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Qualified Tax Relief

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By Lowell L. Kalapa

(Released on 05/13/07)

As county councils race toward adopting budgets for the coming fiscal year, they will have to justify how much they spend for operating the county when it comes time to setting the real property tax rate as it is the real property tax that will cover the lion’s share of county expenditures.

Rising valuations have made the process of setting the real property tax rate a particularly arduous task as council members are on the hot seat with angry real property taxpayers seeing red with larger and larger tax bills in recent years. Not wanting to incur the wrath of homeowners in particular, as they are the largest class of voting constituents, council members have attempted to find ways to mitigate the rise in the real property tax bill.

Unfortunately, council members also like spending all those tax dollars as they attempt to please this or that constituent group, be it seniors who want funding for their recreational programs, public employees who demand pay raises, or neighbors who want more police patrols in their neighborhood. As in the case of the infamous Pogo comic strip, “We have met the enemy, and the enemy is us. ”

To some degree, the expectations that we, as real property taxpayers, have of our elected officials, be it the mayor or the council members, are that we have been led to believe that we can have more and more county services because over the years those very elected officials have shielded us from the truth. The truth is that in order to afford all of those county services, taxes have to be increased.

The problem is that elected officials have tended to shy away from raising taxes on the majority of the population, the homeowner, either by adopting a lower tax rate on homeowners or creating tax breaks such as the homeowner’s exemption which tends to reduce the bill for homeowners. Elected officials also believe that by shifting the burden to nonresidential property (businesses), that those businesses can pass the cost of the additional burden on to their customers. Unfortunately, they fail to realize those customers are the very people they are trying to “save,” the homeowner, as we all must buy our food or have our cars fixed by those businesses that must shoulder the added burden.

In some counties, they have created a special class for homeowners and conferred a substantially discounted rate for the “homeowner” class, but who are they trying to fool? We, as consumers, end up paying for the shifted tax burden every time we shop for food or clothes. Ah, but the beauty of this strategy for the elected officials is that we, as customers, put the blame on those businesses, complaining that those businesses are just trying to “rip us off!”

But at the same time, the lighter tax load for homeowners creates the illusion that it doesn’t cost much to run the county and, therefore, we can demand more and more services from our elected officials. So why not ask for another swimming pool or a brand new park? Maybe there should be two more police patrols in the neighborhood or they should keep the landfill open another two hours.

The disconnect is that not having a heavier tax burden we are led to believe we can have more, because the homeowner is not paying for it. Local officials shy away from the demand for accountability that would mean that there should be a single rate for all classes of property because that way we, as taxpayers and consumers, would know how much it costs to operate the county instead of hiding the true cost in the shift of the tax burden to nonresidential classes of property.

Let’s not play games with the real property tax because all the smoke and mirrors in shifting the tax burden creates more problems than it solves. From increasing the cost of living in Hawaii to fooling taxpayers into believing that they can expect more out of county government to having elected officials finding it difficult to turn down requests for new programs and services, there are more negatives than there are positives about hiding the true cost of county government.

County officials like to point the blame at rising assessments or valuations. What they don’t want to admit is that in order to keep property tax bills from rising with those assessments, they need to reign in the amount of spending they like to do which, in turn, would allow them to lower the rate so increases in property tax bills would be more reasonable.

So the mantra for taxpayers should be, “Cut the spending and lower the real property tax rate!”

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