County eyes property tax revisions

Kohala Councilwoman Margaret Wille thinks she may have found the way to eliminate fraudulent use of the homeowner property tax exemption.


Kohala Councilwoman Margaret Wille thinks she may have found the way to eliminate fraudulent use of the homeowner property tax exemption.

Wille, who has been serving on the county’s Real Property Tax Task Force, is proposing that the credit only be available for people who file a Hawaii state income tax return listing themselves as full-year residents of the island. That way, Tax Division employees can just compare the list of people claiming the exemption with a list of tax return filers, Wille said. The tax list wouldn’t say how much tax the homeowner paid or reveal any other information.

“It’s trying to bring enforce-ability and expediency,” Wille said, adding that it’s not feasible to have county staff individually check each exemption to see if the property owner actually lives at the address right now.

Wille said she doesn’t have an exact count for how many people might be claiming the homeowner credit but not actually living there, but does know of some examples.

“These are the things that people feel are abusive,” she said.

South Kona/Ka‘u Councilwoman Brenda Ford said she knows of a man who owns property in Kona, which he rents out while he lives on the mainland full-time, but still takes the deduction.

Wille’s proposal to fix the situation, Bill 292, goes before the County Council’s Finance Committee during its 9 a.m. hearing today in Hilo. Video teleconferencing is available at the West Hawaii Civic Center in Kailua-Kona and the Waimea Council office.

The county needs to “give a break to the people that are part of the fabric of our island community,” but not extend that break to people who don’t live here full-time, she said.

The bill, one of three Wille is bringing to the committee, will likely be sent to the task force with minimal discussion, Ford said. Once the task force reviews the bills, it typically sends the measures back to the council for discussion and votes.

Three such measures are also being heard today, including one introduced by Puna Councilman Greggor Ilagan, which proposed extending differentiated agricultural designations to organic farms.

Ford said she had several questions about another Wille proposal, Bill 294, which would increase the basic property tax exemption from $40,000 to $60,000. All property owners are exempted from paying taxes on the first $40,000 in property value right now. Across the island, a number of homeowners would drop down to paying just the minimum $100 tax if the exemption was $60,000, Ford said.

“While the intent is probably OK, this is going to lower the revenue coming into the county,” Ford said. “If it was net neutral, it might be different. It’s not.”

A study several years ago showed the county spent about $1,300 per parcel per year on county services, Ford said. While she wouldn’t want to see every property forced to pay exactly that figure, she said dropping more homeowners to the minimum tax rate could have a negative effect on the county’s budget.

Wille said fixing the loophole the homeowners loophole and eliminating the ability to apply for a homeowners exemption mid-year if a home is purchased by someone who intends to live in it, her third proposal on today’s agenda, will offset increasing the valuation exemption to $60,000.

“I think we’ll save much more than what we’re doing,” she said.

This afternoon, the Public Safety and Mass Transit Committee is scheduled to host a discussion at 3 p.m. on the county’s primary election problems and ask County Clerk Stewart Maeda for his back-up plan for November’s General Election.

“It doesn’t have to be extensive,” said Ford, who requested the update. “There’s got to be some plan of action if we’re cut off.”


She said she just wants a general outline, in writing, of the plan for any natural disaster, not just the impending lava flow, but also an earthquake, a tropical storm, hurricane or other event.

Following Tropical Storm Iselle, some residents of lower Puna were unable to leave their neighborhoods the day of the primary, Ford said. Not all of those residents were in the two precincts that were allowed to vote the following Friday.

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