By Keli‘i Akina
Hawaii property taxes are going up, and that’s not cool.
The Honolulu Star-Advertiser reported Dec. 14, 2022, that the most recent property worth assessments of all actual property on Oahu went up by 12.4% in contrast with the earlier 12 months. And that’s simply the typical.
On the North Shore, residential property values went up by 20.4%. East Honolulu properties elevated by 10.1%. And properties labeled as “Residential A” — corresponding to vacant land, condos, and properties that don’t get the “dwelling” or owner-occupied exemption — went up by 39.9%.
Neighbor island residents are more likely to see related will increase in assessed property values, as all islands are affected by the identical financial forces. These embody inflation, which is near spiraling uncontrolled, and Hawaii’s housing crunch, for the reason that state’s shameful lack of housing development helps drive up dwelling costs.
Some folks have mistakenly blamed rich mainlanders for the upper property values, however as defined within the Grassroot Institute of Hawaii’s current report on “The ‘outsider’ principle of Hawaii’s housing disaster,” there isn’t a statistically vital correlation between “outdoors patrons” and residential costs.
What is definite is that increased dwelling values translate to increased property taxes for Hawaii’s owners. Mixed with inflation and the weak economic system, that is one other blow for taxpayers already having a tough 12 months. For retirees and others on fastened incomes, this might push them out into the streets.
And it received’t have an effect on solely owners. Renters additionally will seemingly must pay extra as landlords go on some or all of their further required tax funds.
Except, after all, our county lawmakers decrease our property tax charges or discover methods to trim their spending.
Even earlier than this occurred, I had been saying that now could be the right time for the state to chop taxes, and the identical goes for the counties. The outlook for each state and county revenues is wholesome, and lawmakers at each ranges might simply give their constituents a break.
However wait a minute, some will say. Aren’t Hawaii’s property tax charges low already? Effectively, technically, sure. One purpose is that Hawaii is the one state within the nation the place public schooling is funded virtually wholly on the state stage, as an alternative of by the counties or faculty districts.
In any case, Hawaii property values are the best within the nation, so by way of precise property tax funds, Hawaii owners nonetheless pay near the nationwide common.
In the meantime, Hawaii residents additionally pay a number of the highest earnings tax charges within the nation, and our so-called state gross sales tax, truly a common excise tax, is extensively considered regressive — falling heaviest on the poor.
In different phrases, Hawaii residents have each proper to complain about their property taxes going up, particularly because it’s a rise constructed into the system over which they’ve little or no management.
For county lawmakers, the upper property valuations will produce windfall tax revenues they didn’t even must vote for. It’s a present from Large Authorities heaven — however not one they need to settle for.
Can we rely on our county lawmakers to offset the upper property tax assessments with tax price or spending cuts?
Kauai and Hawaii counties have mechanisms to guard owners from spikes in property values. On Kauai, house owners who’ve a house exemption or a useful tax price resulting from a long-term rental can’t see greater than a 3% enhance or lower in market worth. Hawaii County has an analogous cap.
A number of counties supply tax credit for property taxes owed over a specific amount of family earnings, normally 2% to three%. And there are exemptions out there in some instances, corresponding to for the aged, disabled veterans and different teams. Clearly, as a result of property taxes are the only area of the counties, the property tax schemes, charges and exemptions can range.
The best response can be to only scale back property tax charges throughout the board.
Or county lawmakers might enhance the house owner exemptions, or enhance the worth of the county’s actual property tax credit score for state earnings tax functions.
The one factor they need to not do is enable the upper assessments to translate into an enormous tax hike for Hawaii residents. This is likely to be a boon for county revenues, however it could be devastating to residents.
We’re in an odd place in terms of state and native budgets versus our personal pocketbooks. Whereas the state and counties are raking in revenues, the typical Hawaii household is struggling. Homelessness is rampant; many residents are leaving the state as a result of they simply can’t afford to stay right here anymore.
Counties shouldn’t be cashing in on the housing disaster and its hovering dwelling values. In the long run, county officers ought to embrace insurance policies that can enhance Hawaii’s housing inventory and assist carry down dwelling costs.
For now, they need to search for methods to present taxpayers a break and preserve Hawaii’s value of residing from hovering even increased.
Keli‘i Akina is president and CEO of Grassroot Institute of Hawaii.