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HomeMy WebLinkAboutCOM 0480.007 1998-2000 BILL NO. 143, DRAFT 2 BY RECEIVED BLANE T. YOKOTA Ey._-.._-._,_„~ COUNSEL pate--- - GTE County Council DECEMBER 15, 1999 I am Blane Yokota, Counsel for GTE Hawaiian Telephone Company Incorporated ("GTE Hawaiian Tel"), testifying on Bill No. 143, Draft 2. As a preliminary matter I would like to thank the Council for allowing GTE Hawaiian Tel to testify at the first reading of this bill and for the thoughtful questions and discussion by the Council on this matter. Respectfully, GTE Hawaiian Tel still opposes Bill No. 143, Draft 2. I will not repeat all of the points raised at the last council session. However, GTE Hawaiian Tel would like to raise a new issue and a proposed amendment to Bill 143, Draft 2 for the Council's consideration. This issue and proposed amendment go specifically to the concern of the Councilmembers that the Council act to strengthen its position in its litigation with the State over the sharing of Public Service Company ("PSC") tax revenues in excess of 4%. First if Bill No.143, Draft 2 is passed in its present form it may have the unintended effect of actually limiting the remedies available to the County in its lawsuit against the State. More specifically under Bill No. 143, Draft 2, the process of assessing and collecting real property taxes from public utilities will begin effective January 1, 2000. Once that process begins the State may then argue that the County has given up the right to claim any entitlement to a portion of PSC tax revenues collected for the same period. The County will of course still be able to argue that State collections under the PSC tax which are "in lieu of real property taxes' are unconstitutional. However, since the County would already be in the process of collecting real property taxes from public utilities, the only relief still available to the Court may be to invalidate Chapter 239 of State law (i.e. the County would not~b[eQ Coanm. No. /-fJo• Q~ / F1'le No. H < < ~R i f Ref. To;Ares~gt~ co~wct~ Ref. Date.. ~ 1 5 entitled to receive a double taxation which would occur if the Court ordered the State to give a portion of the PSC tax revenues to the County on top of the real property taxes collected directly by the County). If the County's ultimate litigation goal is to share in the PSC tax revenues it must give careful consideration to actually beginning the process of directly collecting real property taxes from public utilities. As an alternative, GTE Hawaiian Tel respectfully proposes that the County amend Bill No. 143, Draft 2 to expressly state the County's claim to a share of the PSC tax revenues while at the same time avoiding the double taxation problem. GTE Hawaiian Tel suggests Bill No. 143, Draft 2 be amended to add the following language to Section 19-89 of the County Code: This County does not recognize the exemption from real property taxation specified in Chapter 239 Hawaii Revised Statutes. However, for so long as the State of Hawaii continues to collect a Public Service Company tax under Chapter 239 in excess of the State General Excise Tax under Chapter 237, the County claims such excess portion of the Public Service Company tax revenues and shall pursue this claim in lieu of directly collecting real property taxes from those public utilities previously exempt from real property taxation under Chapter 239. The County director of finance shall deposit all funds received in connection with said claim into the general fund. This proposed amendment avoids the double taxation about which GTE, the other utilities, and the Councilmembers have expressed serious concern. At the same time it makes clear that the County no longer recognizes the Chapter 239 exemption and instead chooses to exercise its authority to pursue its claim against the State of Hawaii. GTE continues to believe that these same goals can also be served by the deferral of actual real property tax collection that it proposed. Moreover, deferring collection also addresses the issue of limiting a possible judicial remedy to invalidation of Chapter 239. Accordingly, GTE again urges the Council to consider the amendment proposed by Councilmember Leithead-Todd at the last council session. GTE respectfully proposes that both of these alternatives are preferable to the commencement of double taxation in a little more than two weeks. BILL NO. 143 (Draft 3) AN ORDINANCE AMENDING CHAPTER 19 OF THE HAWAII COUNTY CODE 1983 (1995 EDITION), RELATING TO REAL PROPERTY TAXES. BE IT ORDAINED BY THE COUNCIL OF THE COUNTY OF HAWAII: SECTION 1. Section 19-89 of the Hawaii County Code dealing with real property tax exemptions is being amended to delete those exemptions under State law that are no longer valid or should be controlled by the County. These include chapter 186, Hawaii Revised Statues, tree farms, which was repealed by the legislature in 1989 and adopted by the County in section 19-78, Hawaii County Code; chapter 239, which exempts public service companies which pay the public service company tax to the State in lieu of real property taxes; and chapter 514A, which grants exemptions to condominiums, which we recognize in section 19-71, Hawaii County Code. SECTION 2. Chapter 19, article 10, section 19-89 of the Hawaii County Code 1983 (1995 edition), is amended to read as follows: Section 19-89, [Exemption] Exemptions for certain Hawaiian Homes property[.], and other agencies. Exemptions from real property taxes as set forth in chapter 53, chapter 183, [chapter 186], and chapter 234, [chapter 239 and chapter 514A,] Hawaii Revised Statutes, and in section 208 of the Hawaiian Homes Commission Action, and which were enacted prior to November 7, 1978, shall remain in effect and be recognized by this County in its administration of the real property tax system, provided, that all references to the director of taxation or the department of taxation shall now be deemed to refer to the designated representative of the mayor who shall also be subject to approval by the council. This County does not recognize the exemption from real property taxation specified in chapter 239 Hawaii Revised Statutes. However, for so long as the State of Hawaii continues to collect a Public Service Company tax under chapter 239 in excess of the State General Excise Tax under chapter 237, the County claims such excess portion of the Public Service Company tax revenues and shall pursue this claim in lieu of directly collecting real property taxes from those public utilities previously exempt from real property taxation under chapter 239. The County director of finance shall deposit all funds received in connection with said claim into the general fund. Hawaiian Homes lands, as defined in section 201, Hawaiian Homes Commission Act, 1920, as amended, real property, exclusive of buildings, leased and used as a homestead (houselots, farm lots, and pastoral lots), pursuant to section 207(a) and subject to the conditions of section 208 and 216 of the Hawaiian Homes Commission Act, 1920, shall be exempt from real property taxes, except for the minimum tax, and as provided for by this section. Disposition of Hawaiian home lands for other than homestead purposes is deemed fully taxable and will not qualify for the exemption granted by this section. The respective homestead lessee of Hawaiian home lands shall continue to qualify and receive other personal exemptions, provided that claims for the exemptions are timely filed, including the seven-year limitation on the exemption afforded by section 208 of the Hawaiian Homes Commission Act, 1920. SECTION 3. Material to be repealed is bracketed. New material is underscored. In printing this ordinance, the brackets and bracketed material and underscoring need not be included. SECTION 4. If any provision of this ordinance, or the application thereof to any person or circumstance, is held invalid, such invalidity shall not affect other provisions or applications of the ordinance which can be given effect without the invalid provision or application, and to this end, the provisions of this ordinance are declared to be severable. SECTION 5. This ordinance shall take effect upon its approval.