The following testimony was submitted by the Grassroot Institute of Hawaii for consideration by the Honolulu County Council Budget Committee on July 25, 2023.
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July 25, 2023
9 a.m.
Honolulu City Council Chambers
To: Honolulu City and County Council, Committee on Budget
Councilmember Radiant Cordero, Chair
Councilmember Matt Weyer, Vice Chair
From: Grassroot Institute of Hawaii
Ted Kefalas, Director of Strategic Campaigns
RE: Bill 34 (2023) — RELATING TO REAL PROPERTY TAXATION
Comments Only
Dear Chair and Committee Members:
The Grassroot Institute of Hawaii would like to offer its comments on Bill 34 (2023), which would increase the standard home exemption from $100,000 to $250,000 and the exemption for homeowners age 65 and older from $140,000 to $300,000.
The Institute supports the intent of this measure. Compared to Honolulu’s current $100,000 exemption — soon to be $120,000[1] — Kauai and Maui each offer home exemptions of a much higher value, at $160,000 and $300,000 respectively.[2]
If the Council is interested in further increasing the value of the home exemption, it should explore the “Boston model,” whereby the dollar value of the home exemption is tied to the average assessed value of properties in the Residential tax class.
According to the Boston Municipal Research Bureau, the residential exemption is a reduction in real estate taxes for all those homeowners who occupy their property as their principal residence. In Boston, the residential exemption amount is equivalent to 35% of the average assessed value of all single-family residential properties.
The bureau said that In fiscal 2018, the residential exemption tax savings in Boston was $2,538 for eligible residential properties. That amount is equivalent to a property value reduction of $242,220.[3]
If Honolulu were to copy Boston’s exemption, it would save Honolulu homeowners significantly whenever property assessments increased by a large amount, as they did in fiscal 2023 and 2024.
Set to a percent of the average assessed value of parcels in the Residential tax class, the homeowner exemption would yield the following exemption amounts for fiscal 2024:
The value this model provides when assessments increase can be illustrated by comparing the fiscal 2024 exemption amounts to those from the year before. Clearly, the Boston model can serve as an effective brake against quickly increasing assessments.
Overall, indexing the value of the home exemption would ensure that property tax relief automatically increases when the overall value of the Residential tax class increases, which would spare the Council from having to revisit the value of the homeowner exemption every year.
Thank you for the opportunity to testify.
Sincerely,
Ted Kefalas
Director of Strategic Campaigns
Grassroot Institute of Hawaii
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[1] Ben Angarone, “Honolulu Property Owners Would Get Quick Relief With Tax Measures Passed By City Council,” Honolulu Civil Beat, July 7, 2023.
[2] Jonathan Helton, “How Hawaii’s county lawmakers can provide tax relief to offset higher property assessments,” Grassroot Institute of Hawaii, April 2023, p. 9.
[3] “Boston Homeowner Tax Benefit,” Boston Municipal Research Bureau, Report No. 19-2, March 6, 2019, p. 4. See also Diana Coldren, “Qualified Taxpayers Can Apply for Residential Exemption on Their Real Estate Tax-Bill,” North End Regional Review, Jan. 19, 2023.
