Lewis and Ohana Kauai, a group he co-founded to get the measure passed, took a legal appeal in County of Kauai ex rel. Nakazawa v. Baptiste to the Hawaii Supreme Court where Robert Thomas, Managing Attorney of Pacific Legal Foundation's Hawaii Center, offered oral arguments on their behalf.

During the hour-long hearing, Thomas presented to 5 Supreme Court justices his clients’ arguments and offered a brief rebuttal to Gary Slovin of the Oahu-based Goodsill Anderson law firm who represented the Kauai county government.

Groups concerned with out-of-control government spending say this case -- compelling, complicated and bizarre -- is potentially one of the most important for the people of Hawaii. Government officials on Kauai agree.

Depending on how the justices rule, narrowly or broadly, they could determine the underlying question of who the county represents -- the will of the people or the will of the government.

Ohana Kauai members say the case goes to the heart of what America’s founding fathers fought for -- the right to determine how much the people are taxed and who has the power to make that decision.

2004 Election Sent a Message to County Politicians After Group Successfully Orchestrates Tax Revolt

The story behind how Ohana Kauai got to the Hawaii Supreme Court starts in 2003 when Lewis and about a dozen other property owners formed the group to address concerns that the county government was increasing property taxes and government spending at record rates.

Many residents, including those on fixed incomes, saw their property taxes double in 7 years. Others were in for even more of a sticker shock. One Kauai resident reported a 2000 percent increase to her property tax bill.

The group’s members, who quickly grew to more than 100, believed their government officials -- and their high property tax rates -- were ultimately going to push people from their homes.

Because property values were skyrocketing, with the median price of a home on Kauai exceeding $665,000 in 2005, representing a 48 percent increase in one year, and the rate of property tax imposed on the residents not changing, the local county government raked in the cash.

Soon, two thirds of its total operating budget, now $122 million, was being collected from property tax, with total property tax collections shooting up from $31 million in 1999 to $67 million in 2005. As the property tax collection grew, so did the size of county government, but the population of 65,000 increased at only a modest pace.

Hoping they could reason with county officials, Ohana Kauai members tried to persuade Kauai County Council’s seven members to embrace property tax relief, but they were ignored. Members of Ohana Kauai say their government representatives were quickly becoming greedy, out-of-control spenders. The only option they had was to get the issue on the ballot in the next election and to do that, they had to act quickly.

With increasing momentum, Ohana Kauai collected 3,000 signatures from the island’s registered voters and successfully got a charter amendment on the ballot. The amendment capped property tax increases at 2 percent and rolled back property tax bills to what they were in 1999 for owner-occupant properties.

County officials, who snubbed the movement until the last week before the election, were genuinely shocked that Ohana Kauai had so much success. The county and the mayor, in conjunction with the public union leaders who wanted the tax revenue for pay raises, conjured up a plan to undercut Ohana Kauai’s campaign. They paid for aggressive advertisements against the charter amendment. They told county workers they would lose their jobs. They told residents that services would be cut.

The county’s efforts were too little and too late -- Ohana Kauai was victorious, winning two of every three votes in 2004.

“Mayor Brian Baptiste and members of the County Council vehemently opposed the measure, but the people of the County thought otherwise and approved the measure by a nearly two-to-one margin,” Thomas of Pacific Legal Foundation says.

Bizarre Twist: County Conspires to Kill Amendment After the Fact

Rather than adhere to the wishes of voters, county officials conspired to kill the amendment after the fact.

In what legal experts call a “bizarre” twist, Kauai County attorneys filed a lawsuit against the county administration over the amendment, claiming it was illegal.

"Our elected officials are supposed to represent the people and they should be supporting this tax relief measure, not going to court to try to defeat it," Lewis says.

The county won round two in the battle for smaller government and limited taxes.

The state’s Fifth Circuit Court ruled the charter amendment was not actually a charter amendment, rather it was a ballot initiative that levied or repealed a tax, which is not legal under Kauai County Charter.

The court ruled this way despite the fact that the charter amendment was accepted as a charter amendment by the Kauai County Clerk before the election and put on the ballot by the very county officials challenging it.

The Pacific Legal Foundation, a non-profit dedicated to "rescuing liberty from the grasp of government" by focusing on property rights, agreed to appeal the case to the Hawaii Supreme Court.

Back in the Hawaii Supreme Court

A woman who read a statement on behalf of the Kauai mayor without introducing herself to the justices, admitted upon questioning that the county administration has refused to implement the charter amendment and continued to collect taxes above the limit supported by the 2004 amendment. She said the government officials on Kauai were concerned they would violate their oath of office and the state constitution if they abided by the charter amendment. They sought the Supreme Court’s guidance, she says.

Gary Slovin, whose firm was paid $235,000 by the Kauai County to represent them in this case, went even further. He claimed that allowing people to vote to limit the taxes they pay would create “chaos.”

Public union members, such as Russell Okada of the Hawaii Government Employees Association, and county council members, agreed with Slovin’s position and came to support him.

One Kauai council member said afterward that the Kauai voters could take this issue so far, they might decide they shouldn’t have to pay taxes at all. Then, he asked incredulously, how would the government operate?

Back inside the courtroom, Slovin had difficulty answering almost all of the Supreme Court Justices questions and appeared confused about what the county’s brief actually argued and contained.

In one instance, a justice asked him if he was retracting his original argument and from there, Slovin’s answers only became more convoluted. He went back and forth on the important issue of whether his brief laid out the “injury” that this charter amendment did or could cause.

In stark contrast, Thomas, who was grilled by three of five of the justices on virtually every statement he made, answered all of the justices’ questions and backed up each of his answers by citing other cases they’d ruled on.

Thomas asked the court to consider:

• Whether the courts have jurisdiction to entertain a lawsuit created by government officials in order to strike down a law they politically disagree with.

• Whether the term "counties" in the Hawaii State Constitution mean exclusively "county councils," rendering the people’s of Kauai authority to amend their Charter moot.

• Whether the county Charter Amendment, conspicuously labeled a Charter Amendment, and proposed, passed, and certified by election officials as a charter amendment, will be held by the Supreme Court to in fact be a charter amendment. The County Attorney argues that it was intended to be an initiative or a referendum measure, prohibited by the Kauai Charter.

Thomas also emphasized the fact that the county had not inferred “injury” as is required in any legal case for it to have standing. He asked the justices to narrow their ruling to the issue of whether or not the charter was in fact a charter.

He discouraged the justices from ruling on the broader issue of power behind tax related matters -- the people or the government -- saying this case -- with the government suing itself to stop the charter amendment from being implemented -- isn’t appropriate to determine that issue.

Surrounded by Ohana Kauai members and supporters from other islands who are initiating similar protests, Lewis said afterward that he was pleased with the way the hearing went.

The justices can issue a written opinion at their discretion. Two of the five come from law firms closely affiliated with public unions or Democrats who oppose the charter amendment. However, three of five can issue a majority opinion.

This isn’t a strictly partisan issue. Mayor Baptiste is a Republican and has been one of the biggest opponents of limiting his administration’s spending.

Thomas says the case is extremely important to the people of Kauai and the entire state.

"The people of Kauai -- not local politicians -- are the ones who have the right to vote and decide on property taxes," says Thomas. "We're confident the Hawaii Supreme Court will agree that when the voters speak, government officials should listen, not the other way around."

More details on the case at http://www.inversecondemnation.com

Reach Malia Zimmerman, editor and president of Hawaii Reporter, via email at mailto:Malia@hawaiireporter.com

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