Maui County Council members began their review of the proposed fiscal 2013-14 budget Monday by hearing an overview of Mayor Alan Arakawa's spending plan.
The mayor's draft budget calls for spending $573.6 million, not including revolving and grant revenue funds, in the fiscal year beginning July 1. The County Council has until June 10 to pass its version of the budget.
Budget Director Sandy Baz painted a bright picture for revenue next fiscal year, although he acknowledged a couple of potential losses of income, namely the state Legislature's appetite for taking a larger piece of the counties' share of hotel room tax revenue and diverting half of the counties' franchise taxes to the state Department of Transportation.
Commenting on the upward statewide trend for visitor arrivals, hotel occupancy rates, more jobs and less unemployment, Baz told council members: "Hawaii's economy is doing significantly better now than it has in the past couple of years . . . We're looking for a brighter day this upcoming year. You'll see that we're working on making sure that we have the resources as a county to meet the needs of growing communities."
Real property tax revenue will be certified April 19, Baz said during a meeting of the council's Budget and Finance Committee.
When that income projection is set, the council members will have a firm idea of how much is available to spend while maintaining a balanced budget.
Now, the estimated certified value of real property in Maui County for fiscal 2014 is $33.4 billion, up 0.6 percent from the current fiscal 2013, Baz said.
The homeowner class of taxpayers experienced, on average, a 24 percent increase in tax levies, Baz said, because of a lower homeowner exemption from $300,000 to $200,000 and a 10 percent hike in property tax rates.
The Arakawa administration is proposing no change to the homeowner property tax rate of $2.75 per $1,000 of assessed value. However, it is calling for a 13 percent hike to the residential tax rate to $6.50 per thousand; a 12.9 percent increase to the time share tax rate to $17.50; and a 12 percent rise to the hotel/resort rate to $10.25. Other property tax rates would see increases ranging from 4.8 percent to 8.7 percent under the administration's proposal.
Real property tax revenue is the county's single largest source of income, Baz said. In fiscal 2014, property taxes are expected to bring in $239 million, which represents 71.6 percent of all general fund revenue and 44 percent of all county revenue.
According to the administration's draft budget, the $239 million figure includes an adjustment for the county's circuit breaker tax credit program.
To prevent taxpayers from being taxed out of their homes, the program provides homeowners with a credit to their real property tax bill equal to the amount of their bill that exceeds 2 percent of their adjusted gross income. The circuit breaker program is expected to reduce property tax revenue by $2.4 million next fiscal year.
Baz reminded council members that Maui County's portion of revenue from the transient accommodations tax, also known as the hotel room tax, has been set at 22.8 percent, which has amounted to more than $21 million in the past seven years.
"We're trying to make sure that we hold on to that portion of it," he said, alluding to Senate Bill 359, which calls for repealing the distribution of hotel room tax revenue to the counties.
(According to online records, the bill died in committee in the Senate, although it could be resurrected in another bill before the legislative session adjourns on May 2.)
Baz also briefly discussed the impact of Senate Bill 1213, which would take about half of the counties' public utility franchise tax revenues and divert the money to the state Department of Transportation. (The bill passed through the Senate and crossed over to the House where it was referred in early March to the Finance and Transportation committees.)
Now, Maui County receives about $9 million annually from the public utility tax, he said. If passed, the Senate bill would decrease the county's public utility tax revenue by about $5 million, he told council members.
According to the county's budget overview, the current fiscal year's increases in bus fares are expected to generate an additional $700,000, or a 36.8 percent increase to $2.6 million.
The committee continues its review of the Arakawa administration's proposed budget at 10 a.m. today, 9 a.m. Wednesday and 10 a.m. Thursday in the eighth-floor Council Chambers of the Kalana O Maui building.
The panel is scheduled to hold three community meetings this week. One was held Monday evening in Kihei. The others are set for 6 p.m. Wednesday at the Mayor Hannibal Tavares Community Center in Pukalani and 6 p.m. Thursday at the Paia Community Center.
* Brian Perry can be reached at firstname.lastname@example.org.