Arakawa calls for tax hike or end to TAT cap

WAILUKU – Maui County residents could see hikes in real property taxes, water bills and trash collection fees as proposed in Mayor Alan Arakawa’s $622.6 million county budget for 2014-15.

While presenting his administration’s spending plan to the Maui County Council on Tuesday morning, Arakawa noted a combination of a factors, including inflation, collective bargaining contract increases, a need for infrastructure upgrades and other capital improvement projects as reasons for the proposed increases in taxes and fees.

But Arakawa said an approximately 6.5 percent, across-the-board increase for all real property classifications could be eliminated if the state Legislature agrees to lift the $93 million cap for what the state’s counties receive from the hotel room tax, also known as the transient accommodations tax.

“If the state removes the cap, there should be no property tax increase,” Arakawa said in Council Chambers at the Kalana O Maui building.

Arakawa said he understood that the state has its own “budget challenges,” but he maintained that the hotel room tax should be used as originally intended – to pay for infrastructure used by tourists that visit the counties.

“They should keep the TAT in the county it belongs,” Arakawa said.

He added that Maui legislators have done “so much for the county this year,” but yet “we must ask them to go even further and to fight for the citizens of this community once more.”

House Speaker Joe Souki of Wailuku said in an email Tuesday that the House of Representatives is maintaining that the cap on the TAT should be eliminated. But he added that the Senate would need to agree.

Souki said he suspects that both sides will go into conference committee over the matter, and “hopefully the Senate will agree with the House position.”

If the cap is lifted, Maui County could see an additional $17 million in revenue. If the additional funding is obtained, Maui County residents could also see reduced taxes, as well, according to Arakawa’s budget synopsis.

But West and South Maui Sen. Roz Baker said Tuesday afternoon that while “all of us on the Neighbor Islands are supportive of removing the cap,” the state’s revenue projections have gone down since the House passed its version of the budget, when there was a brighter outlook on tax revenue from the state Council on Revenues.

Now, lifting the cap will be a hard sell, she said.

“I don’t want to be lady doom and gloom, (but) the game has changed if you will, because of the revenue projections,” Baker said.

She is also worried about Maui County state projects.

“I’m concerned for the priorities all of us had for taking care of things in our district,” she later added.

Baker called it “unfortunate” that the mayor would take such a position in his budget and that he needs to be aware of how the Legislature must follow the Council on Revenues’ projections.

Maui Sens. Gil Keith-Agaran and J. Kalani English, who both sit on the Senate Ways and Means Committee, could not be reached for comment Tuesday afternoon.

The mayor’s proposed 2014-15 budget calls for spending nearly $623 million overall, a $63.3 million, or 11.3 percent increase, from the current 2013-14 budget of $559.3 million. Of the mayor’s proposed budget for the next fiscal year, $507 million would be for the county’s operating budget and $116 million for capital improvement projects.

Arakawa said he wants to continue his long-term plans to upgrade infrastructure, including roads, water supplies, wastewater improvements and expansion, and park facility improvements, as well as constructing new county baseyards.

He called his plans “a work in progress.”

“Everything that we have been doing, all the projects that we have broken ground on and plans that we have made, at some point will have a cumulative effect upon this community. In fact, you should be able to see some of that effect already,” Arakawa said.

“Our roads are being maintained on a faster schedule. Our water system efficiency is improving. Our wastewater system is of a higher quality, and our park facilities are getting better and better, even if we have to fix them restroom by restroom.”

The mayor added that he wants to build on improving the county’s infrastructure so the public will not be stuck with footing a large bill in the future nor be stuck with bigger infrastructure problems.

To help with project funding as well as to keep up with day-to-day services, Arakawa is seeking to increase all classifications of real property tax rates.

Under his proposal, property owners would see rates go up between 6.4 percent and 6.6 percent. Homeowners would see their rates jump from the current $2.87 per $1,000 of net taxable assessed valuation to $3.06, or 19 cents more. Time-share properties would continue to pay the most of all tax categories, with tax rates rising from $15.55 per $1,000 to $16.56, or $1.01 more.

Overall, the increase in rates would account for approximately $15.8 million in additional revenue.

Arakawa is also asking for a hike of 6.5 percent overall for water service fees, which includes bills for water usage and new water meters.

For example, for a family of four in a single-family home with a 5/8th-inch water meter and water consumption of 16,000 gallons per month (which is assumed to be about average for that family size), would see its water bill go up from $62.45 per month to $68.40 per month, according to the Department of Water Supply.

The total includes a service charge increase from $15 to $17.50. The charge for water consumption would go from $47.45 to $50.90.

There is no sewer fee rate increase proposed in Arakawa’s budget.

But the administration is proposing to increase the water service development fee that applicants pay for new water meters. For a residential 5/8th-inch meter, the price would increase by $2,000, from $12,060 to $14,060. (Council members are already discussing legislation to allow for various exemptions from the water service development fee.)

Under the proposed budget, residents also would pay more for residential curbside trash collection, with a hike from $18 to $20 per refuse collection unit per month for Maui and Molokai where once- or twice-a-week service is provided.

So for example, those on Maui and Molokai would see their bills go from $108 to $120 per billing cycle. Refuse collection is billed twice a year.

On Lanai, there is a proposed increase from $9 to $10 per refuse collection unit per month.

The administration is also seeking an increase for the commercial tipping fee at landfills from $65.6 per ton to $71 per ton.

Overall, council members said they had mixed feelings about the budget proposal and did not like the idea of raising taxes and fees.

“It’s an aggressive budget,” said Council Member Mike Victorino, who is the council’s presiding officer pro tempore.

Council Chairwoman Gladys Baisa and Vice Chairman Robert Carroll are recuperating from medical issues and were not at the mayor’s budget presentation. Victorino has been chairing the full council meetings.

Victorino noted the continuation of the mayor’s road repair projects as well as water system upgrades in the budget, which he said makes the budget “interesting.”

But he added that he and other council members would be reviewing any expansion positions the mayor has proposed to make sure those positions are needed.

“We can’t just keep on growing government while the private sector is still struggling,” Victorino said.

The council will make cuts where appropriate and add more funds to areas they also believe appropriate, Victorino said.

But he added that he does not want to see new taxes.

“I definitely want to cut (funding in other areas) before I raise taxes,” he said.

In a emailed statement, Budget and Finance Committee Chairman Mike White, who will head the council’s review of the budget, encouraged the general public and businesses to provide input on the budget.

He added: “I look forward to discussing the needs of the county in detail over the next month with each department. Our economy has not yet fully recovered, and I believe we must remain fiscally prudent in spending taxpayer dollars. Fulfilling obligations to current and past county employees, while maintaining core services to the community must be a priority. We cannot overburden Maui County residents and businesses with additional taxes and fees.”

By County Charter, the council has until June 10 to pass a budget for next fiscal year, which begins July 1.

For the full budget see:

* Melissa Tanji can be reached at