Modified tax circuit breaker bill advances

WAILUKU – Recognizing that their first attempt to modify the circuit breaker property tax credit had deficiencies, Maui County Council members Tuesday approved on first reading a new bill that modifies the eligibility criteria for the tax credit and establishes an appeals process for those who do not qualify.

Council Chairwoman Gladys Baisa noted the angry reaction members received from the public when many residents were disqualified from the program because of the new requirements approved last year.

The original program was developed in the 1990s to protect those with limited incomes, longtime residents and kupuna from skyrocketing property assessments and taxes. Council members modified the program in 2013, aiming to catch “tax cheats,” but the changes left many longtime residents, for whom the tax credit was designed, ineligible for the credit, some members lamented.

“We took it back,” Baisa said. “I think the members worked well to craft a solution.”

Council Member Mike White, who chairs the council’s Budget and Finance Committee, through which the circuit breaker modification bills have passed, thanked the administration and council members for their cooperation and work.

“I think the committee has done good work,” he said.

White outlined five major changes to the tax credit program:

* Allowing the tax credit for applicants who have had a homeowner tax exemption five out of the prior six years. The change was made to accommodate those who may have recently moved homes or those who may have converted property ownerships to limited liability companies, which would have disqualified them under current rules.

* Applicants may have ownership interests in other real property. Some were disqualified because the current program only allowed ownership of one property, hurting those in a hui and small land ownerships.

* Narrowing the definition of “household” to include all titleholders living on the homeowner property, instead of all titleholders as is the case currently. This change potentially will allow for lower overall incomes and will offer a better chance of meeting the income criteria.

* A sliding scale was added that allows those whose homes are valued up to $450,000 to receive a partial tax credit. Under the existing rules, the tax credit was unavailable to those whose residences were valued higher than $400,000.

* An appeals process was established for homeowners who fail to qualify for the credit. For the current tax year ending June 30, 2015, appeals to a county board of review must be filed on or before Nov. 30.

Current fiscal year circuit breaker tax credit applications may be filed until Sept. 15.

Council Member Don Couch said that he supports the bill but would have wanted the program to allow for a higher building assessment threshold to allow more homeowners to qualify. Currently, those who qualify for at least some portion of the credit must have a gross building assessed value of not greater than $450,000.

The council member, who holds the South Maui residency seat, noted that a testifier spoke about homes in South Maui that may have high building values due to rising assessments in the neighborhood that are not the fault of the owner.

Council Member Mike Victorino, who made the first amendments to modify the current program, apologized to the community, noting that the homeowners hurt were the ones that the circuit breaker tax program was supposed to help.

Council Member Don Guzman, who also proposed amendments to the current law, said that the changes made this time around will allow more people to qualify for the program.

The bill will have to pass a second and final vote by the council before being sent to the mayor for his signature.

In other matters, council members agreed that Maui County voters in the Nov. 4 general election should get a chance to vote on a proposed charter amendment to increase the current maximum penalty that may be imposed for violations of the County Charter, of county ordinances and of rules “having the force and effect of law” from $1,000 to $25,000 or one year in jail or both.

According to the resolution that is headed to the November ballot, the provision was last amended in 1983, and the maximum fine of $1,000 may no longer serve as a sufficient punishment or deterrent.

The council also approved on first reading:

* A bill to outlaw the consumption of alcohol at Kamaole Beach Park II.

* A bill to establish an active loading zone on Front Street fronting King Kamehameha III Elementary School for the immediate loading and unloading of passengers and to prohibit unattended vehicles in the loading zone.

* A bill amending a portion of the Maui County Code related to B-3 Central Business District by establishing accessory uses, special uses and development standards.

These measures require a second approval before heading to the mayor’s desk.

* Melissa Tanji can be reached at