A proposed $250 tax credit for qualifying homeowners will be discussed once again at a County Council committee hearing next week.
The credit — which an estimated 30,000 Big Island homeowners would be able to apply to their 2022 real property taxes — was first discussed during a January committee hearing, but questions over its legality postponed the matter for months.
The credit was to be discussed at last week’s meeting of the council’s Finance Committee, but was pushed back until that panel’s May 3 meeting.
“(Corporation Counsel) Elizabeth Strance hadn’t completed her opinion on the matter, so it was delayed until next week,” said South Hilo Councilwoman Sue Lee Loy, who proposed the credit in a resolution.
The credit is, in part, an effort to alleviate financial strain on homeowners resulting from the COVID-19 pandemic.
The preamble to the resolution notes “the strain of paying real property taxes during the economic fallout of the pandemic” and that the corresponding decrease in county services has put an undue burden on county residents.
Lee Loy said the credit also is a way to deal with an excess of funds in the county budget. Currently, Lee Loy said, there is a balance of $52 million in the budget not yet allocated, which she said is the highest she’s seen since being elected to the council in 2016.
The $250 credit is estimated to cost the county somewhere between $6.9 and $7.5 million, Lee Loy said, depending on how many homeowners are actually eligible.
Eligibility for the credit is reserved to properties in the homeowner class — that is, those used as the owner’s primary residence. However, if during the 2021-2022 fiscal year a homeowner failed to pay any portion of real property tax due, or if their property was assessed at the minimum tax value, or if the property in question was sold, the property owner would no longer be eligible.
Lee Loy said it isn’t clear whether the resolution will have any more luck at the next meeting than it did in January.
“We’re still not sure if this is the right mechanism to apply this tax credit,” Lee Loy said. “It’s never been done before. … We’ve raised taxes by resolution before, but as far as I’ve seen, we’ve never done a tax credit at all.”
At the January hearing, county Finance Director Deanna Sako said that the terms for federal pandemic relief funds received through the American Rescue Plan Act and the Coronavirus Aid, Relief and Economic Security Act prohibit the county from using those funds to reduce taxes directly or indirectly. Because of this, it is unclear whether a tax credit using county funds offset by federal aid would run afoul of those conditions.
But Lee Loy said a decision about the credit must be made soon one way or another, because the council must approve the county’s operating budget by the end of June.
Email Michael Brestovansky at mbrestovansky@hawaiitribune-herald.com.