The following testimony was submitted by the Grassroot Institute of Hawaii for consideration by the House Committee on Finance on March 3, 2026.
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March 3, 2026, 2 p.m.
Hawaii State Capitol
Conference Room 308 and Videoconference
To: House Committee on Finance
Rep. Chris Todd, Chair
Rep. Jenna Takenouchi, Vice Chair
From: Ted Kefalas, Director of Strategic Campaigns
Grassroot Institute of Hawaii
TESTIMONY OPPOSING HB2147 HD2 — PROPOSING AMENDMENTS TO ARTICLES VIII AND X OF THE CONSTITUTION OF THE STATE OF HAWAII TO AUTHORIZE THE LEGISLATURE TO ESTABLISH A SURCHARGE ON RESIDENTIAL INVESTMENT PROPERTY TO INCREASE FUNDING FOR PUBLIC EDUCATION.
Aloha Chair, Vice Chair and other Committee members,
The Grassroot Institute of Hawaii opposes HB2147 HD2, which proposes amending the state Constitution to allow a state property tax surcharge on homes that are valued at $3 million or greater and are not the owner’s primary residence.
The stated purpose of this proposal is to benefit public education; however, that is a dramatic break with historical precedent regarding Hawaii’s property tax system and the state’s method of funding public education. There is a reason that the Hawaii Constitution bars the state from levying property taxes, making it the exclusive domain of the counties and a significant revenue generator for them. Inserting state taxation into this scheme frustrates that intent and opens the door to yet more state capture of county revenues.
As with any proposed tax increase, this proposal threatens to increase the cost of living in Hawaii, as well as add to the burden of Hawaii homeowners at the very moment our counties are searching for ways to offset soaring property taxes due to increased valuations.
The bill’s proponents might believe that limiting the tax to homes valued at $3 million or more will not affect average homeowners, but the effects of a tax hike cannot be segregated from the rest of the economy. What affects one segment of the housing market will ripple through the state’s housing market as a whole.
For example, the proposed tax surcharge could incentivize the purchase and construction of housing under the threshold, creating a domino effect that would reduce housing availability and affordability in this “middle” tier.
Furthermore, if land-use, zoning and other regulations continue to go unaddressed, which limits homebuilding, one should not assume that a $3 million home will remain a high-value investment property in Hawaii.
Over time, the $3 million threshold envisioned in this bill could slide out of the high-value investment category and become a burden to more and more homeowners, affecting rental prices and further increasing the cost of housing in Hawaii.
Hawaii’s residents and businesses need a break from new taxes, tax increases, fees and surcharges. The last attempt to amend the Hawaii Constitution to allow for state property taxes ended in a lawsuit and a poor showing at the polls. Hawaii residents are already “voting with their feet” to flee the state’s high taxation. This is not the time to make Hawaii a more expensive place to live and do business.
Thank you for the opportunity to submit our comments.
Sincerely,
Ted Kefalas
Director of Strategic Campaigns
Grassroot Institute of Hawaii
