WMTA Shares these commentaries, without taking a position unless otherwise noted, to bring information to our readers
​To view the archives of the Tax Foundation of Hawaii's commentary click here. ​​​​​​​
 
Weekly Commentary

For the Week of September 30, 2018
 
Guess Which Agency Can Impose State Tax?
By Tom Yamachika, President
 
Lots of the controversy swirling around the ballot measure seeking to impose a “surcharge” on investment property to support public education involves our Department of Education (DOE).  The DOE currently receives an appropriation from the State’s General Fund of about $2 billion and is also able to pull from other funding sources such as federal funds.

But did you know that the DOE can also impose tax?

The Hawaii Revised Statutes contains twelve sections  relating to “school impact fees,” starting with section 302A-1601.  The law states, in part, “New residential developments within identified school impact districts create additional demand for public school facilities.  As such, once school impact districts are identified, new residential developments shall be required to contribute toward the construction of new or expansion of existing public school facilities.”

Builders of large projects within school impact districts are required to provide land for school facilities depending on the numbers of students expected in their projects and the amount of available classroom space in existing area schools.  Smaller developers and individual home owner-builders are required to pay a fee instead of land, when their project is too small to entertain a school site.  All home builders or buyers must pay a construction cost fee.

This law, which we have discussed before, recently has been used to create a “school impact district” that goes from Kalihi to Ala Moana.  It’s defined as the areas served by the following elementary schools: Fern, Kalihi Kai, KalihiWaena, Linapuni and Puuhale in the Farrington Complex; and Kaahumanu, Kaiulani, Kauluwela, Likelike and Royal in the McKinley Complex.  Yes, the impact district “tracks” the path of the new Honolulu rail line, pardon the pun. 

In a news release, the DOE announced that the fee, which goes into effect on October 1, will be $3,864 per unit.

That fee is considerably cheaper than the $9,374 proposed two years ago, but it’s not chicken feed by any means.  Multiplying the current fee by the 39,000 additional dwelling units that the DOE is anticipating yields more than $150 million, many times more than the $4.7 million in school impact fees it has collected to date for districts in Leeward Oahu, West Maui and Central Maui.

These fees, of course, are going to have to be paid by someone.  If you think they are all paid by wealthy, fat cat developers who are going to be swimming in money because of the transient oriented development, think again.  These costs get passed along to home buyers or renters, in one form or another.

According to its audited financial statements for fiscal 2017, our DOE’s total revenues were $2.915 billion and total expenses were $2.817 billion.  A recent Star-Advertiser article (Aug. 19, 2018) raises questions about whether the DOE is entitled to tens of millions more in federal reimbursements (and we will write about this next week).  And, of course, it is the only state agency with independent taxing power.

Let’s now turn our attention to making sure that all entitled revenues are being properly claimed and those billions of dollars are being spent efficiently and wisely.​

Joseph Pluta
West Maui Taxpayers Association
Phone: 808-661-7990

FOR IMMEDIATE PRESS RELEASE--

The West Maui Taxpayers Association (WMTA) invite you to attend the WMTA 2018 Candidates Night. Wednesday, October 24, 2018, at 5:00 pm and will be at the Lahaina Senior Center located at 788 Pauoa St, Lahaina, HI 96761

The WMTA Candidates Night is the only forum of its kind in West Maui – and will feature the Candidates for the following: State Senator District 06, State Representative District 10, Maui Mayor, and Maui County Councilmember-all districts. West Maui is a unique and vibrant community that provides employment opportunities and generates significant tax revenues for the all levels of government. WMTA is also unique in that our mission is to promote efficient use of the taxes generated to invest in infrastructure, services and amenities that help ensure that West Maui remains one of the best places to live, work and visit in the world.

As the WMTA Candidates Night is for West Maui voter education, we ask that any candidate attending please refrain from bringing a large contingent of supporters. No signs, banners or other campaign materials will be allowed inside the Civic Center, and all election activities must be conducted outside. Anyone displaying disruptive or disrespectful behavior will be asked to leave. There will be a dinner service provided by local businesses and restaurants.
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For any questions, please email wmta@maui.net or call 808-661-7990

WMTA Shares these articles without taking a position unless otherwise noted, to bring information to our readers
​To view the archives of the Tax Foundation of Hawaii's commentary click here. ​​​​​​​

Proposed Amicus Brief to Supreme Court of Hawaii

Dear Friends,
 
We are asking for your support in a case that is soon to be filed in the Supreme Court of Hawaii seeking invalidation of the ballot measure seeking to allow the Legislature to impose real property tax on investment property to support public education.  The question on the ballot is, “Shall the legislature be authorized to establish, as provided by law, a surcharge on investment real property to be used to support public education?” and we are concerned that it is misleading or deceptive because it doesn’t mention anything about the new tax that would result.
 
You may have seen in the news that the four counties filed a lawsuit against various State officials seeking to remedy this problem.  The Foundation filed a brief in support of the counties’ positions limited to the issue of whether the ballot question was misleading.  (The counties also made other arguments.)  The counties moved for a preliminary injunction, which Circuit Judge Crabtree denied on Friday, Sept. 7.
 
The counties aren’t giving up yet.  They plan to bring the matter before the Hawaii Supreme Court.  We don’t know exactly how, but are assuming they will ask the Supreme Court for an “extraordinary writ” invalidating the ballot measure.  Because such writs are often asked for but rarely granted, we thought it would be useful for the community to demonstrate that the matter is of great public significance by filing an amicus, or “friend of the court,” brief.
 
We at the Foundation already have drafted the brief, and have attached this draft for your consideration, anticipating that things will move very quickly.  We expect the counties to file their petition this week, and we would like to lodge our brief immediately thereafter.  The caption, case number, etc. in the draft will be changed to conform to what the counties actually file.
 
If your organization is interested in weighing in on this issue and is in support of the position the Foundation has taken in this brief, we would be glad to add your name to this brief.  What I will need from you is a “Statement of Interest,” with the name of the person who is acting for your organization.  This statement, with the name and address of the organization and the name of its authorizing person, will be added to the Appendix to the brief, which now contains only the Foundation’s information.  I have also attached a brief filed in the Supreme Court of the United States, prepared by the NFIB Small Business Legal Center, that illustrates how this is done.  Please send tom@tfhawaii.org an email with a Statement of Interest and confirmation that you would like to participate in our brief.
 
Thank you very much for your consideration of this matter.