WAILUKU - A proposal to lower the county homeowner tax exemption was deferred Tuesday by the Maui County Council Budget and Finance Committee.
While council members said they believed it was time to look at dialing back the exemption to 2006 levels, several said they would prefer to see a more incremental change. Budget Chairman Joe Pontanilla said he would revise the proposal and schedule another hearing on the matter for December.
Under the current exemption, homeowners who use their home as their primary residence can deduct $300,000 from their home's taxable value.
That makes Maui County's the most generous homeowner exemption in the state. Honolulu is next with an $80,000 exemption.
Council members had been considering a proposal to reduce the exemption to $200,000. The change would bring around $4 million to $6 million in additional revenues to the county, finance officials have estimated.
The average homeowner would pay around $250 more in his or her property taxes, Finance Director Kalbert Young said Tuesday.
In the early 2000s, the exemption was as low as $50,000. The council voted to increase the tax break multiple times over several years, as a plan to ease the burden on homeowners who were seeing their property values - and taxes - skyrocket in a booming real estate market.
That situation is now heading in reverse, as real estate values decline and take property tax bills - and county revenues - down with them.
Maui Chamber of Commerce President Pamela Tumpap said she realized the county had to "look at options" in a budget crisis. But she also said she was concerned about reducing the homeowner tax exemption, which she equated to increasing taxes during difficult economic times.
"People are already struggling to pay their existing bills," she said.
Council Member Mike Molina felt the proposal was not a tax increase but was actually restoring the tax exemption to previous levels.
"I'm just trying to give a balanced perspective," he said.
Council Member Gladys Baisa said the change would actually cost most taxpayers "a little more than $20 per month."
But Council Chairman Danny Mateo was concerned the adjustment might be too severe.
"Perhaps $50,000 this year, $50,000 next year," he said.
And Council Member Mike Victorino also advised a gradual approach.
"There's going to have to be some kind of change," he said. "Let's take it one step at a time."
* Ilima Loomis can be reached at iloomis@mauinews.com.
