The Honolulu City Council is considering a measure that would increase the property tax exemptions for those who own and live in their home.
If a property’s value increases by a certain percentage, the bill would exempt that increase from a person’s property taxes.
Those who own and live in their homes on Oʻahu already have a home exemption that decreases their property taxes. For those under 65 years old, $120,000 is deducted from their property value assessment. For those over 65 years old that deduction is $160,000.
That means a 66-year-old homeowner who lives in a home valued at $1 million would only have to pay property taxes on $840,000.
The intended purpose is to help kūpuna struggling to pay their property taxes as their home’s value rises.
However, Department of Budget and Fiscal Services Director Andy Kawano warned the council about making adjustments to property tax revenue, as it is the city’s main source of income.
“This proposal increases the value of a home exemption for select homeowners, creating tax inequities among the City and County of Honolulu's real property tax homeowner base,” he said.
“There are approximately 153,000 parcels with home exemptions in [fiscal year 2025]. The impact of this exemption on tax revenue in perpetuity possibly would conceivably shift the tax burden to others.”
The city is still negotiating with government workers unions over pandemic hazard pay. Kawano expects the settlement to go over the $115 million the council already set aside. The goal is to come to an agreement by October.
He hoped to offset some of the cost by using added vacation and comp time for employees.
“Things are going to be tough next year and the year after,” Kawano said.
“I'm just concerned that there are a lot of measures that reduce taxes that are out there. And I think we need a strategy on which ones we're going to use that's equitable and which ones that we can stand behind as a team.”
Kawano recommended that the council convene a permitted interaction group to discuss the several bills that would impact the city’s property tax revenue since so many have been introduced this year.
