Last fall, City Council members introduced legislation to add two sets of homeowners to the list of those eligible for property tax breaks, which now ranges from sight- or hearing-impaired residents to those living in historic homes.
Councilwoman Carol Fukunaga’s proposed relief for homeowners in urban areas growing “culturally significant” fruits and flowers aimed to spur needed food sustainability efforts. And Council Chairman Ernie Martin pitched a bill to give each homeowner actively serving in the armed forces a cut on property taxes.
Both well-intended measures should be shelved at this time as the cash-strapped city is in no position to trim its main source of revenue. But in the case of Martin’s Bill 91, which could cost the city an estimated $1 million a year, the Council voted last week for its approval.
The proposal must now undergo a standard legal review by city attorneys before Mayor Kirk Caldwell decides whether to sign it, veto it or let it become law without his signature. It should be vetoed. Fukunaga’s bill, meanwhile, has stalled.
Under Bill 91, active-duty military homeowners won’t be taxed on the first $120,000 of the total value of their home, which results in a $140 cut on property taxes. Martin has described the relief as a “very small and insignificant exemption” to recognize those who serve.
Indeed, with Hawaii serving as a home to all five armed forces, with about 64,000 defense personnel and 100,000 veterans living here, we’re mindful of military service and sacrifice. However, several military-focused tax breaks and discounts are already in place to provide financial assistance and express appreciation.
What’s more, unfortunately, these benefits have a hand in perpetuating Honolulu’s high-priced housing and rental inventory as well as struggles with maintaining core services for a growing population.
Service members get tax-free allowances to apply toward housing and meals. In Honolulu, the monthly housing stipend starts at nearly $2,000 for a low-ranking service member without dependents. It tops out at slightly more than $4,000 for a high-ranking member with dependents. It’s concerning that this practice allows landlords to charge rates that are out of reach to a large swath of civilians amid an islandwide shortage of affordable housing.
In an example of annual compensation, federal figures show that in 2017, a Navy seaman (no dependents) stationed at the Pearl Harbor Naval Base who drew $30,427 in basic pay also got $23,860, in housing allowance; and nearly $4,420 for meals. Of the total income, slightly more than $58,600, almost half was untaxable.
The upshot is that less is pitched in for government services tied to tax dollars, ranging from public schools to public works infrastructure upgrades on roads and sewer systems.
In May, the city’s budget director said the impact of Bill 91 on the city could be as much as $1 million annually as it’s estimated that more than 7,100 property owners could be eligible. That’s nothing to sneeze at, given the city’s array of financial challenges — from the affordable housing shortage, which last year was estimated at 24,000 units, to possibly covering cost overruns for the 20-mile rail project — now approaching a total price tag of $8.2 billion.
Caldwell is urged to veto Bill 91, and Council members should refrain from an override vote. Through the proposed property tax break, Martin appears to be offering something of a thank-you gesture for military service. But at this time, the city’s mahalo should steer clear of tapping city coffers.
