by Ray Chuan on 16 March 2004
The annual ritual of the County’s budgeting process
has started, as some of you may have read in today’s
Garden Island. We would like to point out some of the
myths attached to this game.
Myth Number One: This is a budgeting
process like no others in this state or this country.
At least for the last ten years that I have observed it, the
budgeting process is a joke. While we are reading in
the papers how the Honolulu Council is fighting with Mayor
Harris over the budget – the spending, the revenue etc,
the Legislature is fighting the Governor over the state budget
with much serious politics and rancor, all is Peace and Tranquility
on the Island of Kauai. We have most of the trappings
of a modern democratically elected government, but none or
very little of the real actions of such a government.
Our legislative branch of the County Government, the County
Council, seems to be always rubber stamping whatever the Administration
proposes. In other words, the Council does not exercise
its power to control the budget.
Myth Number Two: This County has done
its best to keep the taxpayers in the dark about how those
dollar numbers get printed on their annual property tax bill.
You get a little postcard in March announcing the new assessment
on your property: so many dollars for the land and so
many dollars for the building, and, if you are lucky, how
much is taken off these numbers through Exemptions.
This little postcard reaches you about the time the Budgeting
Process begins. The local newspaper and the public access
TV station Hoike tell you absolutely nothing about how the
Process proceeds or how you as part of the electorate and
the taxpayer might influence it. If you take the time
to scan the bulletin boards at the Old County Building you
will get totally blinded by the page-overlappping-page of
special agendas on budgeting workshops, several a day for
weeks. When it is all over you could compare the “final”
budget with the original one proposed by the Administration
and find hardly any difference. In the case of last
year the final one actually came out higher by over $2 million
than the original, because the Administration discovered some
extra revenue! You’d think they would have used
that to reduce the tax burden, right?
Wrong! If there is money they will find ways to spend
it! Besides, you would have no way to know how your
tax bill gets to where it is, anyway. All other cities,
states and counties would show how your assessment becomes
your tax by showing the “tax rate”, which is set
by the legislative body, and how by multiplying the assessment
by the tax rate the tax bill is created. But not here.
You get that postcard in March. In August you get the
tax bill. Somewhere in between the Council goes through
this mysterious and fast moving process called a “Resolution”
which establishes the tax rates, of which there are 16, just
to confuse you more if you should bother to look at the Resolution.
If your tax bill shocks you with a 50% or 300% increase over
the previous year you may adopt the common local reaction
which is to accept it, as a matter of fate, without protest.
If you are agitated enough to complain to the Finance Department
you are told, “Too late! You should have complained
when you got that postcard in March, and filed for an Appeal!”,
to the Appeals Board, made up of your fellow citizens who
probably are just as much in the dark about this county’s
property tax system as you are – which is why some Board
members are known to fall asleep during the Appeals Board
meetings. In a way, the decisions of the Appeals Board
are rigged anyway. The Tax Office, in estimating the
expected property tax revenue for the year, starts out with
the total assessments (for which they have complete control),
applies the tax rates (which they are pretty sure will be
the same as the year before, since the county will always
get more revenue as long as the assessments keep going up,
so that there is no need to change the tax rates); and then
makes a reduction by assuming that a certain percentage of
the appeals will be denied.
Myth Number Three: No increase in property
tax! Both the Mayor and the Council go through the ritual
of announcing at the beginning of the fiscal year (July1)
that they, again, “have not raised the property tax!”
They have cleverly left out the word “rate.”
Without raising the property tax rate while maintaining an
ever-increasing assessment the County of Kauai is guaranteed
a steady increase in property tax revenue from year to year.
The 2003 total assessment was 13% over the 2002 value.
Since the property tax revenue is roughly half of the total
revenue of this county (and the other revenues are either
out of the control of the County or simply don’t change)
this means the county is guaranteed a 6% increase in its total
spending.
The 2004 total assessment is 21% over the 2003 value, which
means the county can gain automatically 10% in its spending.
Since this is a substantial increase, the Administration can
well afford to be magnanimous and announce a few crumbs of
relief. The Garden Island headlines said, “Mayor’s
$103 million budget includes tax relief, emergency fund”
Myth Number Four: Tax Relief!
The tax rate relief the Mayor has so generously offered is
“20 cents per $1,000 of assessed valuation.”
Big deal! The eight tax rates average out to be roughly
$4.50 per thousand, so the Mayor’s generous tax rate
relief is a huge 4.4%! And that’s in the face
of a 21% increase in total assessments!
The Administration is not the only entity touting relief.
Council Chair Kaipo Asing has been touting his Circuit Breaker
Property Tax Relief for the past two years. The first
year 96 taxpayers applied for this relief; only 48 qualified.
The total relief given out to the 48 lucky taxpayers amounted
to $65,000 (or an average relief of $1,354) – a mere
0.14 % of the total property tax revenue of $47 million!
(At the time Kaipo first proposed his Circuit Breaker Bill
I told him it would primarily benefit well to do retired persons
and would in fact discriminate against ordinary wage earners.
As it turned out, I found that at least seven of the 48 received
relief of up to $17,000 each, totaling half of the total relief
given out.)
This year, by improving communication to the public, the County
received 569 applications for relief, of which 408 qualified.
The total relief handed out will be $258,876, for an average
of $634 to each applicant; and the total amounting to 0.45%
of the total property tax revenue of $57 million.
