Council Budget Proposal Calls for 9% Real Property Tax Cut

Mike White. File image by Wendy Osher.

By Wendy Osher

Budget and Finance Committee Chair Mike White today announced a proposed average 9% reduction to real property tax rates for the fiscal year 2015 budget.

In a press release statement, White said the same revenue-neutrality approach relied upon for the last few fiscal years meant it was time for tax rates to be lowered, rather than raised. “Taxpayer relief means leaving more money in the pockets of residents and businesses.”

In explaining the approach, White said real property tax valuations had risen, and the county’s expenditures and real property tax revenues have increased from 2004 to 2013 by 71% and 82%, respectively.

When the mayor presented his version of the budget, he explained that the county’s budget hinged on whether or not the state was going to remove the cap placed on the county’s share of the Transient Accommodations Tax that is derived from hotel room taxes.

At the time, the mayor said, “If they don’t remove the cap, then we’re going to have to ask the community for a property tax increase of 6.7%. If they remove the cap, we can actually ask the council to not raise any of the property taxes and actually possibly reduce some.”

During testimony before the committee today, Mayor Arakawa said a removal of the cap would have resulted in the county receiving more than $17 million. “Unfortunately, the bill that has moved out of conference committee is set to return a mere $2.2 million per year for the next two years. This amount is below even the minimum that we thought we would get.”

While he called the news about the TAT “very disappointing,” Arakawa said, “I believe that with the extra TAT monies that the county did receive, along with delaying some projects and creative cuts by this committee, we should be able to eliminate any need for a property tax increase for fiscal year 2015.”

The mayor also offered his assistance and cooperation in determining which projects should be delayed so that no tax increases are necessary.

While the outcome was a fraction of the sum the counties had sought to have returned, White said, “the council is fiscally prudent and heads into this week of decision making with the task of making do with less. I look forward to collaborating with colleagues to ensure a sustainable future for the county,” he said in a press release statement.

White’s $594 million proposed budget proposal is also $29 million less than the $623 million budget proposed by Maui Mayor Alan Arakawa.

In addition to the property tax decrease, White’s proposal also calls for the elimination of expansion positions. He said new collective bargaining agreements will require an estimated $100 million in additional payments from FY 2014 to FY 2017.  He said increasing the employment base would have a multiplier effect on that obligation.

Under White’s proposal, there is also a $10 million appropriation to improve county water transmission lines for those in need of water meters, reductions in agricultural water rates and residential refuse collection fees, and includes funding for new business and job creation.

Decision-making on the budget will continue through Friday, May 2.

The deadline for the council to pass the budget is on Tuesday, June 10, 2014. If the council fails to pass a budget by the deadline, the mayor’s version of the budget will take effect on July 1, 2014.

Some helpful tips on how to participate in the budget process are available on the County of Maui website.