by
Ray Chuan 21 March 2005
March 16, 2005 will go down in Kauai history as Black
Wednesday, or Day of Infamy. I began receiving first-time
calls from people in panic that very day;
and the calls haven't stopped. In fact, I am having trouble writing this message.
Let me skip to the end of this message first by announcing
that, with a small number of friends, I have decided the only
relief the taxpayers can hope for is a CLASS ACTION
LAWSUIT AGAINST THE COUNTY OF KAUAI. I have no doubt
the ranks of victims who have been injured by the willful
violations of their own
tax laws by the elected officials of the County of Kauai will
swell exponentially once the word gets out.
But I have to warn you of the ultimate irony and insult that
will accompany this lawsuit. Our money extracted from us by
these crooked officials will pay for high-priced lawyers from
Honolulu to defend the County!
There is perhaps no better way to start this message of awakening
by quoting from a letter in today's Garden Island by someone
unknown to me but about whom I have received a couple of calls
extolling this person's credentials. Here is Steve Faunce's
column:
KAUAI
Opinion - Viewpoint for Monday -
March 21, 2005
Letter to the mayor on budget
If one can believe the article in yesterday's issue of The Garden Island (Wednesday, March 16), the budget increase for the coming year "stems from a significant increase in projected real-property-tax revenues generated by a 48-percent increase in real-property assessments of Kaua'i properties this year."
I don't know whether the article's an accurate reflection of the mayor's presentation or not. If it is, I'm appalled at the lack of logic that has our county's budget being driven by increases in property values. I would have assumed that the county would start by determining how much it will cost to provide needed services to our residents this year and submit a budget that reflects that level of
spending.
That number would then be divided by the total of all of the current real-property assessed values for the County of Kaua'i (i.e. the "tax base"), and the result would be the real-property tax rate applied to the our assessed valuations to determine the taxes due for next year. I've observed over a period of many years that the assessed valuations for properties all over the island were typically
well below their market values (as indicated by the sales prices whenever the properties actually sold). It makes perfect sense to me that, if the adjustments have been made equitably, we should begin to see assessed valuations that are more in line with market values.
What doesn't make sense at all is that the budget for providing county services would magically rise by $22,400,000 next year (including a $10,500,000 line item in the budget which may or may not be returned to the taxpayers as "tax relief" in the future). The budget process must begin to separate the issue of how to equitably assess the market values of individual properties from the issue
of how much it costs to provide the services needed by Kauai residents.
Do the budget first, then figure out what tax rate will be needed to pay the bills with the current tax base. If you continue building the budget based on fixed rates and increasing property valuations, we may find ourselves on very "slippery slope." It undoubtedly looks like a great idea now with property values rising each year. However, I suspect it will look a lot less attractive when we hit one of our inevitable market slumps and the property
values stay the same (or even decline) from one year to the next.
Will it suddenly cost any less to run the county than it does now? Will the assessed valuations be reduced? Where will salary and collective-bargaining increases come from? When the voters approved the amendment to the county charter in the last election, I was opposed to it because it seemed to take care of those of us who've lived in our homes for many years at the expense of those purchasing after
a certain date. I was sure that the reasoned judgment of our elected officials together with the recommendations from their key staff members would come up with a more equitable solution.
As of today, I am not as confident that this is likely to be the case. The county cannot continue to base its spending plan on the increases (or decreases) in property values. Every office holder must understand that a change in the size of the tax base is a totally separate issue from the amount needed to provide county services. If that difference isn't clear, that person shouldn't be involved in
our budgeting process.
The tax rates for our properties should probably change (both up and down) from time to time to reflect changes in the relationship between the tax base and the cost of providing needed services. For example, with the huge (48-percent) increase in the tax base this year, I would assume that the tax rates should probably be reduced. Please take the time to consider making this basic change and do not
assume that, just because the market values of all of our properties go up, you have a mandate to spend more.
