and 76 percent of the property value and 47.5 percent of the population was in West Hawaii.

Hoffmann also quizzed Kenoi on Wednesday about why the county is projecting property tax revenues of about $230 million for the fiscal years 2013-14 and 2014-15.

“I’m very encouraged,” Hoffmann told Kenoi. “Could you share with us why you are so optimistic or are you planning on raising property taxes?”

Deputy Budget Director Deanna Sako said the revenue projections for the out-years are put in basically as place-holders, so that revenues can match expenditures. They are then adjusted to reflect reality as the years get closer, she said.

Email Nancy Cook Lauer at ncook-lauer@westhawaiitoday.com.