HomeMy WebLinkAboutCOM 0813.002 1998-2000
THE GAS COMPANY-40
Citizens Energy Services
July 25, 2000
Chair Aaron S.Y. Chung
and Members of the Committee
Finance Committee
Hawaii County Council
25 Aupuni Street
Hilo, Hawaii 96720
Dear Chair Chung and Members of the Finance Committee:
Re: Bill 276, Relating to Real Property Tax
Thank for allowing The Gas Company the opportunity to provide comments on Bill 276,
relating to real property taxes.
The Gas Company opposes the passage of this bill which proposes to use The Gas
Company's annual financial report, filed with the Public Utilities Commission (PUC) in
accordance with Chapter 269, HRS, as the basis for establishing the fair market value of
our utility real property, for real property assessment purposes, within the County of
Hawaii.
First, we don't believe that the annual financial report filed with the PUC is suited for a
real property assessment. No other industry has its real property tax assessment
determined in this manner. Further, there is no rationale, which justifies the imposition
of an entirely different process and standard, from everyone else, to determine real
property values. Singling out the utility companies in such a manner, unfairly taxes our
utility consumers who will ultimately have to shoulder the burden of paying for such a
tax.
Second, this proposed ordinance exceeds the County's power to tax real property
delegated by the Hawaii State Constitution, by attempting to incorporate both real and
personal property into the valuation. The inclusion of personal property and services was
never intended by the delegates to the 1978 Constitutional Convention who debated and
eventually approved the transfer of the real property taxing power to the counties. Such a
definition of real property is inconsistent with what has become the accepted definitions
of real property and one which we believe the Constitutional Convention delegates had in
mind when delegating the real property taxing authority to the Counties.
Comm. No. 3 •
File, No.
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Chair Aaron S.Y. Chung
and Members of the Committee
July 25, 2000
Page 2
Currently, The Gas Company's utility division pays a Public Service Company (PSC)
tax, a Public Utility Fee, and a Franchise Fee, totaling 8.885 % of its revenues in taxes, to
either to the State or County. This is over twice the amount collected from other private
companies. Given the intent behind the adoption of the PSC tax and that 8.885% of
revenues are already paid in taxes and fees, to impose yet another tax in the form of a real
property assessment is tantamount to double taxation, which our utility consumers will
end up paying in higher utility bills.
The Gas Company continues to support the passage of State legislation that would
apportion to the counties that part of the PSC tax in excess of 4 percent. We believe that
this is both the fair and most efficient method of dealing with the counties' real property
taxing authority.
In summary, we recommend that Bill 276 be filed and that the County of Hawaii and the
utilities continue to work together to convince the State to share a portion of the PSC tax
with the counties. This will ensure that utility consumers on the Island of Hawaii are not
burdened with higher utility rates.
Thank you again for the opportunity to provide our comments on Bill 276. If you have
any questions concerning this letter, please contact me at 808-535-5913.
Sincerely,
Steven P. Golden
Manager Government
Affairs & Planning