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<br /> The Honorable James Y. Arakaki <br /> and Members of the County Council <br /> Page 3 <br /> October 8, 2001 <br /> Major disadvantages: Harder to understand, may lead to more appeals, <br /> requires computer change, not a direct test of means. <br /> 5. Providing an additional exception for property covered woith lava <br /> Major advantage: Provides tax relief for property covered with lava and other <br /> unusable property. <br /> Major disadvantage: Less revenues to county. <br /> evaluations. Evaluations were based on how well each model addressed the <br /> issues and guiding principles above. The administration used the evaluations to <br /> select its proposal. <br /> Proposal Selected. The administration's proposal for the minimum tax <br /> combines models 4 and 5. The enclosed ordinance amends Section 19-90(g), <br /> increasing the minimum tax to ____100, with exceptions provided if: <br /> • the owner receives exemptions resulting in the minimum tax, and the value of <br /> the property's improvements is less than or equal to $75,000; or <br /> • the property is assessed at a market value of less than or equal to $500. <br /> Rationale for Selection. Real property taxes accounts for 60% of the county's <br /> General f=und budget and is a very significant source of its revenues. Services <br /> funded through real property taxes range from police and fire protection to park <br /> maintenance, recreation, and senior citizen activities. It costs the county $650 <br /> per resident to support the many services provided through real property taxes. <br /> As the cost of government rises and the population of the Big Island increases <br /> (23.6% since 1990), we must ensure that adequate funds are available to <br /> continue serving the needs of our residents. We believe that a minimum tax of <br /> $100 is reasonable considering the level of services now provided through real <br /> property taxes, and the need to at least retain this level as our population grows. <br /> The average real property tax bill in Hawaii County is $647. <br /> Exceptions to the minimum tax requirement are being proposed to hopefully <br /> address the needs of persons with limited resources and to recognize the <br /> inequity of increasing the minimum tax on properties with market values of less <br /> than $500, which includes land recently inundated by lava. The minimum tax on <br /> the land assessment of Hawaiian Home Lands (HHL) residential leases will not <br /> be treated as an exception. We plan to review the taxation of HHL leases as part <br /> of our comprehensive evaluation of the county's real property tax laws that is <br /> now taking place. <br /> <br />