Kauai Property Tax Revolt: Government Sues Itself and Wins

All of Hawaii suffers an interesting and well known economic phenomenon common to areas that have high tourist or resort traffic. Infrastructure employees cannot afford to live in the cities and/or towns they serve. Resort areas require a disproportionately large number of hospitality industry employees as well as government services such as public safety and law enforcement. Salary norms for such workers are typically not sufficient for them to afford property in resort areas where property values are high. A friend of mine is a resource planner for the Lake Tahoe area. He’s the one who helped me understand this issue.

The North Lake Tahoe area is an extremely popular travel destination rivaling Las Vegas. Property values in the North Lake area reflect this. Hotel workers, waiters, police officers, firefighters and the other infrastructure employees that work in the upscale North Lake Tahoe area typically live either in South Lake Tahoe where homes are a little cheaper or, more commonly especially for police and fire, many miles way where property values are significantly less. This is typically how the issue is addressed. The work force required to keep the hotels and restaurants running commutes into the resort area from surrounding cities and towns where the cost of living matches their income. In the case of Hawaii, the problem is more complicated. The entire island state is a resort area. There aren’t any outlying areas from which employees can commute. Thus, hotel and restaurant employees are competing with the significantly wealthier people for homes.

Multiple families living in a single house is common in Hawaii. In most cases, all the family members of all the families are working multiple jobs in order to pay the rent or mortgage. Typically, they will work some type of day job and then work in the hospitality industry at night. Often, they will work at several different hotels in order to work every night, since all of the jobs are part time. They don’t have weekends off because that is when the hospitality jobs are most plentiful. A friend of mine who lives on the mainland says, “there’s no sense living in paradise when you have to work like hell.” Recent increases in property values and the associated increase in property taxes have only served to make this worse. What is interesting to me is that the state and county governments of Hawaii do not seem motivated to do anything significant to help the state’s residents.

On the island of Kauai voters, led by the Ohana Kaua’i, passed an amendment to the county charter that rolled property taxes back to 1998 rates and capped increases at 2% for resident owners. This would have gone a long way toward helping Hawaii residents keep their homes if and when they managed to buy them. With property values rising at a rate of over 100% per year and property taxes chasing hot on their heels, keeping the house after you’ve managed to buy it is a real problem. The county of Kauai reacted swiftly to the voter voice. They redefined the charter amendment as a ballot initiative and declared that it violated the county government’s sole right to set taxes. The county then sued to have the charter amendment/ballot initiative declared invalid.

The suit was essentially filed by the county of Kauai, against the county of Kauai. So, the county sued itself and won. Image that! Kauai is not the only place where voters are fighting back against local government attempts to cash in on the recent raise in property values. This article recounts similar actions across the country.


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[posted with ecto]

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