Proposal Could Hand New Property Tax Authority To School Board For Teacher Salaries

Jan 29, 2020

A proposed Hawaii constitutional amendment would give the state Board of Education power to impose taxes on real property to pay for teacher salaries.

In 2018, the state Legislature pushed through a similar measure that would have allowed a surcharge on investment property to fund public education. Lawmakers voted to place the proposal on the ballot. However, the counties sued and the Hawaii Supreme Court ruled the proposal's wording was too vague.

Although the proposed amendment was invalidated, it was too late to remove it from the ballot and a majority of the voters opposed it.

The City and County of Honolulu and the counties of Maui, Kauai and Hawaii Island currently impose and collect real property taxes and use the revenue to fund their county programs. Under the latest proposal, the counties would share the taxing authority with the BOE.

House Speaker Scott Saiki and state Rep. Sylvia Luke introduced the measure. Neither could be reached for immediate comment.

The proposed amendment comes as the state continues to face a teacher shortage, especially in hard-to-fill positions in special needs, rural schools and Hawaiian language immersion.

The state Department of Education has asked lawmakers this session to fund raises for long-serving teachers and those in hard-to-fill positions. The department hopes the pay hikes will help retain and recruit teachers, but lawmakers have been hesitant to agree to state funding.

Jim Shon, former director of the now closed Hawaii Educational Policy Center at the University of Hawaii, expressed reservations about granting taxing authority to the BOE.

“The mixture of funding allows future legislatures to say, ‘Oh, you want more money? Raise the property taxes, go ahead.’ They have the same relationship with the counties,” he said. “Counties can get money from the state, but they also have primarily property taxes. When the state is unhappy with the county [they can say], ‘Go ahead, raise property taxes’ . . . that’s enormously unpopular.”

Shon also questioned if specifically targeting teacher salaries in the measure would violate the collective bargaining section of Hawaii’s Revised Statues, and therefore dilute the process, which is written into the state Constitution.

Shon thinks that the Legislature should look into taxing those with higher incomes for education funding or adding lifestyle benefits for teachers such as housing subsidies or free childcare to attract and keep instructors in the state.

Tom Yamachika, president of the Tax Foundation, a tax education nonprofit, said that because the proposed constitutional amendment states that the “powers and duties relating to the taxation of real property shall be exercised concurrently” by both the BOE and counties, it is unclear what should happen if the two parties disagree.

“If the Board of Education wants to pass a tax increase for Oahu and our City Council is adamantly opposed to it, and passes some kind of resolution saying, 'We don't want this,' does the tax increase go into effect or doesn't it?” he asked.

Constitutional amendments require a two-thirds majority vote by the state Legislature to be placed on the ballot for voters. The amendment could also be posed to voters if it is passed by a simple majority in two consecutive legislative sessions.

If it makes it on the ballot, a constitutional amendment can only be approved if a majority of voters favor of the idea.

CORRECTION: A previous version of this story incorrectly gave Jim Shon's title. He is former director of the  Hawaii Educational Policy Center, which is no longer operating.