Hawaii’s teachers and keiki deserve adequate funding, just as Hawaii’s voters deserve transparency from government officials. Unfortunately, a proposed constitutional amendment facing voters in November falls short on both those fronts.
Intended to help fund the state public school system, the proposal put forth via Senate Bill 2922 asks:
“Shall the legislature be authorized to establish, as provided by law, a surcharge on investment real property to be used to support public education?”
Critics say the terms “surcharge” and “investment real property” are vague and open to abuse, while overall the measure would permit the state, for the first time, to get into the property tax business.
The term “surcharge,” for example, is a synonym for “surtax,” so why not use the word that is more clear? Even groups that support the bill refer to it as a “property tax.”
As for “investment real property,” that could encompass many things, including long-term rentals and commercial properties. In an email response to the Grassroot Institute of Hawaii, Paul Xavier, founder of Hawaii Real Estate Investors, said, “To me — and I would think to most real estate investors — it would mean a non-owner-occupied property that is being rented out for cashflow. … This could be [a] condo, townhouse, house, commercial property or even a strip mall.”
Higher taxes on such properties, of course, would have to be paid by somebody, and in this case most likely the renters — if the increased taxes didn’t drive the property owners out of businesses to begin with.
Clearly, granting such taxing power to the state could have an enormous impact on our economy. But the ballot question does not inform voters about this potential; it doesn’t even use the word “tax.” This is not transparent.
All four of Hawaii’s county governments unsuccessfully sued the state over the language of the amendment, hoping to block it from appearing before voters on Nov. 6.
Prior to the adverse Sept. 7 ruling, Donna Leong, Honolulu corporation counsel, said on behalf of the counties that the ballot “fails to mention the most substantive effect of the proposed constitutional amendment, which is that the state Legislature seeks to give itself another taxing power, and that that is the power to impose real property taxes.”
First Circuit Court Judge Jeffrey Crabtree rejected the request to block the vote. But even he said, “Is it as thorough and definitive as one would like? No.”
In an almost identical case in Arizona, that state’s high court on Aug. 29 ruled to block a ballot question that asked whether the state should tax “high-income earners” to help fund education, on the grounds that its language created “danger of confusion or unfairness.”
Supporters of Hawaii’s proposed amendment say its wording is purposely vague because it would be a constitutional amendment, with the details to be worked out by the Legislature after it is approved. But what protections are there in the proposed amendment to ensure that it wouldn’t be abused?
The Arizona ruling showed the value of transparency for voters in that state, and it should have been mirrored in Hawaii.
Now it’s up to Hawaii voters to see through the vog and help make Hawaii affordable for our teachers and keiki.
Keli‘i Akina is the president of the nonprofit public policy think tank, Grassroot Institute of Hawaii.