2020-02-18 Letter to Donovan M. Dela Cruz and Gilbert S.C. Keith-Agaran SB 2074, SD1 Prop an Amen to the Constitution of SOH to Authorize the Leg to Establish a Surcharge on RP to Fund Infrastructure Improvements Near RTS

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�Ntv or'''w', . Roy Takemoto t? , 7i, . Managing Director 1,,,`�i Harry Kim .i&-.. 't;. : Alayor Barbara J. Kossow •�r�,or-N►�' Deputy Managing Director County of Hawaii Office of the Mayor 25 Aupuni Street, Suite 2603 • Hilo, Hawaii 96720 • (808)961-8211 • Fax(808)961-6553 KONA: 74-5044 Ane Keohokalole Hwy., Bldg C • Kailua-Kona, Hawaii 96740 (808)323-4444 • Fax(808)323-4440 February 18, 2020 Senator Donovan M. Dela Cruz, Chair Senator Gilbert S.C. Keith-Agaran, Vice Chair Committee on Ways and Means Dear Chair Dela Cruz, Vice Chair Keith-Agaran, and Committee Members: RE: SB 2074, SD1 Proposing an Amendment to the Constitution of the State of Hawaii to Authorize the Legislature to Establish a Surcharge on Real Property to Fund Infrastructure Improvements Near Rapid Transit Stations I respectfully and urgently request that SB 2074, SD1, amending the Constitution to authorize a State surcharge on certain real property, not move forward. I recognize that SB 2074, SD1 may have some superficial political appeal, restricted as it is to the rail corridor. However, no matter what the potential benefits of SB 2074, SD1 might be, impinging on the counties' singular source of income would be devastating to us. As you well know, the counties have little or no control over their revenue except in one area, real property taxes, and therefore we rely overwhelmingly on real property taxes to fund our operations. For the County of Hawaii, a full 74% of our revenue is from property taxes. The burden of the property tax can be heavy for many residents, but since it is virtually the only tool we have, we use it the best we can. A surcharge on properties would obviously limit County options and make it even more difficult to balance our budgets. Therefore, we have to jealously guard this taxing authority, and ask that you not break the bright line of separation. Yes, this bill is only for rail, so at least for now, it would only affect Oahu. But also introduced this year was HB 2671, authorizing DOE to tax real property statewide. Two years ago, a constitutional amendment passed, by this Legislature, authorizing the State to tax residential investment property. Who knows what next year will bring. The drafters of our Hawaii Constitution must have understood that it was critical to the viability of the counties that they have exclusive authority over the property tax. County of Fiawai`i is an Equal Opportunity Provider and Employer.