Charter Commission rejects ballot measure abolishing minimum property tax

HILO — Some owners of vast Hamakua land holdings don’t pay much more in annual property taxes than an owner of a tiny lot on a Puna lava field, says Kevin Hopkins, who wants to make the county’s property taxes more equitable.

Hopkins, a University of Hawaii at Hilo aquaculture professor and member of the county Charter Commission, was unsuccessful getting fellow commissioners to approve a ballot amendment that would eliminate the county’s annual $200 minimum tax. The tax is applied to all property owners whose property falls below a certain taxable value.

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To illustrate his point, Hopkins used his own 8,000-square-foot Nanawale lot in a comparison to what he said was a randomly selected 1,412-acre Hamakua parcel. The Nanawale parcel, with a market value of $4,300, is charged the $200 minimum tax. The Hamakua parcel, with a market value of $1.38 million, is charged $965.86 in annual taxes.

In other words, the owner of the Nanawale property pays 5% of the property value in taxes, while the owner of the Hamakua parcel pays 0.07% of the property value in taxes.

“We’re basically looking at an issue of inequality in our tax system,” Hopkins told his fellow commissioners Thursday. “Are we trying to balance our budget on the backs of people who have the cheapest lots? We’re just saying, be fair about it.”

There are 46,000 parcels charged the minimum tax of $200, which was raised from $100 in 2017. The minimum tax brings in somewhere between $4 million and $5 million annually, said Property Tax Administrator Lisa Miura.

She and Finance Director Deanna Sako justify the minimum tax as equitable, because everyone uses county services such as police, parks, roads and the like, no matter how much their property is worth.

“Everyone should pay their fair share because there’s a lot of services on our island that people don’t pay for,” Sako said.

Tax exemptions to promote agriculture play a big role in the tax rate differences.

“I support agriculture, but we have a very unfair process right now,” Hopkins said. “I want to support the real farmers but I don’t like what we’ve seen happen in Hamakua. … A few people farming but most really sitting idle.”

Miura said a task force is currently studying the county’s agricultural and other exemptions and will bring recommendations to the County Council sometime in the future. The task force has apparently been meeting since 2017, but it isn’t subject to the state Sunshine Laws requiring open meetings, so its progress is unknown.

“The task force will address a lot of the problem,” Miura told Hopkins. “I disagree with your statement that we’re doing nothing.”

The county has been struggling with making the property tax code more equitable for years. A 2012 report provided 40 recommendations, but most, so far, have not been implemented.

The Charter Commission on Thursday voted 9-1 against the measure that would put abolishing the minimum tax on the ballot. Hopkins was the sole supporter. Commissioner William Bergin was absent.

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Commissioner Bobby Jean Leithead Todd, an attorney, said her interpretation of the state constitution is that taxing power on property is the purview of the county administration and shouldn’t be part of the charter.

“I think trying to put something like this in the charter is basically undermining our structure and it’s too inflexible,” Leithead Todd said. “I don’t know you can legally do it in the charter.”

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