Extend property tax rate cuts beyond just housing classes

The following testimony was submitted by the Grassroot Institute of Hawaii for consideration by the Hawaii County Council on May 14, 2024.

May 14, 2024, 5:30 p.m.
Hawaiʻi County Building

To: Hawaii County Council
      Heather Kimball, Chair
      Holeka Goro Inaba, Vice-Chair

From: Grassroot Institute of Hawaii
           Jonathan Helton, Policy Researcher


Aloha Chair Kierkiewicz, Vice-Chair Inaba and other members of the Council,

The Grassroot Institute of Hawaii would like to offer its comments in support of the proposal to lower fiscal 2025 property tax rates on the homeowner and affordable rental housing tax classes. This is a sound and very welcome proposal.

However, we would like to suggest that the Council expand the reductions to other tax classes as well — namely the industrial and commercial classes — since they too could benefit from property tax relief.

Under the current proposal, the rates for the homeowner and affordable rental housing classes would be reduced from $6.15 per $1,000 of assessed value to $5.95 per $1,000. This would save county taxpayers about $2.74 million in the upcoming year.

For industrial and commercial properties, both currently are taxed at the rate of $10.70 per $1,000 of assessed value. We suggest that amount be lowered to $10.05 per $1,000, which is what the rates were in fiscal 2017.[1]The Council increased the rate for those classes to $10.70 in fiscal 2018.[2] Since then, the assessed values of the properties in those classes have increased significantly.

In 2018, the assessed value of the commercial class was $1.549 billion. Today it is $2.352 billion — a 51% increase. Likewise, the assessed value of properties in the industrial class increased from $1.077 billion in 2018 to $1.738 billion today — a 61% increase.

These higher assessments translate into higher tax bills. At the same time, Hawaii County business owners and entrepreneurs have seen their utility, labor and goods costs have increased significantly since 2018, so it seems an appropriate time for the county to grant them some tax relief — one of the few costs for all Hawaii Island residents that the county can control.

Overall, this reduction would save business owners in the commercial class about $1.528 million and industrial landowners about $1.129 million. These figures, as shown in Table 1 below, represent a drop in the bucket compared to the proposed $920 million operating budget now before the Council.

But again, even if you do not see fit to expand the proposed property tax reductions to industrial and commercial properties, Grassroot supports this bill.

Thank you for the opportunity to testify.

Jonathan Helton
Policy Researcher
Grassroot Institute of Hawaii

[1] COUNTY of HAWAII REAL PROPERTY TAX VALUATION for FISCAL YEAR 2016-2017,” Real Property Assessment Division, City and County of Honolulu.
[2] “COUNTY of HAWAII REAL PROPERTY TAX VALUATION for FISCAL YEAR 2017-2018,” Real Property Assessment Division, City and County of Honolulu.

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