Council sets tax rates, with eye on bumping gasoline by a nickel

Most property tax rates will be dropping next fiscal year with others remaining flat after Maui County Council members passed a resolution Friday to set the tax rates that will take effect July 1.

Although most of the tax rates will change, property valuations are up and that could mean higher tax bills for residents and businesses. Council members approved the rates following a final public hearing Friday morning in Council Chambers. The tax rates for homeowners remains the lowest at $2.70, down from the current $2.75. (Taxes are calculated by multiplying the rate against each $1,000 of net taxable assessed valuation.) The highest property tax rates remain with time-share units at $14.31, although that’s down from the current $14.55. (See box for tax rate details.)

Overall, the property taxes are expected to generate $275.4 million next fiscal year. Property taxes are the county’s largest single source of revenue.

Also on Friday, members heard testimony on proposed fuel and motor vehicle weight tax rates. The motor vehicle rates will remain the same, but there are proposed increases to all the fuel tax classifications, including a 5-cent hike for gasoline and diesel from 18 cents per gallon to 23 cents per gallon.

The proposed fuel tax rates are forecast to raise nearly $15 million in fiscal 2017.

The tax on biodiesel would climb from 9 cents per gallon to 11.5 cents. The council will revisit the rates when it reviews the budget during its first reading Friday.

Pacific Biodiesel President Bob King opposed the increase for biodiesel, saying past tax increases have resulted in lost business for his company, which maintains its headquarters on Maui.

He asked the council to leave the tax rate on biodiesel at its current rate of 9 cents a gallon or even impose no county tax, as Kauai and the Big Island have done.

King said the public needs to be educated about biodiesel fuel, and, when there’s a significant amount of business, then biodiesel tax rates could be increased.

Biodiesel is a renewable diesel fuel derived from waste vegetable oil.

King added that even if the biodiesel tax rates were to go up, small-business owners with whom he does business with would continue to use biodiesel because “they want to do it.”

But, as for fleets of vehicles with larger business operations, those customers are “more cost sensitive” and may shy away from using biodiesel if taxes on it were raised.

King supported increasing the gas and diesel fuel tax, noting that the funds do go into the repair and maintenance of Maui County roads.

“It’s important to support our roads and our Department of Transportation by giving the funds to keep everything going,” he said.

As cars become more “efficient” and use little or no gas, taxes on gasoline and the cost of the fuel itself would continue to go up, King said.

Testifier Jim LoBianco said he doesn’t mind paying the increased gas tax, although he would like to see a way that electric vehicles could also help pay for the use of county roads.

He added that, although electric or hybrid vehicles are subject to weight taxes, some of the vehicles “don’t weigh much at all.”

Thomas Crowley also said he supports the 5-cent increase for gasoline and was surprised that there were not many other testifiers on Friday, but he added that gas is “cheap,” but if prices were $5 per gallon, “you would have a line out the door” of testifiers.

He said he supports the idea that if a person drives more, then he or she should pay more in taxes, which goes into road repairs and maintenance. He agreed that finding a way to tax electric and hybrid vehicles may be challenging because many of the vehicles are different, and some people drive a lot while others don’t.

Crowley was the testifier who spoke out about proposed property tax rates, which he said he supported.

In written testimony, Eugenia Kraft, president of the Ocean Resort Villas Vacation Owners Association, whose members have time shares on Maui, said time-share unit tax rates are “unfairly high.”

For years, time-share officials and owners have complained to the council about having the county’s highest property tax rates.

In her letter, Kraft said that “at worst” time-share units should be classified along with hotels and resorts, which will pay $8.71 per $1,000 of net taxable assessed valuation, down from $8.85 this year. That is still lower than the time-share rate of $14.31.

Kraft said the high rates are unsupported by “any rational basis” or “empirical data” and that time-share owners “generally have no voting right” because they’re not permanent residents. But, they “are nevertheless constituents and components of the Maui community who deserve better treatment than they have received to date,” she wrote.

Time-share owners have argued that they stay longer on than hotel guests, and therefore spend more money here and return to Maui year after year.

The high time-share tax rates have led to the association filing a complaint in 2nd Circuit Court in 2013. That matter remains pending in the courts.

* Melissa Tanji can be reached at