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FOR IMMEDIATE RELEASE December 31, 2005
Release No. M-117
MAYOR PROPOSES $40 MILLION IN PROPERTY TAX CUTS,
NEW HOMEOWNERS TAX CLASS
Mayor Mufi Hannemann today announced he will propose $40 million in property tax cuts when he sends his budget to the City Council in two months.
“We feel the pain of taxpayers who have seen their home values rise an average of 27.8 percent over the past year,” Hannemann said. “Therefore, we are expanding our initial proposal to relieve more of that additional burden on homeowners.”
The mayor said he looks forward to working out the details of the tax cut with the City Council as it goes over his proposed budget for the fiscal year that begins on July 1, 2006. The tax cuts, like the assessed valuation notices that were sent out to property owners two weeks ago, will apply to that fiscal year. In other words, the new assessments as well as the cuts will apply to tax payments to the City in August 2006 and February 2007.
In addition to the cuts, Hannemann will propose legislation to create a new homeowner classification of real property. Currently, homes on
“This will allow the City to distinguish owner-occupied houses and apartments from other property, and thus enable us to address more directly those property owners most affected by rising assessments,” said Hannemann.
He said he is also establishing the Mayor’s Tax Policy Committee to work with his administration and the City Council in drawing up tax policies that are equitable and help those most in need of relief.
Property taxes are determined by multiplying the net assessed valuation of a parcel of property by the rate for the classification. Islandwide, assessed valuations for all real property rose 25.9 percent over the past year.
It is estimated that will generate an additional $125 million in property tax revenue for the City next fiscal year. The mayor’s proposed cut of $40 million would come out of that figure. Another $65 million of the increased revenue would go to cover fixed costs such as pay raises for City workers, payment of debt and increased fuel and operating costs for TheBus.
The balance of the additional revenue, about $20 million, would be used to establish a fiscal stability reserve fund, something most other large cities have. Initially, Hannemann had proposed creating a reserve fund of $50 million next fiscal year. That remains his long-term goal.
“The City is in a somewhat rosy economic period right now, but we face mounting expenses over the next several years,” said Hannemann. “As I have said in the past, now is the time to prepare for that. Creation of a reserve fund of 5 to 8 percent of our annual operating budget is something that bond raters have strongly urged us to do. In addition to being available in times of disasters or economic downturns, having a proper reserve fund will actually save the City money in the long run by allowing us to borrow money at lower interest rates.”
Bill Brennan, 527-6928
Mark Matsunaga, 527-5767
|Tuesday, January 03, 2006|