In this year’s general election on Nov. 6, Hawaii voters will be asked to decide on a proposed constitutional amendment that would give the Legislature the authority to create one of the largest tax increases in Hawaii’s history.
The ballot question reads: “Shall the Legislature be authorized to established, as provided by law, a surcharge on investment real property to be used to support public education?”
This tax will affect all investment property in Hawaii — residential, commercial and agriculture — regardless of value.
The impact will be felt not just by local property owners, but by the people and businesses who rent from them. The result will be higher residential rents and business leases and an increase in the cost of goods and services.
The tax will NOT be limited to real property over $1 million dollars in value as the Legislature and those in favor of the tax wants you to believe. SB Bill 2922 does not specify the value amount, taxing process or any other specifics on how this constitutional amendment will be carried out. Hawaii currently has the second highest overall tax burden in the country and one of the highest costs of living.
A friend of mine said they’ve kept a modest house as an investment property, which has been passed down the family for generations. Supporters claim the tax is aimed at rich, out-of-state investors, but they don’t mention that the amendment will hurt local families like us.
The amendment does not guarantee more money for public schools or that any additional funds will reach students or go to increase teachers’ pay. There is a legitimate concern that the Legislature could use the new funds to replace a portion of the close to $2 billion in general funds that currently goes to education and divert it to other priorities.
Approximately $3 billion is spent on public education each year — 16.8 percent above the national average. The Education Institute of Hawaii has found that the DOE’s expenditures of $2.9 billion lack fiscal accountability, making it impossible for the public to know how much money is reaching the schools. The Department of Education has not undergone an independent management audit since 1973. It is critical to understand how the current budget is being used before creating a new tax.
The new tax will undermine counties’ ability to provide basic services like police, fire, park maintenance, road repairs, waste disposal and transportation services. Taxation of real property is currently the only exclusive revenue generating authority for the counties.
“A surcharge on residential investment properties would obviously limit county options and make it even more difficult to balance our budgets,” said Mayor Harry Kim.
We support our public schools, teachers and students, but creating a new tax that will increase the cost of living for everyone is a bad idea. New laws and sources of funding are already in place to help improve public schools, but the DOE has not yet implemented their intent. Act 155, 2013, creates a pilot program to allow underutilized DOE land to be developed for affordable workforce housing, including teacher housing, leased or sold to generate additional revenues for public education. Another law passed in 2007, Act 245, 2007, establishes a process for the DOE to impose impact fees on new residential developments determined to have an impact on public schools in the area.
The Affordable Hawaii Coalition, a newly formed organization representing diverse interests across the state, including the Hawaii Island Chamber of Commerce, has launched a collaborative effort to raise awareness of the damaging impact the new tax will have. Here’s how you can help:
• Vote “no” on Nov. 6;
• Contribute to the Affordable Hawaii Coalition PAC to support the campaign;
• Speak to businesses and organizations;
• Provide information to employees/members;
• Write letters to the editors;
• Post information on social media;
• Inform family, friends and neighbors.
Gordon Takaki is president of the Hawaii Island Chamber of Commerce.