Simplified property taxes

With ten new property tax proposals under consideration in Honolulu, which I highlighted in my post “Tax watch: Honolulu property taxes” (7/16/13), it’s a good time to think about what makes for fair and reasonable property taxes.

It still bothers me that we are forced to pay taxes on property that we already paid taxes on. I have to be realistic and accept that our property taxes pay for city and county programs – even though we pay for many government services through user fees. In Honolulu, real property taxes are expected to generate $834.8 million in fiscal year 2014, almost 40% of the total operating budget.

Three years ago, in a post titled “Sensible property taxes” (8/3/10), I suggested a flat property tax fee based on lot type, lot size, and building square footage. This idea may be too simple and generate too little revenue for lawmakers to accept. But I think that the existing property tax classes and all of the exemptions are too complicated and I wanted to generate some ideas to simplify our property taxes.

First, my approach to laws and taxes is that they should be 1) fair and reasonable, 2) easy to understand, and 3) easy to comply with. With this in mind, here is my property tax proposal for Hawaii:

1. Fair and reasonable property taxes. Limit property taxes to a 2% annual increase (or decrease), with two rates for structures and land. We shouldn’t have to pay soaring property taxes because the “real estate market” is booming; and the city shouldn’t suffer if there is a dramatic drop in home valuations.

2. Easy to understand property taxes. Instead of 8-10 property classes, let’s set 5 property tax classes based on the fundamental land use.

Class 0 – Vacant (unimproved land, fallow agricultural land)
Class 1 – Residential (permanent, transient)
Class 2 – Business (retail, professional, industrial, warehouse)
Class 3 – Agricultural, Preservation, and Conservation
Class 4 – Government, Public Service, and Nonprofit (public schools, hospitals and medical facilities, museums, charities, churches, cemeteries)

3. Easy to comply with property taxes. I suggest keeping a minimum property tax rate for all properties, and reducing the number of exemptions to just two: 1) an exemption for owner-occupied principal residences; and 2) an additional exemption for low-income residents who are age 75 and older, blind, deaf, disabled, or deployed military personnel.

With a simplified property tax plan, could we generate enough revenue to pay for city and county services? Would a commitment to fewer exemptions and less paperwork help the tax department save time and frustration?

Please think about property taxes and how they may affect you and your neighbors, wherever you live. If you feel strongly about an issue, speak out! Talk to your family and friends, let your Honolulu Councilmember know about it, and write letters to the local newspapers.

Outdoor safety innovations

Did you know that researchers are working on network-connected pill bottles that track whether you’ve taken your medication? Bike helmets that let you know if the cyclist has been in an accident? House slippers that take readings and alert personnel if there is a medical problem? I read about these developing products a while back in an article titled “What Will They Think of Next” by Matt Hendrickson.

I thought about these healthful inventions when I recently read about car accidents and injured hikers. In fact, almost every day, there is a report of a traffic accident, an ocean accident, a hiker in need of rescue, or a missing fisherman. The law can’t keep us safe from every danger, and it can’t protect us from our own bad decisions. But maybe there are inventions that could reduce our risk and make us a little safer in dangerous situations.

Here are some outdoor safety innovations that could make us safer on land, in the ocean, and on the road. I don’t know whether these ideas are being worked on today, but I think they can help us choose to live more safely.

* GPS safety bracelet. Hotels, national parks, state beaches, outdoor sports companies, and nonprofit companies could rent a GPS safety bracelet, which could be activated when a hiker, swimmer, surfer, or paddler is lost or in distress. The GPS feature would give them peace of mind and help rescuers find them quickly and easily. They bracelet wouldn’t prevent accidents, but it could reduce the cost of rescues, by minimizing search times and getting help to travelers sooner.

* Sun safety bracelets. Hotels and outdoor sports companies could offer bracelets that measure body temperature and UV rays, and alert the wearer when they are too hot from the sun or need to re-apply sunblock. There are already color-changing sun-sensor stickers that remind kids to re-apply sunblock, and plastic UV-sensor cards that warn you of impending sunburn; a sun safety bracelet shouldn’t be a stretch.

* GPS walking sticks. National parks, hotels, and outdoor sport companies could rent walking sticks to hikers, which could help hikers keep their footing or aid hikers if they are injured. The walking sticks could come with a GPS feature in case the hiker gets lost, and it could also send out a signal if the hiker has an accident and the walking stick is broken.

