A judge has ruled against a motion by Hawaii’s four counties to block November ballots from asking voters if they want to amend the Hawaii Constitution to allow the state to tax investment property.
In ruling for the state, First Circuit Judge Jeff Crabtree said today that the counties didn’t meet the standards required for granting a preliminary injunction, including a requirement that they are likely to win. Rather, he said the counties are unlikely to prevail in the case.
Hawaii’s four counties are suing the state arguing that the ballot question is unlawfully vague and that the Legislature didn’t follow proper procedures in passing the measure.
The bill, which was overwhelmingly approved by state lawmakers, instructed the ballot question to be phrased as follows: “Shall the legislature be authorized to establish, as provided by law, a surcharge on investment real property to be used to support public education?”
The counties are arguing that the word “surcharge” is misleading because it doesn’t make clear that it is really a tax, while the term “investment real property” is ambiguous and undefined.
But Crabtree said the question didn’t appear to rise to the level of being unlawful.
“I do not find the proposed language is deceptive,” he said. “Is the language as thorough and definitive as one would like? No … This language is not as clear as it could be. That said, (the statute) does not require that the proposed constitutional amendment contain a detailed description of all the issues and possible effects connected to the proposed amendment.”
Honolulu Corporation Counsel Donna Leong said during a press conference after the ruling that she was disappointed, but that the counties will press on in the lawsuit while working to educate voters about why they oppose affording the Legislature this taxing power. Leong said that she hoped for a final ruling in the case before the general election.
Currently, the state Constitution only allows the counties to levy property taxes. If a simple majority of voters approves the changes to the Constitution in November, it will then fall back to the Legislature to determine whether they want to raise property taxes in support of public education, and to work out the specifics of the tax – or as the state prefers to call it, the surcharge.
The Hawaii State Teachers Association, which backed the bill in the Legislature this year, issued a statement cheering today’s ruling.
“Today was a victory for Hawaii’s keiki,” said HSTA President Corey Rosenlee.
While House Speaker Scott Saiki has said there is no legislative intent as to what property might be taxed if the ballot measure passes, HSTA has advocated for taxing second homes valued at more than $1 million.
“Hawaii has become a haven for outside millionaires and luxury developers who treat our aina like a commodity,” said Rosenlee. “If the 1 percent want to call Hawaii home then they should be giving back—and that starts with paying their fair share to ensure our children get the quality education they deserve.”