WAILUKU - As property taxes have gone down for homeowners in Maui County, data released by the county Finance Department show that an increasing number pay the minimum tax of just $150 per year.
Almost a third of all homeowners today pay the minimum, compared to only 5 percent eight years ago. In total, the number of homeowners who pay the lowest amount of property taxes possible has increased by 800 percent since 2003, to 8,461 households this year.
"The only thing I've really noticed is that my property tax bill is almost nonexistent," said minimum-taxpayer Terrie Eliker, who noted that the county's $300,000 homeowner exemption is more than the current value of her condo.
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"Without checking on the Internet to see what I paid, property taxes are not a worry for me at all," she said. "It's almost a nonissue."
The Maui County Council is now considering a proposal to lower the exemption to $200,000.
A separate proposal being considered would tighten restrictions on who can qualify for the homeowner exemption and give finance officials more ways to catch people claiming the exemption illegally.
The homeowner exemption and low homeowner rate apply to people who use their property as their primary residence. Homeowners also can qualify for the "circuit breaker" tax credit, which allows them to cap the amount of taxes they pay, based on their income.
The sharp increase in homeowners paying the minimum property tax coincides with steps the county took to provide tax relief during the real estate bubble of the mid-2000s.
As the average property's value more than doubled from $293,116 in 2003 to $689,700 in 2008, the county lowered the property tax rate and increased the tax exemption offered to homeowners.
The exemption increased from $50,000 for most homeowners in 2003 to $110,000 in 2004, $200,000 in 2005 and finally $300,000 in 2006, where it has remained.
Maui County Council Budget and Finance Committee Chairman Joe Pontanilla said he was not surprised to learn that so many homeowners now pay the minimum tax. Homeowners also pay the county's lowest property tax rate, $2.50 per $1,000 of assessed value. That's down from $3.55 in 2003.
"As property values have gone down, you add the $300,000 for the home exemption, then you put the rate on that - people are paying less," Pontanilla said.
While the actual amount varies depending on each property's individual value, the average Maui County homeowner will pay around $519 in property taxes this year - a third less than the $863 they would have paid on average in 2003.
Homeowners also contribute significantly less to the county's tax collection than other kinds of landowners. While homeowners make up 40 percent of all properties in the county, they pay just 7 percent of all property taxes.
Hotels pay the most, contributing 33 percent of the county's total property tax revenues.
Maui homeowners also enjoy significantly lower property taxes than residents of other counties in Hawaii.
After Maui's $300,000 exemption, Honolulu's is second-highest, at $80,000.
The owner of a home valued at half-a-million dollars would pay about $500 in property taxes in Maui County, compared to $1,436 in Honolulu, $1,681 on Kauai and $2,553 on the Big Island, according to Finance Department calculations.
That surprised Maui Tomorrow Executive Director Irene Bowie.
"I was just amazed at how much lower the exemption was for other islands," she said.
"Certainly the striking thing is how much lower the Maui (homeowner) tax rate is, and how much higher the exemption is," said retired Maui Community College economics professor Dick Mayer. "It's not even close. Whether that's good or bad, the politicians have to decide."
Bowie said she was concerned that the county was no longer collecting enough revenue to build and maintain critical infrastructure, and said officials needed to look at readjusting the system.
"The way this kind of got so out of balance was that our properties increased in value so much," she said. "But now, the value has gone down."
Dave DeLeon, government affairs director of the Realtors Association of Maui, said the county should be given credit for protecting homeowners from skyrocketing property taxes during the real estate boom. But now that property values are going back down, he said, the county needs to consider a readjustment.
"No one, of course, wants to pay more taxes," he said. "The homeowners are also a large percentage of the county's voters, which of course creates a political problem for the council and the mayor."
But he said his organization supported a call by Council Member Gladys Baisa to hold a conference or working group to evaluate comprehensive changes on the county's property tax structure.
"Our system is clearly out of whack and needs a serious, objective review and probably realignment," he said.
Eliker said she still feels her property taxes are a "real deal" considering what she gets in county services. She said she thought it made sense to reduce the home exemption to $200,000.
"The exemption I don't think should be kept from being lowered if property values have lowered at the same time," she said.
Since that's what her condo is now worth, Eliker would likely continue to pay the county's minimum tax.
But noting that she recently became self-employed and was watching her expenses, she said she hoped the county wouldn't look at other tax hikes for homeowners anytime soon.
"I don't know how much of an increased rate I could absorb," she mused. "But if it's necessary, I always feel people should pay their fair share."
* Ilima Loomis can be reached at iloomis@mauinews.com.
