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Arakawa Responds to Council Override of Veto on Bill 16

May 7, 2013, 4:59 PM HST · Updated May 7, 5:19 PM
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Mayor Alan Arakawa. Photo by Wendy Osher.

Mayor Alan Arakawa. Photo by Wendy Osher.

By Maui Now Staff

Maui Mayor Alan Arakawa issued a media statement today in response to the council’s override of his veto on Bill 16.

The bill seeks to amend the Circuit Breaker tax credit and is aimed at “weeding out those who abuse the credit,” but the mayor vetoed the bill saying there would be unintended consequences to qualified homeowners.

In a statement, the mayor thanked the council for their work in trying to address the issue, but maintained his position on the potential adverse effects of the bill.

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“I commend the council for their hard work in addressing this important issue, we know they and their staff put in a lot of hours researching and studying this matter,” said Mayor Alan Arakawa in a statement released today.

“Both this administration and the council want to catch those abusing our Circuit Breaker tax credit, but this piece of legislation includes some language that could be inadvertently hurtful to those who are deserving of the credit,” he said.

The mayor continued saying, “We must be fiscally responsible in ensuring real property tax revenues are maximized and that the system of taxation that we utilize maintains the highest integrity and fairness.”

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According to the mayor’s office, ongoing discussions included two letters from the mayor to the council last month discussing how the bill might be improved.

The first letter, dated April 19, was addressed to Jeffrey Kuwada, the County Clerk stating the following:

In accordance with Section 43(1), Revised Charter of the County of Maui (1983), as amended, I am submitting my written objections to Bill No. 16 (2013). My objections are as follows:

1. Section 3.48.800 Purpose.

“The Council finds that tax relief for the citizenry of Maui County is a compelling County interest.” This statement is unnecessary as the second sentence sets forth the purpose of’ the circuit breaker tax credit.

2. Section 3.48.805 Definitions.

The definition of “household” has been amended to include “titleholders”. This broad inclusion has the potential to eliminate the circuit breaker tax credit opportunity for many individuals and families.

3. Section 3.48.81() Circuit breaker tax credit established.

The requirement that a homeowner has been granted a home exemption on the homeowner property for at lease five consecutive tax years may serve to delay relief for those homeowners who may be in immediate need due to a change of circumstances in their lives.

The inclusion of all titleholders in the definition of “household” along with the requirement that household income not exceed $100,000 has the potential to eliminate circuit breaker tax credit eligibility for those properties held jointly by families.

The inclusion of all titleholders in the definition of “household” along with the restriction from having an ownership interest in any other real property has the potential to eliminate circuit breaker tax credit eligibility for those properties held jointly by families.

The limitation on $400,000 on the home0wner’s gross building assessed value has the potential to disqualify homeowners whose gross building assessed value has increased due to an increase in neighboring property values from being eligible for the circuit breaker tax credit.

4. Section 3.48.825 Penalties and revocation of credit.

This section revokes the tax credit if title to the property is transferred by gift, with some qualifications. This provision could revoke the circuit breaker tax credit from individuals, most likely seniors, engaged in estate planning.

Should you have any questions, please feel free to contact me.

In a letter to Council Chair Gladys Baisa dated April 26, the mayor stated the following:

Please know that I appreciate the efforts of the Council in drafting Bill No. 16 and what the Council is attempting to resolve and address with the passage of this bill. I recognize that the intent of Bill No.16 is to minimize the potential for abuse and ensure that only those truly deserving of tax relief via the circuit breaker tax credit are granted that tax credit. I commend the Council’s efforts in researching and analyzing this matter.

In my letter of April 19, 2013 to Mr. Jeffrey Kuwada, County Clerk, I expressed my concerns with Bill No. 16 (2013). I truly believe that, as written, properties held jointly by families would be subject to negative consequences, albeit, inadvertently.

To that regard, I humbly offer the following suggestions for your consideration which I believe may remedy the concerns that I expressed in my letter of April 19, 2013:

1. Section 3.48.805 Definitions.

The definition of “Household” be revised as follows: “Household” means a homeowner, spouse of the homeowner, and any title holders living on the property.

A definition of “Living” be added as follows (which is Consistent with language included in 3 .48.450): “Living” means occupying the property for more than two hundred seventy calendar days for the Year preceding the tax year in which an application for circuit breaker tax credit is filed.

Should you have any additional questions or concerns regarding this matter, please do not hesitate to Contact me.

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