Deferred tax breaks: Council wants more information before voting on tax credit and assessment cap

As the specter of California’s Proposition 13 hangs in the room, the county council’s finance committee on Tuesday postponed a measure that would have capped property value increases for most commercial classes.

Bill 156 would cap the value of properties classified as apartments, hotels and resorts, commercial, industrial, agricultural or native forest, or conservation at 15% of the prior year’s assessed value for that property.

Council members said they would like to see financial impact statements on how the measure would affect the county’s budget and its bond rating before moving forward. There is no rush, they learned, after discovering the measure would not relieve sharp increases in property values ​​this year that have been prompted by a robust sales market.

The value of properties in the owner and affordable rental categories are already capped at 3%.

The council has the power to adjust tax rates each year, so potential relief is still on the table, noted Councilor Hilo Sue Lee Loy, the bill’s sponsor.

“It doesn’t provide them with upfront relief on the August tax bill; the second step would be to tackle rates,” said Lee Loy. “That cap would be a relief in the coming years, which forces us to look at rates as well. If we’re able to estimate those safeguards where our businesses can better predict, that’s better for the economy. …it’s definitely something our business community is looking for.

While most council members say they’ve heard from landlords ‘who have whiplash’ about increases in value, calls to the county’s property tax office ahead of Monday’s deadline don’t set records . There are 797 calls this year compared to the record of 1,439 for the 2009-2010 fiscal year.

The tax office now certifies property values ​​and they cannot be changed without going back and reassessing the 60,073 affected parcels of the county’s 140,905 taxable parcels plot by plot, Chief Financial Officer Deanna Sako said.

Hilo Councilman Aaron Chung urged the council to consider “the cautionary tale of Proposition 13 in California that nearly bankrupted these people.”

“I’m not a big fan of these caps,” Chung said.

Proposition 13, passed in California in 1978, set strict limits on property value increases, requiring the state to use income taxes to fund needed services. This has destabilized the economy relying heavily on a fluctuating source of income.

“One of the reasons we have good bond ratings…is the valuations and then the board sets the rates and that’s how the protections are extended to our ratepayers,” Sako said.

The committee also postponed another Lee Loy action, Resolution 291, which authorizes the Director of Finance to issue a $250 credit to be applied against the August property tax bill for properties in the Owners category, except for those who have not paid part of the installment. taxes, properties assessed at the minimum tax rate, or properties sold during the tax year.

The measure had been postponed from a January meeting for the company’s lawyer to investigate whether the board had the authority to go this route. But company attorney Betsy Strance said her office had yet to find an answer, prompting a postponement until May 3.

Chung, also a lawyer, tackled it.

“I think our power only extends to setting the tax rate; that’s my thought,” Chung said.