* Pickup truck safety belt attachments. Personally, I think that adults can decide whether they want to wear seat belts or ride in the back of pickup trucks, as long as it doesn’t harm anyone else. But to make riding in pickup truck beds safer, car dealerships and car rental companies could sell or rent safety seats or safety belt attachments for pickup trucks. We strap in refrigerators, construction materials, and mattresses; how hard could it be to add a padded chair back with straps?

* Youth seatbelt adjusters. Hawaii law requires that children under age 4 use a child safety seat, and rightly so. Infants and toddlers need additional support and restraint. But Hawaii law also requires that children under age 9 use a booster seat, which I think only benefits booster seat manufacturers. Most children over age 4 should be able to sit in the car and use a seatbelt adapted for their size and height. Car companies could install adjustable seat belts or auto parts manufacturers could offer seat belt attachments that would allow people of all heights to wear them safety and comfortably. Some school buses in Hawaii already have SafeGuard adjustable seat belts; why not passenger vehicles?

What products and inventions do you wish you could use when you’re outdoors? How do you keep safe when you’re traveling, vacationing, or just relaxing on the beach? What could you do to make Hawaii a safer place?

Tax watch: Honolulu property taxes

On July 10, 2013, Mayor Kirk Caldwell proposed ten property tax bills. All ten bills passed the first reading at the Honolulu City Council.

Since all ten bills are under consideration, let’s take some time to look at the property tax proposals. You can and should read the 2013 Honolulu City Council bills for yourself in PDF format here. I’m not a lawyer or tax expert, so if I’ve misunderstood any of the bills, please let me know!

First, let me state that I think all laws and all taxes should be 1) fair and reasonable, 2) easy to understand, and 3) easy to comply with. You decide whether the current real property tax code, and these property tax proposals, meet these standards.

1. Bill 34: Amends the exemption for charitable purposes, including labor unions and federal credit unions. No exemption percentage stated. My opinion: what is the intent of this bill? It appears to re-word the existing code, without any changes.

2. Bill 35: Cancels the real property tax exemptions for historic commercial real property dedicated for preservation. Currently, 50% of the value of the designated historical site is exempt from real property taxes. My opinion: “designated historical sites,” unless they are nonprofit community or cultural organizations, should pay the assessed property tax rate.

3. Bill 36: Adjusts the amount of real property tax exemptions for federal or state credit unions. Currently, credit unions pay the minimum $300 real property tax. My opinion: credit unions are a business and should pay the assessed property tax rate.

4. Bill 37: Adds transient vacation and bed-and-breakfast units to the “hotel and resort” real property class, raising the real property tax rate from $3.50 (residential) to $12.40 (hotel and resort) per $1,000 net taxable property. My opinion: this could discourage entrepreneurial individuals and families. It may also decrease income and general excise taxes, if homeowners choose not to offer vacation rentals because they can’t afford the almost 300% increase in property taxes.

5. Bill 38: Cancels the real property tax exemptions for dedicated lands in urban districts. My opinion: I need more information about “dedicated lands in urban districts.” How much land is currently dedicated? Can the lands be considered “public service”?

6. Bill 39: Adjusts the amount of certain real property tax exemptions for nonprofit medical and hospital indemnity associations. No exemption percentage stated. My opinion: nonprofit medical and hospital facilities are a public service.

7. Bill 40: Repeals the “in lieu of” home exemption for low-income taxpayers over age 75, limiting the home exemption to $120,000. Currently, low-income taxpayers age 75 have a home exemption of $140,000; low-income taxpayers age 80 have a home exemption of $160,000; low-income taxpayers age 85 have a home exemption of $180,000; and low-income taxpayers age 90 have a home exemption of $200,000. My opinion: undecided. My sympathy for elderly low-income residents is tempered by my support for a simplified and fair tax code.

8. Bill 41: Adds “residential-multifamily” as a new general real property class. Currently, multi-family properties are taxed at the single-family tax rate of $3.50 per $1,000 net taxable property. No tax rate stated. My opinion: what is the intent of this bill? How is a single family property shared by multiple families different from a multifamily property? Do residents of multifamily properties use less or more government services than residents of single family properties?

