Vets tax cut headed to revision

HILO — A bill zeroing out property taxes for totally disabled veterans appeared to be cruising toward easy passage until it got stopped in its tracks last week, leading to likely changes when it comes back before the County Council on Wednesday.

Bill 165, sponsored by Kona Councilman Dru Kanuha, removes requirements for paying taxes for those designated by the Veterans Benefits Administration as “100 percent disabled or 100 percent unemployable or both.” There are 656 qualifying vets in the county in that category, representing $131,200 in property taxes, according to Finance Department staff.

Currently, totally disabled vets and their widows pay a minimum property tax on their primary homes of $200 annually, if the home is valued at $75,000 or more. Lower than that, tax is based on a sliding scale.

Council members had unanimously supported the concept earlier in the month on first reading. But when the bill came up for its final reading, they started having doubts.

Hilo Councilman Aaron Chung led the charge against adoption, saying relieving an entire class of property owners from any tax burden sets a bad precedent. He noted disabled veterans do receive compensation, and may not even be financially strapped. Other disabled individuals might be in even worse straits, he said.

“We have families whose family members have died in action. Do we give them any breaks? … How about people born with disabilities and just dealt a bad hand in life? Do they have zero taxes?” Chung asked.

“There’s no end to this … How we’re going to make up that difference?” he added. “Once you give this away, no one will ever come back and try to resurrect it. … Once we open up the flood gates for this, more and more exemptions will come and deeper and deeper in debt the county will become. I can think of no end.”

Other council members agreed that the vets should pay something, even if it’s a $100 minimum tax, rather than $200.

“Everything we do at the county costs something,” said Hilo Councilwoman Sue Lee Loy. “For the amount of services the county provides, it all costs something.”

Finance director Deanna Sako agreed.

“I feel everyone should pay something. We leave it up to the council to decide,” Sako said. “We definitely support our vets, but feel everybody should pay a little of their fair share.”

Kanuha said he understood why someone might be reluctant to support a zeroing out of taxes, but he said he feels it’s an important measure.

“The heavy discussion kind of perplexes me since we discussed it extensively and had opportunity to make changes before,” Kanuha said.

The measure was welcomed by East Hawaii and West Hawaii members of the state Board for Veterans Services, as well as the state Office of Veterans Services during earlier hearings. If passed, Hawaii County would be the first in the state to exempt disabled vets from property taxes.

Jim Traxler, a West Hawaii member, said he’s spoken with various veterans organizations on the island and all support the change.

“This bill will provide additional benefits/support for a group of veterans that gave much to their country and in many cases face a lot of hurdles in their everyday lives,” Traxler said.