Steve Faunce
Koloa, Kauai, Hawaii
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With that
letter as an introduction I immediately fired off a response
to the Garden Island (we'll see if it gets published
Letter
to the Editor of the Garden Island News
It's interesting how reader Steve Faunce described
as a sensible and logical way to raise property tax
revenues to support the services provided by the County
of Kauai is precisely what is mandated in
Chapter 5A, Kauai County Tax Code: Figure out how
much you need, then figure out a tax rate to apply
to the assessed value of real property (whatever that
may be, depending on the real estate market)to yield
the necessary revenue. Clearly, the County government
has been doing it backwards!
Figure out the assessed value first. Then, without
changing the rate, come out with the revenue. In a
rising real estate market that calculated value will,
of course, keep rising. The incredibly candid words
of Mayor Baptiste, as reported in the Garden Island
on March 16, descbribed precisely how the County has
been violating its own Tax Code all these years!!
Our county government is the only one in the nation
that DOES NOT explain on the property tax statement
it sends out to the property owner how that number
is arrived at. The latter just says "This is
how much you owe." What is hidden, of course,
is the TAX RATE, which magically does not change by
more than a few insignificant percentage points, when
the assessment could increase by as much as three
hundred percent, as has been happening around the
island.
To add insult to injury, both the Council Chair and
the Mayor boastfully announce every year near the
beginning of the new Fiscal Year: "We have again
not raised the TAX!" Carefully left out, and
apparently with the desired result of keeping the
taxpayers in the dark, is the little word RATE! This
deception has been used so many times that our officials
are obviously starting to believe in it themselves,
as was apparently revealed by His Honor the Mayor
himself on the front page of the Garden Island.
A good example of this deception on the part of the
Council was revealed during the well attended meeting
at the Convention Center when Chair Kaipo Asing, with
his slide show, told the audience how he had actually
reduced the TAX by showing a bunch of new TAX RATES
that differed from their previous values by maybe
three or four percent. What he did not point out on
the same slides was that the assessment had gone up
61%!!
Since the County government has, in effect, boasted
how it has been violating its own tax code all these
years, the logical solution would be for all the elected
officials - the seven members of the Council and the
Mayor- to resign immediately. The only effective alternative
to this would have to be a taxpayers revolt through
a class action lawsuit
against the County of Kauai.
The final irony in this drama is that the County government
will be using, guess what, our money to hire high-priced
lawyers to defend itself. If these officials have
any conscience at all at this point, they should resign
and not squander any more of our money!
Raymond Chuan
Hanalei, Kauai, Hawaii
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The reason
for the shock delivered to the taxpayers this year may well
be that the Assessor's Office no longer has over it an experienced
and dedicated Deputy Finance Director. In essence, the Assessors
now think they can go all the way to maximize the real property
tax revenue for the coming year. And the Mayor was proud to
announce that to the public in his Wednesday, March 16 pronouncement
in the Garden Island.
I have a feeling this county government has opened the gate,
inadvertently of course, to a torrent of outrage on the part
of the taxpayers. Please pass this message to everyone you
know. We will do whatever we can to get the message out to
the general public as soon as possible.
In the mean time I will prepare another message that will
try to explain why we think the County has been violating
its own Tax Code all these years, by quoting for you appropriate
passages in this 75-page document.
What we will need the most in preparing this lawsuit are examples
of serious injuries being done to property owners, especially
modest income locals and Native Hawaiians who, by their cultural
background, are not prone to complain to the government, but
more often than not, suffer in silence, as they give up their
homes and move in with relatives or move to Las Vegas.
Just to keep you awake let me close by citing a case to show
how crazy this tax scheme can be. The assessment of land along
the shore of Hanalei Bay is somewhere around $12 million an
acre. At a tax rate of, say, $4.50 per thousand, the tax on
the land alone for this parcel of around half an acre would
be
$27,000! What is the tax bill on this property? $25.00. Twenty-five
dollars, that is. You figure it out!
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