9. Bill 42: Adds “Residential A” as new general real property class for homes with assessed values of $1 million or more; and for homes that are not owner-occupied as the principal home. My opinion: this is unfair. Part-time residents pay the same property taxes as full-time residents, but use less government services. In effect, they are already paying a higher tax rate. And if they rent their home, they are paying more taxes in the form of personal income and general excise taxes.

10. Bill 43: Adds “time share” as a new general real property class, including condominium units used as time share units. No tax rate stated. Currently, time shares are assessed at the “hotel and resort” rate of $12.40 per $1,000 net taxable property. My opinion: what is the intent of this bill? Time share owners and visitors already pay a higher tax rate than full-time residents, but use less government services. FYI Maui’s “time share” class is assessed the highest rate in the state, at $15.50 per $1,000 net taxable property.

Please think about these property tax issues and how they may affect you and your neighbors, whether or not you live in Honolulu. If you feel strongly about an issue, speak out! Talk to your family and friends, let your Honolulu Councilmember know about it, and write letters to the local newspapers.

Celebrating parks and recreation

July is Park and Recreation Month, a time to celebrate the importance of parks and recreation to our health and wellness, conservation and social equity. Park and recreation employees protect our open spaces and natural resources, and provide us with fun, outdoor activities for our health.

I’d like to thank all the dedicated personnel and maintenance workers who do the best they can to keep our parks clean and safe. In Hawaii, our parks and recreation opportunities are amazing. In addition to beautiful beaches, mountain trails, camping, fishing, hunting, and water sports, our kids can picnic in grassy parks and play at neighborhood playgrounds. We have public pools, gyms, tennis and basketball courts, baseball and soccer fields, skate parks, enrichment classes, and children’s programs.

As a college student I spent two summers working as a recreation aide at a local park (it taught me a lot about patience and keeping your cool). When my son was a toddler, we often took him to local playgrounds to get exercise and practice climbing, sliding, swinging, and balancing. Now that he’s older, we’ve signed him up for after-school classes, we take him to baseball practice and Pinto games, and enrolled him in the summer fun program.

When we have access to public parks, we tend to exercise more, have a greater sense of well-being, and feel more connected to the community. Parks and open spaces can reduce air pollution and water runoff, increase property values, revitalize neighborhoods, and even reduce crime, according to “The Benefits of Parks: Why America Needs More city Parks and Open Space” (2006), a report by the Trust for Public Land.

In Hawaii, there are 7 national parks, with over five million visitors in 2012. Even if you can’t visit one of our national parks, Haleakalā National Park and Hawai‘i Volcanoes National Park have great online resources for kids to become junior rangers, download activities, and learn about Hawaii and nature. There are also 53 Hawaii state parks, historic sites, and monuments; and numerous regional and neighborhood parks.

When you visit our parks and hiking trails, be a good visitor and caretaker of the land. Please pick up your litter, pack out what you pack in, and don’t damage the plants, animals, historic sites, and reefs. And thank the parks and recreation volunteers and staff you meet.

How often do you go to a neighborhood, state, or national park? What are your favorite parks in Hawaii, and what makes them special to you? Share why you love your park and recreation and your photos at http://www.nrpa.org/july.

Giveaway: “Mom Entrepreneur Extraordinaire” (Ends 7/31/13)

To celebrate three and a half years of Better Hawaii, I’m launching my first giveaway – the book I reviewed this month: my copy of “Mom Entrepreneur Extraordinaire: Top Experts Share Strategies for Success,” a collection of 21 practical essays and personal stories, written by successful mom entrepreneurs to help other moms juggle family and career.

How to enter:

1) Visit the “Mom Entrepreneur Extraordinaire” book review by July 31, 2013.

2) Write about how you juggle family and work. Share your favorite tip for family, time management, or business. Post an inspirational quote. Or suggest a good book.

3) Check this page after August 1, 2013 to find out the winner.

If there’s a good response to the giveaway, I’ll try to offer more giveaways in the future.

Giveaway rules: This giveaway will end on July 31, 2013 and is open to United States residents. One entry per person, please (though feel free to share as many tips and comments as you like). No purchase or registration necessary (you don’t have to follow my blog). A winner will be picked on or around August 1, 2013 and will be posted on this page. If the winner cannot be reached within one week, a back-up winner will be picked on August 8, 2013.