Revamp for tax credit nixed by Arakawa

Mayor Alan Arakawa has vetoed a bill that would change the county’s “circuit breaker” property tax program.

The tax relief program aims to protect people with limited incomes from being taxed out of their homes because of skyrocketing land values. Drafted by County Council Budget and Finance Committee Chairman Mike White, the bill is designed to preserve the program as a safety net while preventing it from being abused by wealthy residents.

The council’s revision of the program provides that the adjusted gross income of all titleholders who have an ownership interest in the property would be considered in determining whether a homeowner would qualify for the circuit breaker tax credit. Households with combined incomes of $100,000 or more would not qualify.

In a news release announcing his decision to veto the measure, Arakawa acknowledged its intent to eliminate abuse of the tax credit, but “in doing so would also have affected some qualified homeowners.”

For example, the mayor said, if an elderly couple had their son’s name on their house deed during the process of estate planning, they would no longer qualify for the credit.

“Moreover, elderly individuals needing live-in care would have been required to include their nurse’s income in addition to their own, which would have disqualified them from receiving the tax break,” he said.

The council would need six votes to override the mayor’s veto. And, unless Arakawa is able to change some minds, an override would seem likely because the circuit breaker measure, Bill 16, was passed unanimously in committee and before the full council.

On Saturday, council Chairwoman Gladys Baisa said Arakawa had informed her of his intention to veto the bill, but she had not had a chance to discuss it with other council members or staff.

Speaking for herself, Baisa said she would look at the mayor’s concerns about the bill and be willing to return the measure to committee for more work, if needed.

“Sometimes in our zeal to correct something, we overlook something,” she said. “We don’t want to hurt anybody, especially the people we want to protect.”

But, because the tax credit is tied to a property taxpayer’s adjusted gross income, a person with a “very large income and a skilled accountant” could get his or her adjusted income “down to nothing” and qualify for the benefit, Baisa said.

The council still wants to help people who are cash poor but land rich, she said.

Baisa said she supports the mayor’s use of his veto to point out his concerns in a bill in which council members might have overlooked something.

“It’s OK. It’s fine,” she said. “It’s the way it should be. Democracy works.”

In his six years serving as mayor, this marks the first time Arakawa has vetoed a council bill, he said, “because I believe that the unintended consequences of this bill are severe enough to merit further consideration.”

“I support the council’s work in proposing legislation to address abuse of this important tax credit, but the flaws contained in this bill have not been adequately addressed,” he said. “We must continue to work toward eliminating abuse of this tax credit, but in doing so we must be careful to avoid causing harm to the very people the circuit breaker was designed to help. Although I am vetoing this bill, I hope to see an amended version of it in the near future, one that is more prudently crafted.”

* Brian Perry can be reached at