HomeMy WebLinkAboutCOM 0813.007 1998-2000
THE GAS COMPANY_~O
Citizens Energy Services
August 8, 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 as
part of the definition of real property is inconsistent with what have become the accepted
definitions of real property. We believe that such a broad definition also exceeds what the
1978 Constitutional Convention delegates had in mind when they agreed to delegate the
real property taxing authority to the Counties.
Comm. No. W3' 000?
File No.r'
Ref, To: 7 C
Ref. Date AM i 0 2000
Chair Aaron S.Y. Chung
and Members of the Committee
August 8, 2000
Page 2
Currently, The Gas Company's utility division pays 8.885 % of its revenues in taxes to
either to the State or County (Public Service Company (PSC) tax, Public Utility Fee and
Franchise Fee). This is over twice the amount of taxes collected from other private
companies. Given the passage of Bill 143 by the County of Hawaii in 1999, we are now
subject to a real property tax by the County of Hawaii. While we continue to challenge
the imposition of a real property tax, if such a tax is eventually held to be valid, The Gas
Company strongly believes that our utility property should be assessed in the same
manner as other property owners. Accordingly, we oppose the passage of Bill 276,
which establishes a different methodology for utility companies.
I would like to reiterate The Gas Company's continued support of State legislation to
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 for the counties to receive adequate
revenues from their 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 issue, please contact me at 808-535-5913.
Sincerely,
Steven P. Golden
Manager Government
Affairs & Planning