Hawaii’s four counties asked the state Supreme Court on Wednesday to invalidate a proposed constitutional amendment to tax investment property for public school funding.
The unusual step comes a couple weeks after Circuit Judge Jeffrey Crabtree refused to block the measure from appearing on the Nov. 6 ballot. The counties are appealing that ruling to the state’s appeals court.
This separate avenue of legal action, the counties argue, is necessary because waiting for the other appeal to wend its way through the court system would take too long.
“Granting an extraordinary writ is the only practical way the counties can obtain pre-election relief prior to November 6, 2018,” their 15-page petition states.
Standing on the lawn in front of Aliiolani Hale in blistering heat Wednesday morning, Honolulu corporation counsel Donna Leong said seeking this remedy from the Hawaii Supreme Court “stood a better chance of being briefed, heard and decided” before the election.
The counties are challenging the validity of the constitutional amendment, which proposes to grant the state the authority to tax “investment real property” to support public education.
Currently, the right to levy property taxes is solely in the counties’ hands. They rely on that revenue to provide a slew of services, and they’re vociferously arguing against sharing the power with the state Legislature.
Voter approval of the constitutional amendment would be only the first step, allowing the Legislature to create enabling legislation at a future session.
The counties’ petition asks the Supreme Court to invalidate the ballot question based on its “unclear and misleading” wording and to do so before the election. The five justices must decide whether to grant the petition, which would then require a response from the state.
The court could then schedule oral arguments, which the counties are requesting on an expedited basis.
It’s not clear when the Hawaii Supreme Court will decide whether to grant the petition.
“There are no deadlines for rulings specified in the Hawaii Rules of Appellate Procedure,” said court spokeswoman Jan Kagehiro. “Generally, extraordinary writs are not frequently filed.”
The Hawaii Department of the Attorney General, which is representing the state of Hawaii and Office of Elections on the opposing side, said if the court accepts the writ, it will “respond appropriately.”
“What (a petition for extraordinary writ) basically means is, it’s asking the Supreme Court to act outside the normal appeal channel and order somebody to do something,” said Tom Yamachika, president of the Tax Foundation of Hawaii, which filed an amicus brief in support of the counties’ position in Circuit Court.
In Wednesday’s petition, the counties of Honolulu, Maui, Hawaii and Kauai basically present the same arguments they did in support of a preliminary injunction: that the ballot question is unclear and could mislead the average voter.
The counties say the question uses the word “surcharge” instead of “tax”; that it doesn’t define the term “investment property,” so it’s possible that any type of of real properties, including residential homes, could be swept up in a new tax; and that the measure gives off the “misleading impression” any revenue generated from a new state property tax would actually enhance — as opposed to supplant — current state education funding.
The proposed constitutional amendment has set off intense debate among the statewide teachers’ union, business interests and counties.
Hawaii is the only state that doesn’t rely on any form of property tax to help fund its schools. The islands’ 292 public schools are part of a unique statewide district where money flows directly from the state Department of Education. Its $1.9 billion annual budget is mostly propped up by the state’s general fund, comprised of general excise and personal income tax revenues
While the state Supreme Court’s involvement in pre-election matters is rare, it is not unprecedented.
In 1992, the court blocked then-Lt. Gov. Ben Cayetano, in his capacity as the state’s elections officer, from putting two constitutional amendments on either the primary or general election ballot.
That case — which came to the court via the standard appeals process, not a petition for a writ as the counties are seeking now — also dealt with education, particularly the appointments process for the school superintendent and Board of Education members.
In support of their petition for a writ in this case, the counties also cited a recent Arizona Supreme Court order removing a ballot question from the upcoming election that proposed raising income tax on people earning $250,000 or more to fund teacher salaries.
The Arizona court said the ballot question failed to add the proposal would have also removed a state index of tax brackets to prevent those whose income didn’t exceed inflation rates from moving to a different tax bracket.
The Hawaii State Teachers Association, which lobbied successfully to get the Legislature to place the constitutional amendment on the ballot, criticized the counties’ latest legal move.
“It is disappointing that the counties are wasting tax-payer dollars to fight for wealthy outside investors and illegal vacation owners, rather than Hawaii’s own keiki,” said president Corey Rosenlee in a statement.
The teachers union has vowed that legislators would limit the proposed state tax to second homes worth $1 million or more — not commercial property or primary homes so as not to ding average Hawaii residents with additional taxes.
The union estimates that the any new tax would generate $200 million to $400 million for public schools, which it argues are “chronically unfunded,” resulting in underpaid teachers, crumbling school buildings and lagging student achievement.
Read the counties’ petition for a writ here:
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