Three of five bills aimed at reducing loopholes and making property tax collections more fair have survived their first reading at the County Council and will be considered a final time when the council meets early next month.
The bills came out of the Real Property Tax Stakeholders Task Force, a group that has been meeting regularly most of the year to help implement 40 recommendations contained in a 99-page March 2012 report by the International Association of Assessing Officers. The task force held its last meeting Monday.
The council gave its preliminary approval last Wednesday to three bills:
• Bill 71 reduces from three years to two years the time a property owner is delinquent in paying property taxes before the county can start foreclosure actions. The council passed the measure on first reading on a 5-3 vote, with Hilo Councilman Dennis Onishi and Puna Councilmen Greggor Ilagan and Zendo Kern voting no.
• Bill 103 requires that a person taking a property tax exemption because they are blind, deaf or totally disabled have as their primary residence the home they are taking the property exemption for. It passed first reading 8-0 with Hamakua Councilwoman Valerie Poindexter absent.
• Bill 292 requires property owners claiming the homeowners exemption file a Hawaii state tax return to prove they are full-time residents. The county won’t see the tax return, but will compare the list of homeowners taking the exemption against the state list of taxpayers. It passed first reading 8-0 with Poindexter absent.
The bills are scheduled to be taken up when the council meets Nov. 7 in Hilo.
Two other bills failed and won’t be taken up again this council session:
• Bill 293 would have removed the half-year application for a homeowner exemption, instead requiring property owners to apply for an entire year. It failed 8-0 with Poindexter absent.
• Bill 294 would have increased 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. It failed 7-1, with Kohala Councilwoman Margaret Wille the sole yes vote.
Wille, co-chairwoman of the task force, said she wanted to give something back to property owners in addition to bringing forth a lot of bills tightening requirements.
“All of this is a balancing of competing legislative initiatives,” Wille said. “We’re closing all these loopholes, so the working population, the ones who pay their bills, let’s give them a little something. It’s not gigantic.”
But fellow council members disagreed, especially in light of fiscal concerns raised by the county Finance Department.
“I would rather see savings before we start giving away additional benefits to the taxpayers,” said Finance Director Nancy Crawford.
Kona Councilwoman Brenda Ford said it could cause a number of homeowners to drop down to paying just the minimum $100 tax.
“While the intent is probably OK, this is going to lower the revenue coming into the county,” Ford told West Hawaii Today before the vote. “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.