WAILUKU - The chairman of the Maui County Council's Budget and Finance Committee is not looking to make any "significant rate changes" or to do any "upheaval" to current real property tax rates - in contrast to Mayor Alan Arakawa's proposed budget calling for an across-the-board 6.5 percent increase in rates.
Chairman Mike White made the announcement Monday after the committee completed questioning of Department of Finance Real Property Tax Division officials. They reported that the county could see $261 million in property tax revenues under Arakawa's proposed tax schedule for fiscal 2014-15, which begins July 1. The mayor has proposed a $622.6 million county budget, which the County Council is currently evaluating.
Arakawa has said that tax increases could be eliminated if the state Legislature agrees to lift the $93 million cap on the counties' share of the hotel room tax, also known as the transient accommodations tax. Currently, House-Senate conference committees are meeting to discuss various bills, including the cap, and some predict that negotiations will go down to the wire Friday, which is the last day to file fiscal bills to deck for final reading.
The session ends May 1.
"The chair is not looking to make any significant rate changes or upheaval in any way. We know how emotional changes to the tax policy are. It's one of the more challenging things to get through this body as you all seen," White told committee members.
After the meeting, White said in an email that "for the past few years, real property tax rates have been raised to offset declining revenues as property values decreased. In this manner, the county has managed to maintain a fairly flat revenue stream from property taxes during tough times. Now that property values are starting to rebound, it seems only fair to stop property tax rate increases and to work toward a slight reduction in rates.
"My pledge is to find ways to trim the fat from the mayor's budget proposal. Only by reducing spending and keeping government right-sized can we hope to maintain property tax rates at fiscal year 2014 levels."
The fiscal 2014-15 net taxable value of property in the county is $36.4 billion, which is 8 percent higher than the value certified for the current year of $33.7 billion.
Scott Teruya, real property tax division administrator, said that there has been a "slight rebound" in valuations. The lowest valuation in the last seven years, less exemptions, was in fiscal 2012-13, when the net taxable value was $32.7 billion. The highest during the same time period was in fiscal 2009-10 with $44 billion.
Arakawa's proposal calls for the following rates, based on $1,000 of net taxable assessed valuation, followed by current rates: Residential classification, $6.12 from $5.75; apartment, $6.82 from $6.40; commercial, $7.51 from $7.05; industrial, $7.77 from $7.30; agricultural, $6.44 from $6.05; conservation, $6.66 from $6.25; hotel and resort, $10.01 from $9.40; time share, $16.56 from $15.55; homeowner, $3.06 from $2.87; commercialized residential, $4.90 from $4.60.
Council Chairwoman Gladys Baisa asked about the number of appeals the county has received, wondering if the circuit breaker tax credit changes caused an influx of appeals for the upcoming fiscal year. The circuit breaker tax credit program was developed in the early 1990s to protect those with limited incomes, longtime residents and kupuna from being taxed out of their homes due to escalating property assessments and taxes.
Teruya said that appeals were not significantly higher historically for the coming fiscal year despite changes that tightened eligibility for the credit.
There have been 531 appeals filed for the 2014-15 fiscal year, with 30 in the homeowner category to which the circuit breaker applies. In the current fiscal year, there were 499 appeals, and 20 were in the homeowner class. In fiscal 2012-13, there were 566 appeals, with 26 in the homeowner class. In fiscal 2011-12, 786 appeals were filed with 46 in the homeowner class, county records show.
Council Member Mike Victorino offered an explanation for the lower appeals despite the new circuit breaker guidelines.
"Most of them (homeowners) told me, they give up, they quit," he said, adding that the homeowners just are paying the higher bills.
The circuit breaker tax credit is intended for homeowners whose property taxes exceed 2 percent of their adjusted gross income. Last year, the council approved amendments to the qualifications, which included restricting homeowners' household income to $100,000 or less and assessed building values to $400,000 or less.
For the current fiscal year under the old rules, 1,039 residents qualified for the circuit breaker, with the total tax credit costing the county $1.2 million. The average credit to homeowners was $1,175.
For new fiscal year beginning in July, under the new terms, 388 residents qualified for the circuit breaker credit, with a cost to the county of $297,122. The average credit is $766.
The majority of those who benefit from the circuit breaker credit in the current fiscal year are 71 to 80 years old, according to county documents.
* Melissa Tanji can be reached at firstname.lastname@example.org.