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February 17, 2010; Honolulu Advertiser | Honolulu might be an island paradise for many. But for the city’s nonprofits, storm clouds are approaching. According to press reports, the city is considering hiking the minimum $100 property tax levied on nonprofits. Right now, nonprofits—regardless of their wealth—enjoy a deeply discounted tax rate that saves them hundreds, if not thousands, annually. However, in the face of financial woes that include an anticipated $140 million budget shortfall for the coming fiscal year, Honolulu City Council Budget Committee chairman Nestor Garcia said the $100 minimum tax is hard to justify. Reacting to talk about a tax hike, nonprofits say they’d be forced to cut services if enacted. According to the Honolulu Advertiser, a typical O’ahu homeowner pays $1,700 in annual property taxes, and that includes a four percent jump over the previous year. “When they see certain people in this community paying much less than that, I need to explain why,” Garcia told a Budget Committee hearing last week. Based on a review of property tax records, The Advertiser reported that 843 church properties with a total assessed value of $1.82 billion are being charged the $100 annual minimum tax. In addition, the newspaper found that 881 properties classified as “charitable organizations” with a total assessed value of $1.7 billion pay the deeply discounted rate, as do 257 nonprofit “low-moderate income housing” properties with a total assessed value of $1.4 billion. Other beneficiaries include school and hospital properties, credit unions, disabled veterans, Hawaiian Home Lands beneficiaries, and properties designated for historic preservation. The last time Honolulu increased the minimum real property tax was in 1993—and just by $7. Although Mayor Mufi Hanneman opposes raising taxes, his budget chief disagrees. “Given that it’s been 17 years … I think that it is, in general, time to again consider moving the minimum tax,” said Rix Maurer III.—Bruce Trachtenberg
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