There will be no tax breaks for Hawaii County property owners this year, after the County Council on Thursday shot down attempts by three council members to divvy up for property owners a budget windfall stemming from a booming economy that sent property values skyrocketing.
Instead, the council, by default, opted to keep the current tax rates the same, despite an attempt by Mayor Mitch Roth to provide relief in his $779.7 million budget proposal that was already increased by 27.8% over the current year.
North Kona Councilman Holeka Inaba, Kohala Councilman Tim Richards and Hilo Councilwoman Sue Lee Loy tried to bring taxes down, but a council majority couldn’t agree on whether homeowners or commercial establishments like hotels and resorts should get the bigger break. In the end, no one did.
Several council members were inclined to keep the tax rates the way they are, under the theory it won’t make that much difference to property owners, any business relief probably wouldn’t trickle down to consumers and it would be hard to bring tax rates back up once the economy cools.
That move was led by Hamakua Councilwoman Heather Kimball, with Hilo Councilman Aaron Chung and several others following suit.
“People have made a lot of money off Hawaii for decades,” said Kona Councilwoman Rebecca Villegas, in justifying not cutting commercial taxes. “I don’t want to have to do this. I don’t want to tax, tax, tax. No one wants to do this.”
Inaba took a contrary view.
“To take $6 million more than we need, I don’t understand,” Inaba said. “I just don’t think its right for the county to tax when we don’t even know where that $6 million will go.”
Lee Loy was equally dissatisfied.
“I’m generally concerned that we had an opportunity to provide relief,” she said. “We’re going to have a surplus that’s lingering out there that we did not program.”
Puna Councilman Matt Kaneali‘i-Kleinfelder wasn’t too happy, either.
“I think the right message to the people of Hawaii County right now would have been to decrease,” Kaneali‘i-Kleinfelder said. “But it was shut down by this body.”
Beefed up security for county parks and buildings, increased community policing, fences to keep out pigs, increased funding for parks and money for council contingency accounts were among some 20 amendments adding $5.6 million to Roth’s proposed spending plan for operations.
The new budget adds 88 more positions. Most of them are clustered in the Fire Department, Mass Transit, Public Works, Parks and Recreation and Environmental Management.
The council approved the budget, Bill 126, by a 6-3 vote, with Puna Councilwoman Ashley Kierkiewicz, Lee Loy and Richards voting no.
Roth’s recommendations would have trimmed 5 cents per thousand dollars of property value off the homeowners and affordable rental classes, the categories that already pay the least tax. It would have reduced the residential tier two tax on luxury second homes by 10 cents while leaving the basic residential rate the same. Apartments, which currently have the highest rate, would have been reduced 60 cents to match that of other residential property. Commercial and industrial would have been cut by 20 cents, agriculture by 25 cents and hotel/resorts and golf courses by 45 cents.
The council voted 7-2 to approve $900,000, or $100,000 per council member, for council contingency funds, money that each council member can distribute to county agencies or nonprofit groups with council approval. Roth had not put any contingency money in the budget for council members. They unanimously approved a $22,500 increase in their expense accounts.
“The mayor did have some reservations how the funds were spent in the past,” Sako said, when asked why the mayor didn’t provide funding for this category in his budget.
She added that some such grants were alluded to as if they were “brought forward by a particular council member rather than by the county.”
Lee Loy and Richards voted no, wanting to see how the rest of the budget fit together before deciding how much council members would get for contingency spending.
The council voted unanimously to approve Bill 127, a $445 million capital improvement budget after tacking on 13 amendments adding another $33.1 million in new appropriations and reappropriations of lapsed funds. The CIP budget is basically a wish list of projects to be constructed over the next three years.