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Include business properties in Big Island property tax break

The following testimony was submitted by the Grassroot Institute of Hawaii for consideration by the Hawaii County Council for its May 29, 2024 hearing.
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May 29, 2024, 5 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

RE: FISCAL YEAR 2024-2025 REAL PROPERTY TAX RATES

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.

Under Mayor Mitch Roth’s earlier proposal, the rates for the homeowner and affordable rental housing classes would have been reduced from $6.15 per $1,000 of assessed value to $5.95 per $1,000. This would have saved county taxpayers about $2.74 million in the upcoming year.

Grassroot was delighted to learn that the Council has proposed to further reduce the rates on these two classes, from $6.15 to $5.75 per $1,000. This $0.40 per $1,000 cut would save taxpayers $5.48 million in the upcoming year, compared to the current rates.

However, we would like to reiterate our suggestion that the Council expand the rate reductions to the commercial and industrial tax classes.

Both industrial and commercial properties 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 increase 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 owners about $1.129 million. These figures, as shown in Table 1 below, represent a drop in the bucket compared to the proposed almost $1 billion operating budget 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 resolution.

Thank you for the opportunity to testify.

Jonathan Helton
Policy Researcher
Grassroot Institute of Hawaii
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[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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