Property tax hike OK’d

By TOM CALLIS

Tribune-Herald staff writer

Homeowners will have to open their wallets a little wider this time to balance Hawaii County’s budget.

The County Council approved a double-digit raise in property taxes Thursday — the first increase in three years — citing a need to provide better services in areas that have taken a hit following the last recession.

The higher taxes, proposed by the administration, will range from 10.2 percent to 10.8 percent and provide the county with $18.8 million in additional revenue.

For the owner of a $250,000 home, that means an extra $150 a year.

The increase, adopted in a 7-2 vote, also came with a gesture of goodwill.

Noting a reluctance to support the increase, the council also passed a resolution that states it will seek tax reductions for the 2014 fiscal year.

The tax increase is part of the 2013 fiscal year that begins July 1.

Though not legally binding, Kohala Councilwoman Margaret Wille, who introduced the resolution, said it will demonstrate a commitment to keep the tax burden as low as possible.

“What it shows is our intent to make a real effort … to cut expenses and to explore them comprehensively and to also look at different streams of income,” she said.

The resolution passed 6-3.

Hamakua Councilwoman Valerie Poindexter, who voted for the resolution, said before the vote she had concerns that it may set an expectation that can’t be met.

“I don’t like giving people false hope,” she said.

The council is expected to form a task force to recommend changes to the property tax code. Several council members indicated this will help keep taxes under control.

Kona Councilman Dru Kanuha and Puna representatives Greggor Ilagan and Zendo Kern voted against the resolution.

Voting against the tax increase were Ilagan and Ka‘u/Kona Councilwoman Brenda Ford.

Ford, who voted against the previous increase in 2010, said it will put more homeowners into foreclosure.

“Three years ago we heard the same story,” she said. “And we’re still where we are.”

Ilagan kept his decision close to his chest until the vote.

“I just want the public to know that my final decision will come out from my heart,” he said. “What I really want to do is make the right decision based on my integrity.”

Council members voting for the increase noted they were largely supported by their constituents who feel the need to maintain or improve services.

“It’s a difficult decision but my community demands that these services be met,” Kanuha said, referring to roads and parks.

Council Chair J Yoshimoto said there was no right or wrong answer.

“Raising the rates provides us with more resources but it does come at a cost,” he said. “The key question for me and all of us is whether we can justify that.”

The increase was passed with little opposition from the public.

On Thursday, only one testifier mentioned the increase. Tim Rees, a regular speaker before the council, said he believes his rate will be higher than what has been presented.

A hearing on property taxes on May 14 attracted only seven speakers.

The council did receive some opposition to the plan through written testimony.

Fred Housel questioned whether the increase should occur when the economy is still recovering.

“Hawaii Island’s economy has shown slow improvement in the past year, but many homeowners are still underwater with their mortgages,” he wrote.

The raise will bring tax revenue to $217.6 million, about $8.3 million less than when Mayor Billy Kenoi took office.

On average, the impact for other rate classes will be $417.48 for commercial, $560.88 for industrial, and $870.48 for hotels and resorts. Owners of second homes and rentals will pay $314 more on average.

While council members said the tax plan will help the county improve critical services, such as police and fire, the county also has higher expenses that need to be covered.

Those include ending monthly furloughs, $4.2 million; raises for United Public Workers and Hawaii Government Employees Association members, $2.9 million; a $3.9 million increase in debt services; and payments to the GASB 45 employee retirement benefit fund at $3.1 million.

Email Tom Callis at tcallis@hawaiitribune-herald.com.