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The Hawaii Supreme Court took the unusual step Thursday of scheduling oral arguments in connection with a request by the state’s four counties to consider their petition for an order invalidating a constitutional amendment on the Nov. 6 ballot.
The court scheduled a hearing on the matter just 19 days before the election. Ballots have already been printed that include the proposal to change the state Constitution to allow the state to tax investment properties to fund public education.
All five justices signed on to the brief order requesting the State of Hawaii and Elections Office to file a response to the counties’ petition by Oct. 11 and scheduling oral arguments for Oct. 18.
“The counties filed this petition for extraordinary writ so that we could argue the merits of our case before the state’s highest court, and we are pleased that chance has now been afforded to us,” Honolulu Corporation Counsel Donna Leong said in a statement.
The decision by the court to take up the counties’ “petition for extraordinary writ seeking pre-election relief” comes as proponents and opponents of the so-called ConAm work furiously in the days leading up to the election to get their message out.
The legal battle casts a shadow over the ongoing campaigning, which involves television ads, radio spots, sign-waving and press conferences, over a hotly contested issue that’s already seen more than $1 million raised between the two sides.
The counties of Honolulu, Hawaii, Kauai and Maui are challenging the validity of the ballot measure, which asks, “Shall the legislature be authorized to establish, as provided by law, a surcharge on investment real property to be used to support public education?”
Passage of the measure would authorize the Legislature to impose a state tax on some kinds of investment properties — which ones exactly and the amount of the surcharge would be determined by legislators in a future session.
Last month, Circuit Judge Jeff Crabtree denied the counties’ motion for a preliminary injunction to keep the question off the printed ballots. Those will be distributed to absentee voters as soon as the week of Oct. 15.
As the counties appealed that decision to the mid-level state appeals court, they decided to turn to the Supreme Court for immediate relief, filing a petition for the writ.
That the court requested the state to file a response in this kind of challenge is not typical, but it isn’t rare, say observers.
What is more unusual is the court’s decision to hear oral arguments.
“Based on the court’s history of oral argument recordings, it appears that the court has had oral argument in only two cases seeking an extraordinary writ in the last seven years and the last such argument was five years ago,” said Brian Black, executive director of the The Civil Beat Law Center For The Public Interest.
What this signals, Black added, is that the justices want further discussion on the issue.
“They have questions they don’t think are going to be answered by the briefs alone,” he said. “This is something they want to flesh out more — what the issues are and the policy implications.”
The counties want the ballot question invalidated prior to the election. If that happens, the election results would be meaningless.
They argue that the proposed state surcharge on investment real property encroaches upon their primary source of revenue to provide services to residents, that it is “misleading and deceptive” for the ballot question not to mention the word “tax,” and that it is too vague as far as which investment properties could be impacted.
Opponents’ underlying argument is that passage of the ConAm would raise the cost of living for everybody in Hawaii, not just the wealthy investors that proponents of the measure say will be the ones bearing the brunt of this proposed new state property tax.
The constitutional amendment’s main backer is the Hawaii State Teachers Association, which has argued Hawaii’s public schools are in dire need of more funding and that this is the best shot at improving public education in Hawaii by paying teachers more, expanding arts curricula and bolstering special education. The union argues legislators intend to tax only second homes worth $1 million or more if the measure passes.
Correction: An earlier version of this story said the tax could apply to homes worth $1.5 million. HSTA has consistently put the figure at $1 million or more.
HSTA President Corey Rosenlee said he wasn’t daunted by the Supreme Court order Thursday.
“They (the counties) lost before and they’re going to lose again,” he said.
The day’s legal developments came as parties on both sides of the ConAm took to microphones on the streets of Honolulu to amplify their arguments.
Speaking to reporters at a press conference organized by the Affordable Hawaii Coalition — a network of businesses and organizations that include the Chamber of Commerce Hawaii, Hawaii Association of Realtors and Building Industry Association of Hawaii — Honolulu Mayor Kirk Caldwell and Hawaii County Mayor Harry Kim urged voters to defeat the amendment.
Kim called the measure “a ridiculous, disastrous proposal” for residents and businesses.
“I resent any kind of finger-pointing that this is for teachers, that this is for students — and that if you’re not for (the ConAm) you’re against the education system,” he said.
Caldwell said he was “extremely concerned” about the long-term implications of passing the amendment, saying even if today’s legislators assure the public that only investment properties worth $1 million or more would be subject to the tax, there’s no telling what tomorrow’s policymakers could do with the new state power.
Hawaii’s counties have the sole power to tax property in the state. Hawaii is also the only state in the country not to rely on any form of property tax to fund schools. The statewide school system is primarily funded by the state’s general fund, which is comprised mostly of personal income and general excise tax.
“This amendment doesn’t even define what kind of property is going to be taxed,” Caldwell said. “Everything’s on the table; all the properties are on the table. I believe all property is at risk.”
The mayors’ remarks were delivered across from the Ala Wai Golf Course in front of a residential building that the Affordable Hawaii Coalition described as an investment property valued at $1.5 million, which is rented out to eight families as “affordable units.” The coalition argues that even if only those investment properties and condo units worth $1 million or more are targeted in any new taxing structure, higher rents would still be passed down to everyday residents.
The HSTA held its own press conference Thursday to underscore support for the ConAm in front of Central Middle School in downtown Honolulu. Rosenlee said the union chose that location to remind the public that more than half of Hawaii’s public school buildings are more than 65 years old, and in bad need of repair. (Clarification: The DOE said Friday that actually 43 percent of Hawaii’s public schools are currently more than 65 years old.)
During a late morning recess, students from the school tossed footballs and played outside on the front lawn facing Queen Emma Street, the shimmering blue-tinted glass facade of Capitol Place Condos towering nearby.
The Hawaii Department of Education — the state agency that operates on a $1.9 billion budget — has not taken a position on the ConAm. School Superintendent Christina Kishimoto issued a general statement Thursday on education funding.
“Investing in public education directly impacts Hawaii’s economic viability and the Department is mindful that the funding provided for its operating budget — 94 percent of which goes directly to school-based expenses — has not kept pace with the cost of living,” Kishimoto said.
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