2020-02-21 Letter to Donovan M. Dela Cruz and Gilbert S.C. Keith-Agaran SB 2054, SD1 Relating to Infrastructure Improvement Districts

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os Roy Takemoto Managing Director Harry Kim flavor oi•• , Barbara J. Kossow eTE' f'N�a!=' Deputy;Managing Director County of Hawai i Office of the Mayor 25 Aupuni Street,Suite 2603 • Hilo, Hawai'i 96720 • (808)961-8211 • Fax(808)961-6553 KONA: 74-5044 Ane Keohokalole Hwy., Bldg C • Kailua-Kona, Hawai'i 96740 (808)323-4444 • Fax(808)323-4440 February 21, 2020 Senator Donovan M. Dela Cruz, Chair Senator Gilbert S.C. Keith-Agaran, Vice Chair Committee on Ways and Means Dear Chair Dela Cruz, Vice Chair Keith-Agaran, and Committee Members: RE: SB 2054, SD1 Relating to Infrastructure Improvement Districts I respectfully and urgently request that SB 2054, SD1, creating a State surcharge on certain real property, not move forward. This bill would implement the constitutional amendment proposed in SB 2074. As I testified on SB 2074, SD1, I recognize that such a Constitutional provision might have some superficial political appeal, restricted as it is to the rail corridor. However, no matter what the potential benefits of SB 2074, SD1, impinging on the counties' singular source of income would be devastating to us. As you well know, the counties have little or no control over their revenue except in one area, real property taxes, and therefore we rely overwhelmingly on real property taxes to fund our operations. For the County of Hawaii, a full 74% of our revenue is from property taxes. The burden of the property tax can be heavy for many residents, but since it is virtually the only tool we have, we use it the best we can. A surcharge on properties would obviously limit County options and make it even more difficult to balance our budgets. Therefore, we have to jealously guard this taxing authority, and ask that you not break the bright line of separation. Yes, SB 2074 and this bill are only for rail, so, at least for now, they would only affect Oahu. But also introduced this year was HB 2671, authorizing DOE to tax real property statewide. Two years ago, a constitutional amendment passed this Legislature authorizing the State to tax residential investment property. Who knows what next year will bring. County of Hawaii is an Equal Opportunity Provider and Employer.