On the morning of October 28, the Honolulu City Council initially rejected establishing a new homeowner category for real property taxation. A few hours later, two councilmembers, Todd Apo and Gary Okino, reversed themselves and the City Council approved the very same measure that it had just rejected. This homeowner tax issue had been debated for years. No new facts suddenly came to light in the intervening hours of October 28th. These councilmembers’ reversal of their position just hours later appears to entirely be attributable to only thing: private meetings with the mayor.
As a matter of policy, a new homeowner classification does not make sense. The City already grants homeowners a break on real property taxes with a homeowners’ exemption. For most homeowners, the first $80,000 of value in their home is exempt from real property tax. Adding another new tax category to achieve the same policy objective unnecessarily complicates our tax code.
Furthermore, the current real property tax exemption gives all homeowners, regardless of wealth, the same tax break. This new homeowner tax rate, however, affords individuals with wealthier homes a much larger tax break than those with less expensive residences. This doesn’t make sense.
The new homeowner tax rate also moves the City tax code in the wrong direction. One of the best reforms the City adopted in recent years was the 2003 tax simplification, which reduced nine different complex tax rates to a tax code of just two rates. Since 2003, however, the City has gradually increased the number of rates from two to three to four and now with the passage of this new homeowner class, we will likely have five different tax rates. This new measure virtually unravels the major 2003 tax reforms.
Finally, this new homeowner tax rate appears to be a Trojan horse that will likely result in an increase in taxes on everyone. By creating a homeowner tax rate, the City will nominally keep the tax rate stable for homeowners, but will likely dramatically increase taxes on all other classes. This means much higher taxes not only on renters who don’t own a home, but also commercial properties and anyone who uses commercial property. In the end, anyone who buys goods, consumes services or works on Oahu – that means everyone – will likely end up paying much more though a higher “hidden” cost of doing business on Oahu.
As bad as this new homeowner tax rate policy is, the politics surrounding the passage of this new tax rate is even worse. For years, Councilmember Todd Apo was one of the most outspoken critics of establishing a homeowner tax rate for many of the reasons outlined above. Councilmember Gary Okino also regularly expressed similar concerns.
During the day, when the TV news media were present and the public in ample attendance, establishing a homeowner tax rate was voted down by the Honolulu City Council. Then, Mayor Mufi Hannemann called several members of the council, including Apo, into his office for several hours. After these private discussions between Hannemann and selected councilmembers were concluded, the vote suddenly changed. In the dark of the night, after most of the news media had gone home, just hours after shelving establishment of a homeowner tax class, the bill was resurrected with an unscheduled vote and was suddenly passed.
Whatever your opinion on the wisdom of a homeowner tax class, the political machinations surrounding its passage should disgust anyone who believes in an open democracy and transparency in government. It is disappointing to see elected officials like Apo and Okino vote and publicly state their position one way, then after closed private “talks” with Hannemann, completely reverse their position.
Even more unfortunate, this style of saying-one-thing-but-doing-another governing is all too typical of the mayor and too many councilmembers. What happened with the homeowner tax class is not a one time occurrence. Similar vote flipping after private closed-door meetings occurred with proposals on shifting the rail route to Salt Lake Boulevard, banning street performers in Waikiki, prohibiting text messaging while driving, and crafting the budget.
Integrity is a word that has actual meaning to me. I have always done my best to make sure that what I say in public is identical to any private discussions I may have. Misleading the public and casually flipping a vote because I can cut an insider deal is simply not the way to build respect with the public. Unfortunately, it appears that my approach to governing is a minority view at Honolulu Hale.
Next year, however, you will have an opportunity to finally cast judgment on the style of politics you want to see in your government. The mayor and several members of the Honolulu City Council will likely be seeking higher office and it will be up to you to demand transparent democratic government or allow this sordid Honolulu Hale-style politics to continue in Hawaii.