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HomeMy WebLinkAboutCOM 0813.009 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 VERIZON HAWAII AUGUST 8, 2000 Good morning Committee Chair Chung and Members of the Hawaii County Finance Committee. I am Blane Yokota, Corporate Counsel testifying on behalf of Verizon Hawaii ("Verizon) formerly known as GTE Hawaiian Tel. 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, Verizon 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. No. File No. Ref. To: C Ref. Date A 0 f U ZUUU (5) Verizon will begin paying a portion of its PSC tax under protest on August 10, 2000. At the same time or at the lastest within 30 days after making its first payment under protest Verizon will file a complaint regarding the PSC tax and the double taxation issue. It is Verizon's hope and intention that these actions will be followed by renewed negotiations between the County and the State to resolve the double taxation issue. 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, Verizon 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. Verizon 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 Verizon 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. Fourth, 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, Verizon, formerly GTE 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. Verizon 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, Verizon urges the Committee to hold Bill 276. Lastly, Verizon respectfully submits that the action by the public utilities to pay PSC taxes under protest will result in renewed settlement negotiations which have the greatest chance of resolving the longstanding real property tax dispute between the Counties and the State. Accordingly, passage of Bill 276 at this time would not add any impetus to such negotiations nor contribute in a meaningful way to the resolution of said dispute. Thank you for the opportunity to provide testimony on this matter.