Tupola property tax idea best, but other proposals good too

from Grassroot Institute

The following testimony was submitted by the Grassroot Institute of Hawaii for consideration by the Honolulu City and County Council Committee on Budget on May 13, 2024.
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May 13, 2024, 9 a.m.
Honolulu Hale

To: Honolulu City and County Council, Committee on Budget
      Councilmember Radiant Cordero, Chair
      Councilmember Matt Weyer, Vice Chair

From: Grassroot Institute of Hawaii
           Ted Kefalas, Director of Strategic Campaigns

RE: RESOLUTION 24-61 — DETERMINING THE REAL PROPERTY TAX RATES FOR THE CITY AND COUNTY OF HONOLULU FOR THE FISCAL YEAR JULY 1, 2024 TO JUNE 30, 2025

Aloha Chair Cordero, Vice-Chair Weyer and other members of the Committee,

The Grassroot Institute of Hawaii would like to offer its comments on Resolution 24-61, which would set the property tax rates for fiscal year 2025.

In particular, on behalf of Grassroot, I would like to comment on the three separate proposed amendments from Councilmembers Esther Kia’aina, Matt Weyer and Andria Tupola, respectively, that deal with the tax rates for the new transient vacation rental tax class.

This new class is divided into two tiers. The first applies to the first $800,000 of a property’s value. The second applies to any amount above $800,000.

Currently, the fiscal 2025 budget would levy a rate of $9 per $1,000 in assessed value on the first tier and a rate of $11.50 per $1,000 on the second tier.

All three of the proposed amendments would lower these rates.

Councilmember Kia’aina’s amendment would lower the rates on the first and second tiers to $8 and $10.50 per $1,000, respectively.

Committee Vice-Chair Weyer’s amendment would lower the rate on the first tier to $7.50 per $1,000, while leaving the second tier at $11.50.

And Councilmember Tupola’s amendment would lower the rate on the first tier to $6.50 per $1,000, while also leaving the second tier as proposed.

The table below shows the effects that each councilmember’s proposed rate reductions would have on the 1,872 properties in the new transient vacation rental tax class:

As can be seen in the table, Councilmember Tupola’s amendment would provide Honolulu property owners the largest tax savings — $3.09 million — while still being a reasonable amount when compared with the overall proposed operating budget of $3.4 billion.

In addition, Councilmember Tupola’s amendment would reduce the rate on the 31 properties in the bed-and-breakfast class from $6.50 to $5.50 per $1,000 of assessed value, which would save those properties just more than $71,000 in taxes. That amount would be but a drop in the bucket compared to the proposed operating budget, but still a welcome amount of tax relief for the B&B owners.

That said, Grassroot supports Councilmember Tupola’s amendment foremost, though any of the proposed amendments would be welcome.

Thank you for the opportunity to testify.

Ted Kefalas
Director of Strategic Campaigns
Grassroot Institute of Hawaii

PDF: state-report-fy24-final-tax-rates.pdf (realpropertyhonolulu.com)