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 newest property worth assessments of all actual property on Oahu went up by 12.4% in contrast with the earlier yr. 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” — reminiscent of vacant land, condos, and properties that don’t get the “residence” 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, because the state’s shameful lack of housing progress helps drive up residence costs.
Some folks have mistakenly blamed rich mainlanders for the upper property values, however as defined within the Grassroot Institute of Hawaii’s latest report on “The ‘outsider’ concept of Hawaii’s housing disaster,” there is no such thing as a statistically vital correlation between “exterior patrons” and residential costs.
What is for certain is that larger residence values translate to larger property taxes for Hawaii’s owners. Mixed with inflation and the weak economic system, that is one other blow for taxpayers already having a troublesome yr. For retirees and others on mounted incomes, this might push them out into the streets.
And it gained’t have an effect on solely owners. Renters additionally will possible must pay extra as landlords move on some or all of their extra required tax funds.
Until, 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 training is funded nearly wholly on the state degree, as a substitute of by the counties or faculty districts.
In any case, Hawaii property values are the best within the nation, so when it comes to precise property tax funds, Hawaii owners nonetheless pay near the nationwide common.
In the meantime, Hawaii residents additionally pay a number of the highest revenue tax charges within the nation, and our so-called state gross sales tax, truly a common excise tax, is broadly thought to be 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 Huge 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 fee or spending cuts?
Kauai and Hawaii counties have mechanisms to guard owners from spikes in property values. On Kauai, homeowners who’ve a house exemption or a helpful tax fee because of a long-term rental can’t see greater than a 3% enhance or lower in market worth. Hawaii County has the same cap.
A number of counties supply tax credit for property taxes owed over a certain quantity of family revenue, often 2% to three%. And there are exemptions accessible in some circumstances, reminiscent of 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 fluctuate.
The best response could be to simply cut back property tax charges throughout the board.
Or county lawmakers might enhance the home-owner exemptions, or enhance the worth of the county’s actual property tax credit score for state revenue tax functions.
The one factor they need to not do is permit the upper assessments to translate into an enormous tax hike for Hawaii residents. This is perhaps a boon for county revenues, however it will be devastating to residents.
We’re in a wierd 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 taking advantage of the housing disaster and its hovering residence values. In the long run, county officers ought to embrace insurance policies that can enhance Hawaii’s housing inventory and assist convey down residence costs.
For now, they need to search for methods to offer taxpayers a break and preserve Hawaii’s value of dwelling from hovering even larger.
Keli‘i Akina is president and CEO of Grassroot Institute of Hawaii.