Grassroot supports proposals at county councils aimed at reducing tax burden for property owners

from Grassroot Institute

As Hawaii’s county councils work on finalizing their budgets for the next fiscal year, some are considering changes to property tax rules.

On Hawaii Island, the Council there heard a proposal Tuesday to reduce the tax rates on the affordable rental and homeowner classes and increase the rates on all three tiers of the residential class.

Then yesterday, the Council decided against higher taxes for the apartment class and the first tier of the residential class, while keeping its planned higher rates on the other two tiers. The county expects to receive about $17 million more in tax revenue as a result. Grassroot had testified that raising rates on the residential tax class could increase costs for local renters.

Meanwhile, the Maui County Council last Friday moved forward with a plan to reduce taxes on some owner-occupied and long-term rental homes while imposing a $30 million tax hike on various other classes, including non-owner-occupied homes, time shares, short-term rentals and some bed-and-breakfast properties.

It is possible though that properties in the latter category, bed-and-breakfast homes, could at least see a lower rate than Mayor Richard Bissen originally recommended in his proposed budget. During the Council’s meeting last Friday, Councilmember Kauanoe Batangan won support from other councilmembers for an amendment to reduce the proposed rates on the first and second tiers of that class. Grassroot testified against increasing the rates for any property tax classes.

On Tuesday of this week, the Maui Council’s Budget, Finance and Economic Development Committee postponed discussion of a bill that would increase the value of the home and long-term rental exemptions by $100,000 to provide tax relief to homeowners and owners of long-term rentals that are registered in the county’s long-term rental tax class.

Grassroot submitted testimony in support of the measure, pointing out that “The values of the home and long-term rental exemptions have not been increased recently to offset high property assessments. The home exemption was last increased in 2022, and the long-term rental exemption has not been changed since it was created in 2021.”

READ GRASSROOT’S COUNTY TESTIMONIES HERE

Elsewhere in the Grassroot universe…

>> The Foundation for Economic Education recently republished Grassroot President Keliʻi Akina’s April 11 “President’s Corner” column about the filtering effect of homebuilding, under the headline “More houses, more choices.” Akina wrote about a recent study by economists at the University of Hawai‘i that showed how families moving into a new condo building in Ala Moana created a chain of affordable housing vacancies.

>> Grassroot Scholar Colin Grabow, who is an associate director at the Cato Institute’s Herbert A. Stiefel Center for Trade Policy Studies, wrote a very informative article last week about the impact of President Donald Trump’s ongoing Jones Act waivers. The article features an interactive map of 45 voyages that have been completed under the waivers. Grabow said “this is not a case of foreign vessels replacing American ships but rather supplementing them.” As of yesterday, the number of voyages was up to 58.

>> Grassroot Executive Vice President Joe Kent said Monday in a KHON2 News story that he hopes Gov. Josh Green “follows through” with pausing state and county gas taxes for part of the summer to help locals with rising fuel prices during the war in Iran. “It’s awesome that the governor is thinking creatively about how to help people’s bottom line,” Kent said.

>> Hawaii Baptist Academy student Zoe Lim wrote an excellent commentary in the Honolulu Star-Advertiser earlier this month in which she cited Grassroot research concerning Hawaii’s crippling cost of living. “Unaffordability begins with Hawaii’s restrictive zoning regulations,” the high school junior wrote, adding that “Proposals from the Grassroot Institute of Hawaii to relax zoning laws and allow more housing conversions are a step in the right direction.” Lim also highlighted Hawaii’s high tax burden, noting that, “Although tax cuts are critical, reducing overall government spending is equally necessary.”