Concerns over Trump’s federal funding cuts push Maui County Council to bigger budget than mayor’s

The Maui County Council will have a first reading today of its fiscal year 2026 budget of $1.56 billion, which at $55 million more than Mayor Richard Bissen’s proposed version is due in part to concerns over protecting local programs from possible federal funding cuts. 

The council’s increases are mostly in county operations, by nearly $45 million, while increasing capital improvement project funding by $10.4 million, according to the budget committee’s report. 

“Circumstances are different,” Council Chair Alice Lee said Thursday. “Initially, we wanted to cut the budget. But, with the way Washington policies kept changing a lot, we thought … that we better be more conservative.”

Not all council members are happy with how the budget has shaped up.

“There wasn’t a real understanding by the leadership of what we were doing — if the goal was to come in near to or under the mayor’s budget,” said Council Member Tamara Paltin, who holds the West Maui residency seat. 

Before Bissen presented the council with his $1.51 billion budget in March, Lee and other council members said they were preparing to make cuts wherever they could because of the uncertainty over the Trump administration’s policies. 

Now, they say that’s the reason why they decided to keep funding in the county’s budget and add programs where needed — to make sure there is enough money locally for organizations that may lose grants, residents facing higher expenses and developers grappling with the rising costs of building homes. 

Last week, the University of Hawai‘i Economic Research Organization warned that federal policies could be pushing the state “toward mild recession.” Council members feel the county is prepared if that happens.

Council Vice Chair Yuki Lei Sugimura, who also chairs the council’s budget committee, said that when council members went out into the community to get public feedback on the budget, “one of the things that I was surprised to hear is that there were nonprofits who were already feeling the crunch or fear from what’s going to happen with the federal government, and they were looking at us saying that ‘I hope you help us.’” 

Sugimura said she thinks the additions to the budget are “meaningful.”

The budget committee started every session with a chart known as “Exhibit 1” that helps council members keep track of all the reductions and additions they are making to the budget. Sugimura said her goal is typically to lower the mayor’s budget, but that since the fire, both the economy and the federal administration have changed.

Council Member Shane Sinenci, who holds the East Maui residency seat, said the community made it “loud and clear that this budget should invest in our people in Maui County.” He pointed out that in the end, the budget still balances out. 

“When we added to the budget, it’s to kind of make sure that our nonprofits and our people have those protections,” Sinenci said. “So for me, the addition to the budget was kind of in response to a lot of these federal cuts to make sure that we’re OK here.” 

Paltin said given the way the process went, “it’s inevitable” that the budget was going to come out higher. She said council members were asked to list their priority projects, and those eventually added up. She is concerned about increasing the budget, especially because some funding from last year went unused. 

WHAT ARE THE INCREASES?

While many of the increases came from programs added by the council, there was also $14.7 million in carryover savings from the last fiscal year. 

Notable increases in operations include $12 million for Maui United Way’s Countywide ALICE Initiative, a program to help households described as “asset limited, income constrained, employed,” meaning they work but still struggle to afford the cost of living.

Another change included allocating $25 million toward the “shovel-ready” Līpoa Apartments rental project in Kīhei. The council did this by shifting nearly $14 million from carryover savings to the Affordable Housing Fund and reducing a $12.4 million loan for a housing project in Nāpili to a $2 million grant, which the project developer agreed to, according to the committee report. 

Lee said the focus on increasing housing projects and social service programs was to address “the missing middle.”

“These are your teachers, your carpenters, your plumbers, your health care providers,” Lee said. “All of these people in the past perhaps did not need the kind of assistance they need now because of the rising costs of materials and supplies and even services. That’s why we are hunkering down in case we do experience a recession at the end of the year.”

Other operational increases included $3 million more for the Lahaina Community Land Trust to provide insurance gap funding for residents impacted by the fires, putting the total at $6 million; $1.5 million for controlling axis deer and other feral animals impacting the environment; $1.35 million to Maui Economic Opportunity to address a rental assistance waitlist; and $1 million for a program to incentivize people to buy locally produced food.

Some of the increases for project funding include $5 million for the integration of public and private water systems, $5 million for the relocation of the Molokaʻi Police Station, $2.7 million for West Maui land acquisition and management, and $1 million more to the Countywide Bridge and Drainage Program specifically to mitigate flooding in gulches running through South Maui. 

WHO’S PAYING FOR THE INCREASE?

To cover the increase in costs, the council made changes that included cutting some projects and raising taxes for some property owners. For example, bumping tax rates for non-owner-occupied properties increased revenue by nearly $12.3 million. Increased rates for timeshares, hotels and resorts and short-term rentals also lifted revenues by a combined $14.4 million. 

Meanwhile, the council lowered rates for owner-occupied and commercial residential properties, as well as the lowest tier of long-term rentals. Combined, the changes resulted in a decrease in revenue of just over $677,000.

The council also had to contend with lower-than-expected real property tax revenues, despite higher property values. For fiscal year 2026, the net taxable value for real property is $83.7 billion, a 14.3% increase over last year’s certified value of $73.3 billion, according to the county’s real property tax certification released April 17. However, after making deductions for the circuit breaker adjustment and the tax exemption for long-term rentals for wildfire survivors, the total revenue in real property taxes was $643.6 million, about $7 million less in property tax revenue than the administration had expected. 

However, Lee is proposing some changes at today’s meeting that call for restoring the mayor’s proposed tax rates for hotels and resorts, timeshares and the highest category of short-term rentals, all of which the council increased. She is also proposing restoring the mayor’s rates for long-term rentals — the council decreased rates for the lowest tier but increased for the highest tier. To account for the $14.5 million drop in revenues, Lee is proposing cuts that include $2 million from the ALICE program and $500,000 from the Office of Recovery, which is overseeing the recovery from the 2023 wildfires. 

Lee pointed out that visitor accommodations will likely already be paying more taxes because of higher property values, and that they don’t need higher rates at a time when occupancy is still down following the wildfires. She said that Maui United Way needed at least $10 million for the ALICE program and that the proposed reduction from the Office of Recovery was from a miscellaneous category. 

Paltin is concerned about what she sees as last-minute changes, especially the cuts to the Office of Recovery at a time when Lahaina is rebuilding and “we can’t anticipate and call out all the needs, and so a miscellaneous category will help.” She also pointed out that other tax categories are dealing with higher property values just like hotels, but their rates are going up under the council’s version.

“We’re not really able to talk it through without opening the whole budget committee on the council floor when we have a lot of other work to be done,” Paltin said.

Lee said the cuts are simply proposals and that she is open to discussion. 

“It’s not over,” Lee said. “We have many loose ends, and probably amendments to make, and this will be sort of one of the biggest last hurdles.”

The council’s public hearing and regular meeting start at 9 a.m. today in Council Chambers on the eighth floor of the county building in Wailuku. The public can testify in person, online via Microsoft Teams at tinyurl.com/2p9zhjr2 or by phone at (808) 977-4067 and dialing code 234 794 559#.

The council has until June 10 to pass the budget on second and final reading and send it to the mayor for his signature.