Council looks at reducing penalties for late tax payments
The cost of not paying property taxes on time could be getting lower.
The Hawaii County Council’s Finance Committee will discuss a bill today that would cut the penalty for late payment in half, from 10 percent to 5 percent.
Additionally, the bill would reduce the monthly interest rate on late payments from 1 percent to 0.5 percent.
Kona Councilwoman Brenda Ford introduced the proposal, aimed she said to help struggling homeowners.
The Finance Committee is scheduled to meet at 9 a.m. in the council chambers at the West Hawaii Civic Center, 74-5044 Ane Keohokalole Highway.
The penalties apply to all property types, including commercial, industrial and agriculture lands.
County Finance Director Nancy Crawford said Big Island property owners owed the county about $25 million as of June 30, which was the end of the last fiscal year.
“The vast majority of what is outstanding and owed is just current and from the last two years,” she said last month in regard to the late payments.
Crawford said Monday the penalty and interest rates are the same in Maui County and the City and County of Honolulu. She didn’t know the rates in Kauai County but believed the county’s fines to be fairly standard.
She said she is concerned reducing the penalties could lead to more delinquent payments.
“I think that’s a possibility,” Crawford said.
“There’s an issue of fairness on people who are making payments on time and making sure we receive our real property tax revenue in a timely fashion.”
Ford said she understands the department’s concern and “tends to agree with that philosophy.”
“But people are really hurting, and what we’re doing is adding to their burden,” she said.
“I’m not trying to slow down payment. God knows the county needs the money. It just seems to me to be a little onerous to be charging these kinds of rates at this time,” she said.
If adopted, Ford said she would be open to the rates being raised in the future.
The bill would require two positive votes by the council after being heard in committee to be enacted.
It would not affect existing delinquent payments.
In addition to charging penalties and interest, the county also has the option of foreclosing on a property.
Crawford said that occurs after three years of delinquent payment.
The county receives what is owed in taxes, penalties and interest through sale. The property owner can file a claim for the rest.