Myth Number Five: Emergency and Reserve
Accounts. This is a myth because there is no accounting
of how much there is or how and when they are used.
The reality is that this county always dips into what it calls
the Un appropriated Surplus to fund whatever comes up that
is not in the budget. There is also the so-called General
Fund from which the county liberally transfer money to accounts
that need extra – usually un-accounted for – money.
This is how the Solid Waste Program, which is theoretically
an Enterprise Fund (like the Golf Course, Water, Waste Water
etc) which is supposed to be self-supporting, regularly has
money transferred into its account amounting to millions.
One of the more impressive dippings into the Un-appropriated
Surplus occurred in 1998 when the county built its Junk Car
Yard in Puhi, more popularly referred to as the Black Hole,
for three quarters of a million dollars (not in the budget,
of course.) To add insult to injury, while the plan
was to have a contractor pay the county to use the facility
to process junk cars while making money by selling the junks
or parts thereof, the county ended up paying a contractor
to process junk cars while using the Black Hole for free.
In other words, there is an ever-present Slush Fund for the
Administration to dip into. And, by the way, Waste Water
is the ONLY enterprise fund that actually pays for itself.
But, no wonder, when they charge people $42 a month to use
the sewer system, the highest in the country – the next
highest being San Diego at $34 per month. So you
thought we are only number one in electricity rate!
Wrong! Electricity, sewer, water, solid waste ….
You name it, we are Number One!
SO, WHAT CAN THE PUBLIC DO ABOUT ALL THESE MYTHS?
Expose them when the opportunity arises at Council meetings,
especially in the next two to three months when the Council
is “working” on the budget. With the Council
meetings now finally regularly aired on Hoike, after spending
$120,000 to get them there, make use of the video camera to
speak not so much to the Council members as to speak to the
viewing public. In case you wonder where that $120,000
came from, you know about the Slush Fund, or the bottomless
Unappropriated Surplus.
Whenever the opportunity comes up, ask the Council to have
audit by independent auditor. Our own Senator Hooser
has offered to get the Senate to authorize sending an auditor
to Kauai– but Kauai has to ask for it. So far,
almost two years after the subject of audit was first raised
by Councilman Hooser, nothing has happened. Councilman
Mel Rapozo is probably the only member of the Council willing
to support an audit; but he will need at least three more
votes. Reminding the other six members that this is
election year won’t do any good if there is no competition
at the balloting place in November.
Unfortunately, there is no indication so far that any of the
incumbents may not run for re-election, which means that it
will be essentially impossible to get Mel Rapozo any help.
As a matter of fact, Mel is the most likely to be bumped off
if a strong contender emerges. What chance is there,
then, to influence the incumbents? By pressuring those
among them who have ambitions to run for mayor in two years,
as well as to take advantage of possibly two empty seats if
some of them do run for mayor.
Another cultural trait of the Council members is that, while
they are quite secure in holding on to their seats for the
next two or more years, they do have some sensitivity about
looking good before the public when important issues come
up. Take Kealia Kai for example. The issue of
whether McCloskey should be allowed to put his private security
guards on the beach really did not pose an issue of conscience
with the Council members, because their seats were secure,
unless they were running for mayor, and two of them did, which
gave the public two votes. But the votes were unanimous,
because the heavy attendance at Council meetings made the
issue very public, such that a vote for McCloskey would look
very bad on Hoike. Then Councilman, but now Mayor Baptiste
had been vocally adamant about accepting the coastal strip
along Kealia Kai with private security guards, even vowing
that he “didn’t care what arguments there were
against accepting the deal, he wasn’t going to change
his vote”, did in the end go with the sentiment
of the public and made the vote unanimous for rejecting the
gift with strings attached. (Without the support of
Baptiste McCloskey promptly came back with his modified gift
plan without the private security guards.)
What issue, or issues, would cause the Council members to
want to look good on Hoike? Now and for the next two
years? That’s what the public would need to study
and analyze and seize on the right issue.
The current Council is about the most un-productive in recent
years. The only visible achievement might be the extensive
revisions of the Grading and Grubbing Ordinance on which it
worked for ten months, only to render the output quite impotent
because six of the members would not support an audit of the
Public Works Dept as Gary Hooser did when he was on the Council
and Mel Rapozo did this time, in vain. I believe AUDIT
is the central issue around which the public can build up
sufficient pressure on the Council and the Administration
in the next two years to expose the irresponsibility of both
sides of the County Government. The audit could start
out with just the Solid Waste Program of the Public Works
Department; expand then to the entire department, and ultimately
to the entire county government. Only then will the
Council assume its proper role, and its sworn duty, as the
watch-dog of this county government and stop this annual sham
of exercising oversight on the operation of the Administration.
You may be interested in knowing that ethereal Property Tax
Task Force has not disappeared into oblivion after submitting
its tax reform plan to the Mayor and the Council. It
is continuing to meet to delve into some of the more complicated
tax issues that the members were not able to tackle adequately.
One of these is the question of how to tax condos and time-shares.
One tends to morph into the other – condo to timeshare-
and, then timeshare is morphing into something that would
entail no “property” So how does the government
tax these ephemeral entities, especially on Kauai –
the timeshare capital of the country. The next few meetings
of the Tax Force will focus on this knotty problem.
The next meeting will be on Wednesday, March 24, from
3:30 to 5:30 p.m. The public, as always, is invited
and urged to participate.
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