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HomeMy WebLinkAboutCOM 0394.002 2002-2004 ?'1 0I AL KONISHI = W~: I-_ rr ~~ONSTANCE R KIRIU L..~ ' Legislative Auditor 03 NDU Rf~ 9 58 JAY MENDE . ~~'"w Depuh• County Clerk County ofHawai`i C N~~, ~~_'''ta;,,~p;,gll Office of the County C~ 25 Aupuni Stree! Hi[o. Hawaii 96720 Telephone: (808) 961-8386 Facsirriile: (808J 961-8572 November 4, 2003 TO: Council Members ~ FROM: Constance R. Kiriu, e`C gislative Auditor Rory Flynn, Fiscal Program Review Auditor Rodney Oshiro, Legislative Analyst ~ RE: Bill Nos. 174, 175 and 176 Home Exemptions; Valuation; Nonspeculative Residential Use Assessment The Council has been forwarded three real property tax relief (benefit) Bill Nos. 174 (Home Exemptions), 175 (Valuation) and 176 (Nonspeculative Residential Use Assessment). All three bills target the homeowner in Hawaii County. The following questions and comments are submitted to enable the Council to examine the justification and intent of these bills. Consideration of the questions below may assist the council and the administration in assembling the data needed to analyze these amendments. For policy makers, the rationale is crucial to explain to constituents and will be important if and when changes in the economic, social or political climate compel future analysis. PURPOSE AND INTENT • What do the bills attempt to accomplish? Purpose and intent should be included in bill. • What are the metrics for assessing whether these bills will accomplish the anticipated tax relief? • Should abudget/expenditure metric analysis trigger a formula for tax relief? • For purposes of clarity, shouldn't we examine the idea of "tax benefits?" Is it the business of government to confer special tax benefits to targeted classes of citizens or to provide common essential services for all? • How do these homeowner bills fit into the bigger picture of property taxation? • Have other tax classes been reviewed for fairness and impacts (hotel/resort, apartment, commercial, industrial)? What real property tax tools, rules or laws will affect the tax payer? When? How? (i.e., market driven assessments, comparable homesite valuations) Are any of these tools, rules or laws factored in to the proposed bills? 'f Comm. No. ` Ref. To•Pf°0e ~ Rif. Uate BUDGET IMPACT • Is the intent of the bills to be revenue-neutral? • Based upon the principle of revenue neutrality, should we first assess where we stand respective to: ? upcoming UPW & HGEA negotiations ? possible liability stemming from Hokulia-related lawsuits ? the outcome of the Legislature's action re: a City & County of Honolulu sales tax and reapportionment of TAT revenues to the Neighbor Islands ? an assessment of growing county debt and projected CIP needs ? action on the administration's ag lands tax bill ? a "rainy day" account or the creation of a disaster and emergency special fund ? solid waste solutions ? extending sewerage systems • What is the breakdown of our county revenue projections over the next six years? What is the basis for making these projections? • What is the "island-wide infrastructure and services catch-up" plan? • What is the corresponding expenditure plan? EXAMINATION OF FAIRNESS • Hawaii ranks No. #1 in the nation in fuel taxes; 10`h in total state and local taxes per capita (survey data from 1998-2000); and 42nd in per capita property tax collections. In focusing on real property tax relief, we may be ignoring the most regressive features of tax policy in Hawaii -that is, the state income tax rates and deductions, which have not kept pace with the lower federal tax rates or deductions for over twenty years. • How do council members justify raising the Homeowner rate in 2002 and giving relief in 2003? • If the aim of the bills is to give relief to those who can not afford to pay, why not immediately propose a circuit breaker bill? • If reducing the tax burden is the main objective, then why not reduce the RPT rates? • Based on the three bills, will the increase in the market assessments offset the decrease in the bill assessments? For example, if the market assessment are 11% and the Bills are 2%, why not give every class a reduction in the RPT payment closer to the tune of 11%?