America's Property Tax Advisor

Hawaii Property Tax Constitutional Amendments Proposed


Two proposed amendments to the Hawaii State Constitution relating to real property taxes are being debated by the legislature.


One could give local school boards the ability to increase tax levies to pay for teacher pay raises. The other could increase property taxes to pay for infrastructure improvements near rapid transit stations.


House Bill 2671


HB 2671 would give “concurrent authority” to local Boards of Education and counties to levy property taxes. School boards would exercise their authority for the purpose of funding teacher compensation. The county of Kalawao is exempt from the proposal.


The bill doesn’t require board and counties to agree before any tax increases are put into effect. Therefore, the effect of the amendment could be that either the board or the counites would be able to modify property tax rates whenever they choose.


A similar Constitutional Amendment was proposed two years ago giving the state the power to impose a surcharge on property taxes to fund teacher pay raises. The Hawaii Supreme Court voided that proposal as vague and misleading.


Senate Bill 2074


SB 2074 proposes a Constitutional Amendment authorizing the legislature to establish a surcharge on the taxation of real property for the purpose of funding infrastructure improvements in areas near rapid transit station. The Senate Committee on Judiciary heard testimony on the proposal on January 28, 2020.


The Building Industry Association of Hawaii issued a statement in favor of SB 2074:

“The State of Hawaii has significant assets at several proposed rail transit stations. In order to support planned high-density developments, which in turn would ensure ridership, investment in infrastructure (i.e. sewer, water, drainage, etc.) would be critical. Without the infrastructure capacity to support higher density, redevelopment of these valuable state-owned assets will not occur. In addition, increasing infrastructure capacity will benefit adjacent landowners around transit stations."


The Tax Foundation of Hawaii went on record against SB 2074:

“The proposed measure empowers the legislature to establish a surcharge on real property tax ‘for real property located near rapid transit stations.’ The proposed measure does not say ‘residential,’ ‘commercial,’ or any other class of real property.


Therefore, if adopted, any real property may be surcharged. The proposed measure says it is ‘for real property located near rapid transit stations,’ not ‘upon real property …’ or ‘with respect to real property ….’ The language chosen does not appear to limit the ability to tax. Therefore, if adopted, it appears that any real property may be surcharged wherever located. Maui property may be surcharged to pay for Oahu rail, for example.


Furthermore, there are no limits to the amount of the surcharge. The surcharge could be less than the current property tax, or it could be many times the current property tax. In other words, once the amendment passes, the genie is out of the bottle. It may not even be under control of the members now in the legislature, because future legislators may have different ideas from current members.”


At this point, it’s unclear whether either of these proposed Constitutional Amendments will make it to the 2020 general election ballot.