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HomeMy WebLinkAboutCOM 0813.004 1998-2000 BILL 276 AN ORDINANCE AMENDING CHAPTER 19, OF THE HAWAII COUNTY CODE 1983 (1995 EDITION), RELATING TO REAL PROPERTY TAXES BY BLANE YOKOTA CORPORATE COUNSEL FOR GTE JULY 25, 2000 Good morning Committee Chair Chung and Members of the Hawaii County Finance Committee. I am Blane Yokota, Corporate Counsel testifying on behalf of GTE Hawaiian Telephone Company Incorporated. Thank you for the opportunity to testify regarding Bill No. 276, "AN ORDINANCE AMENDING CHAPTER 19, OF THE HAWAII COUNTY CODE 1983 (1995 EDITION), RELATING TO REAL PROPERTY TAXES." With all due respect to this Committee and the Council, GTE Hawaiian Tel strongly opposes Bill 276 and urges the Committee to hold this bill for the following reasons: (1) Bill 276 is unconstitutional in that it attempts to exercise taxing powers with respect to personal property and other non-real property assets of public utilities; (2) Efforts by the County to directly tax the real property of public utilities will result in double taxation; (3) The fact that this Committee is even considering Bill 276 demonstrates the inherent difficulty in directly assessing and administering a real property tax on public utilities; and (4) Even assuming, that the constitutional and administrative difficulties can be overcome, any increase in taxation revenues resulting from county taxation of public utilities will ultimately be passed on to the customers of utilities in the form of higher utility bills. Comm. Pile No. Het. To. C Ref. Data JUL 2 5 2ooo First and foremost, Bill 276 is unconstitutional in that it purports to tax the personal property and other non-real property assets of public utilities. Notwithstanding the County's ongoing dispute with the State regarding real property taxation, there is no legal authority whatsoever which grants the County the right to tax personal property or any other non-real property assets. Furthermore, GTE Hawaiian Tel understands that Bill 276 is based on a mainland statutory model. However, that model is inapplicable to the instant situation because of Hawaii's unique constitutional split regarding taxing authority. GTE Hawaiian Tel has been unable to find any other statutory scheme similar to Bill 276 in which the taxing authority does not possess the authority to tax both real property and personal property. Second, as GTE Hawaiian Tel testified last December of 1999, when the Council was considering Bill 143, any attempt by the County to directly assess real property taxes without a corresponding and concurrent change in the Public Service Company tax will result in double taxation. Third, that the Council is even considering Bill 276 demonstrates the inherent difficulties in directly assessing and administering a real property tax based on a valuation of utility assets where, as in this case the counties do not have concurrent authority to tax personal property and other non-real property assets. Lastly, it should always be remembered that any ordinance change which results in an increase in the overall tax burden on public utilities will ultimately be passed on to the customers of utilities, the Council's constituents. Accordingly, a tax on public utility real property should not be viewed as a pain-free way to increase county revenues. When the Council passed Bill 143, GTE Hawaiian Tel and the other utilities pledged to work on passage of legislation to amend Chapter 239, H.R.S., to achieve a sharing of the PSC tax revenues between the State and the counties. GTE Hawaiian Tel continues to support efforts to resume negotiations between the County and the State and will once again champion a legislative solution to the ongoing dispute regarding real property taxation. Such a solution is preferable to Bill 276 in that it will finally address the constitutional split in taxing authority between the State and the counties, it will be administratively workable in that the current method of taxation and collection will be preserved, and it will avoid any double taxation or increase in public utilities rates. For these reasons, GTE Hawaiian Tel urges the Committee to hold Bill 276. Thank you for the opportunity to provide testimony on this matter.