The following testimony was submitted by the Grassroot Institute of Hawaii for consideration by the Honolulu City and County Council on April 19, 2023.
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April 19, 2023
10 a.m.
Honolulu City Council Chambers
To: Honolulu City and County Council
Councilmember Tommy Waters, Chair
Councilmember Esther Kiaʻāina, Vice Chair
From: Grassroot Institute of Hawaii
Ted Kefalas, Director of Strategic Campaigns
RE: RESOLUTION 2023-33 — DETERMINING THE REAL PROPERTY TAX RATES FOR THE CITY AND COUNTY OF HONOLULU FOR THE FISCAL YEAR JULY 1, 2023 TO JUNE 30, 2024
Comments Only
Dear Chair and Committee Members:
The Grassroot Institute of Hawaii would like to offer its comments on Resolution 2023-33, which would set Honolulu County’s property tax rates for fiscal 2024.
The Institute appreciates the Council’s efforts to provide homeowners tax relief; however, we also would like to share with you our analysis of two possible changes to the county’s property tax rates, in case you decide changes to the rates would be a good way to provide tax relief.
For context, the rates currently proposed in this resolution would generate approximately $1.71 billion in property tax revenues, up from about $1.5 billion last year.[1]
Scenario 1: A 10-cents-per-$1,000 rate cut
Our first scenario considers the effect a rate cut of 10-cents-per-$1,000 would have on the owners of Residential, Residential A (tier 1), Commercial, Industrial, Agricultural, Preservation and Vacant Agricultural properties.[2] Such a cut would save the owners of these properties about $26.7 million.
Scenario 1: 10-cents-per-$1,000 rate cut
| Class | Rates | Assessed value | Revenue |
| Residential | 0.0034 | $197,803,526,000 | $672,531,988 |
| Residential A 1 | 0.0044 | $29,223,862,003 | $128,584,993 |
| Residential A 2 | 0.0105 | $16,159,324,000 | $169,672,902 |
| Commercial | 0.0123 | $23,445,116,033 | $288,374,927 |
| Hotel and Resort | 0.0139 | $17,603,467,000 | $244,688,191 |
| Industrial | 0.0123 | $14,355,571,033 | $176,573,524 |
| Agricultural | 0.0056 | $1,394,616,030 | $7,809,850 |
| Preservation | 0.0056 | $471,296,000 | $2,639,258 |
| Vacant agricultural | 0.0084 | $43,193,000 | $362,821 |
| Bed and breakfast home | 0.0065 | 0 | 0 |
Scenario 2: Revenue freeze
Our second scenario considers the effect of a revenue freeze.
If tax revenues from the Residential, Residential A (tier 1), Commercial, Industrial, Agricultural and Preservation classes were frozen at fiscal 2023 levels and rates were adjusted accordingly, this would result in about a $126 million tax reduction.
Scenario 2: Revenue freeze
| Class | Rates[3] | Assessed value | Revenue |
| Residential | 0.00321 | $197,803,526,000 | $634,513,000 |
| Residential A 1 | 0.00311 | $29,223,862,003 | $90,980,000 |
| Residential A 2 | 0.01050 | $16,159,324,000 | $169,672,902 |
| Commercial | 0.01200 | $23,445,116,033 | $281,263,000 |
| Hotel and Resort | 0.01390 | $17,603,467,000 | $244,688,191 |
| Industrial | 0.01116 | $14,355,571,033 | $160,236,000 |
| Agricultural | 0.00534 | $1,394,616,030 | $7,450,000 |
| Preservation | 0.00550 | $471,296,000 | $2,591,000 |
| Vacant agricultural | 0.00850 | $43,193,000 | $367,141 |
| Bed and breakfast home | 0.00650 | 0 | 0 |
Conclusion
The scenarios outlined above are just two suggestions for how the Council could provide tax relief in light of the county’s higher property tax assessments.
In an upcoming report — which we would like to share with you upon its release — we discuss other ways the County could provide property tax relief, including exemptions, tax credits and programs intended to benefit small businesses.
The District of Columbia, for example, offers a tax credit to qualified small retailers who have operated in D.C. for a certain number of years.[4]
Such a relief program in Honolulu could target startup entrepreneurs and small businesses that are the backbone of any healthy economy.
Whichever policies you adopt, we look forward to continued dialogue on this important issue.
Thank you for the opportunity to testify.
Sincerely,
Ted Kefalas
Director of Strategic Campaigns
Grassroot Institute of Hawaii
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[1] “City and County of Honolulu Real Property Tax Valuation for Tax Year 2022 – 2023,” Technical Branch, Real Property Assessment Division, Department of Budget and Fiscal Services, City and County of Honolulu. August 2022.
[2] On Maui, Mayor Richard Bissen has proposed a similar 10-cents-per-$1,000 reduction for certain owner-occupied units in his fiscal 2024 budget. See Melissa Tanji, “Mayor’s $1B budget request calls for a slight increase,” The Maui News, March 25, 2023.
[3] Rates rounded to the nearest thousandth.
[4] “Small Retailer Property Tax Relief Credit Frequently Asked Questions (FAQs),” Washington, D.C., Office of Tax and Revenue, accessed Jan. 23, 2023.
