Sky-high property values lead to proposed changes in Maui County Circuit Breaker program

Members of the Maui County Council’s Budget, Finance and Economic Development Committee have voted unanimously to extend property tax relief to taxpayers at risk of being priced out of their homes by skyrocketing property values.

Bill 85 advances to the full Council for first reading. The measure amends the Maui County Code, effective Aug. 1, 2024, to increase the maximum amount of the circuit breaker tax credit from $6,500 to $8,200 and raise the maximum household income to qualify for the credit from $100,000 to $126,000. The bill also changes the building value qualifications from a maximum of $750,000 to $1 million to receive 100% of the credit.

Currently, the Circuit Breaker program is for property owners who qualify for a homeowner’s exemption and real property taxes exceed 2% of a taxpayer’s gross income. Taxpayers are required to apply for the program with signed copies of their IRS tax account and return transcripts. Applications are available and accepted Aug. 1 through Dec. 31.

According to acting Budget Director Lesley Milner, the Circuit Breaker ordinance was last amended in 2020, and property value assessments have continued to increase over the last four years.

“Properties that received the circuit breaker tax credit in Fiscal Year 2024 have experienced, on average, a 25% increase in their building assessments,” Milner said in a letter to Council members.

She added that changes to the tax relief program would not impact the fiscal year 2025 budget because the measure would not go into effect until Aug. 1, when property owners can begin submitted applications under the updated provisions of the program.

“These changes will only begin to impact revenues in the fiscal year 2026,” she said.

Committee members heard that property owners most impacted by higher property values are generational families living near the ocean.

During questioning of administration officials, committee members focused their attention on how to keep people better informed of the tax relief program and make it easier to apply, especially for older residents.

In other committee action, the panel recommended approval of Bill 57 to amend the current fiscal 2024 budget for the Department of Housing and Human Concerns by adding a new appropriation of $16,425,000 for the Homeowner Assistance Fund under the American Rescue Plan Act of 2021.

According to Milner, the funds are a supplemental award from the State of Hawaiʻi to assist homeowners impacted by the COVID-19 pandemic. The state chose to reprogram remaining funds of the Oʻahu allocation to Maui County, she said.

The purpose of the Homeowner Assistance Fund, established under the federal American Rescue Plan, is to ease financial hardships of homeowners impacted by the coronavirus pandemic. The program provides funds to eligible recipients to prevent homeowner mortgage delinquencies, defaults, foreclosures, loss of utilities or home energy services.

The state Department of Budget and Finance has worked to make Lahaina homeowners eligible because, as a tourist destination, it was economically impacted by COVID, Milner said. The federal government also relaxed the eligibility to allow more people to receive the funding.

Committee members were told that a contract with Catholic Charities of Hawaiʻi is under final review. The original amount of funding was $8,060,550, which was added to the fiscal year 2022 budget by ordinance. The contract will be amended to add the additional funding.

Catholic Charities is partnering with Hale Mahaolu to provide housing counseling services to interested homeowners.