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Wednesday, January 25, 2023
​There’s still time to counter higher property taxes
By Grassroot Institute @ 6:00 PM :: 1576 Views :: Taxes, Cost of Living

There’s still time to counter higher property taxes, Akina tells Perry

by Grassroot Institute of Hawaii, January 23, 2023

As the cost of living in Hawaii continues to soar, many Oahu residents are worried that the county’s latest property assessments will make the problem even worse. 

That’s because higher property assessments typically mean higher property taxes. But Keli‘i Akina, president and CEO of the Grassroot Institute of Hawaii, said county lawmakers can act to offset the increase’s impact on property taxes, whether through reducing the rates, increasing exemptions or credits, or some other means.

Appearing Jan. 19 on Michael W. Perry’s KSSK radio show “Perry & The Posse,” Akina said the tax rates will be set by the City Council in June. And what that means, he said, is that “people have several months to talk to their political leaders, talk to the mayor, talk to County Council leaders and let them know that they need to have some solution to this problem.”

Above all, he said, “They [should] look for ways to make government cost less and run more efficiently and operate on a leaner budget. That’s what inflation is forcing our businesses to do, and families have to do the same thing. So … I would tell them, ‘Tighten your belt in government, and save the people from having to pay higher taxes.’”

TRANSCRIPT

1-19-23 Keli‘i Akina with Michael W Perry on KSSK’s “Perry & The Posse” show

Michael Perry: KSSK radio. Hey, welcome to Thursday. and welcome to — whoa! — a property assessment that probably got your attention when it came in the mail this year. 

What is this all about? We’re not talking a minor increase here. This is like a near-cardiac event for a lot of people. Folks are nervous about it. 

We have a guy who is not only himself nervous about it, but he kind of knows what to do about it: the man who runs Grassroot Institute of Hawaii, Dr. Keliʻi Akina. 

Keliʻi, how are you today? And what is this property tax thing?

Akina: Well, good morning, Michael, and it’s just such a delight to be with you and your listeners. 

You’re right, Michael. Some homeowners in Honolulu recently saw their property assessments jump sky-high. In some cases it was by 20% or more. 

So, here’s the lowdown: It looks most property owners on Oahu are in for some big property tax hike in the near future. But that’s unless the Council and mayor can act, somehow, to offset those increases. 

Now why is this happening? I’d say there are just two main reasons.

First, as everybody knows, Hawaii is in a housing crisis. Prices have been rising for several years because of the strong demand. Everybody wants a home in Hawaii, but there’s such a low supply. 

And the second reason is inflation. It’s everywhere. It’s affecting everything. That’s driven the price of everything higher, including housing and rent.

Perry: Well, OK, so, we get it. The price of the house goes up, that means the assessment goes up. 

When does the city determine how much a homeowner’s going to have to pay in property taxes? What’s the process there?

Akina: Well, first I wanted to echo what you said: Higher assessments usually lead to higher property taxes; because if the tax rates stay the same, you’ll pay more if the city’s estimate of your property’s value increases. 

Perry: Ah.

Akina: A lot of people didn’t realize that.We want to have a higher valued home — it means more equity — but it also means we pay more taxes. 

But to your question, Mike, the tax rate, however, is not going to be determined this year by the City Council until June. 

And what that means is people have several months to talk to their political leaders, talk to the mayor, talk to County Council leaders and let them know that they need to have some solution to this problem.

Perry: OK, the solution being the tax rate, because the assessment can be one thing, and you can have a higher assessment, but if you lower the tax rate — the amount that you pay per thousand dollars of assessment — that means you could actually come out the same, right? 

Akina: Yeah, absolutely. One of the things that the County Council could do is actually lower the rate. And I think that’s an option that is worth talking about. 

But there are some other things that can be done in the — if that isn’t something that would happen immediately, the Council could look for other ways to lessen the burden of the rate, because right now, if you own and live in your home, you could be eligible for a tax exemption of a certain dollar figure. 

The xounty should look at increasing the size of that homeowner’s exemption — that’s one thing they could do. 

And there’s another way the county could help us out: We should remember that a lot of people in Honolulu rent their property — they can’t afford to buy — and so they end up paying for higher property tax rates when landlords raise their rates. 

So it’s possible to give them some tax cut for rental properties that are classified as Residential A, because they’re going to face higher rates since their landlords are going to bring up the rent.

Perry: You know, I talk to people on the mainland about us, and they all look and say, “Your median price of a home is a little over a million bucks? What the heck is going on?” 

And then they look at our property taxes, and they say, “Oh, you got nothing. We pay” — on the mainland, wherever it is — “we pay eight times that” or something. 

Some politicians evidently want property taxes to be even higher because we have some fairly low ones, if you look at the rest of the country. How do you respond to that?

Akina: Well, first, it is true that Hawaii has some of the country’s lowest property tax rates when you’re just talking about the percentage. 

But the fact is we also have some of the nation’s highest housing prices, so those high property values way offset the low rates. So, for a kamaaina a couple who are retired, for example, maybe you — actually, you’re not retired yet, I’m listening to you this morning [laughs] — but someone who is retired and on a fixed income, higher property property taxes can be a real problem.

Their house might be worth somewhere between $1.25 or $1.5 million now. That’s easily done by somebody who’s been paying off a mortgage for 30 years.

Perry: Yep.

Akina: But they don’t have a lot of extra income to pay off their tax bill. They may be on a fixed income, and that’s going to really hurt them. 

Now, Mike, as for politicians who want to raise property taxes go, let me just be polite and say, “God bless them.”

I would suggest that instead of raising taxes, they look for ways to make government cost less and run more efficiently and operate on a leaner budget. 

You know, that’s what inflation is forcing our businesses to do, and families have to do the same thing. So, you know what, I think I would tell them, “Tighten your belt in government, and save the people from having to pay higher taxes.”

Perry: Spend less. Totally agree. And good luck, right? 

Well, maybe the mayor is — and by the way, what you’d tell those politicians if you lived in Texas is, “Bless your heart,” which doesn’t mean “Bless your heart.” 

The City Council and the mayor are aware of this. I guess we’ll just have to wait until June to see what happens, but I’m sure they’d love to hear from you. 

Thanks, Keliʻi, we appreciate it. Grass …, by the way, if you need more information on this: grassrootinstitute.org. — there’s all kinds of stuff there. 

Have a great day, Keliʻi.

Akina: Thank you. Aloha to you and your listeners. Bye-bye.

 

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