WAILUKU - With a battle brewing over how to handle the county's fiscal 2015 budget, only 11 individuals showed up to testify on property tax rates during a public hearing Wednesday night before the Maui County Council.
In March, Mayor Alan Arakawa called for an approximately 6.5 percent, across-the-board increase in property tax rates, if state lawmakers did not remove a $93 million cap on the counties' share of transient accommodations taxes. Legislators kept the cap in place, but added only $10 million to it.
Budget and Finance Committee Chairman Mike White has proposed a 3 percent across-the-board property tax rate reduction, with Arakawa now seeking no property tax hike. And Arakawa has responded, saying property tax rates should remain flat while budget adjustments could be done to eliminate the need for increases.
Nevertheless, with all that going on, most of Wednesday night's testifiers were concerned about something else - a lower property tax rate for time-share units, which currently have the highest tax rate at $15.55 per $1,000 of net taxable assessed valuation.
The next highest category is hotel and resort with a tax rate of $9.40 per $1,000, and homeowners have the lowest rate at $2.87.
"Year after year, we have testified before this body expressing our concern of the apparent targeting of our time-share owners. Yet their taxes have continued to rise at unfair rates," said Steve Aheong, a born-and-raised Maui resident and employee at the Westin Ka'anapali Ocean Resort Villas. "Our owners are more to us than guests that spent their time in our villas. They are part of our ohana."
Aheong said that time-share owners connect with the community on many levels - they attend Maui residents' parties and go to employees' homes as well as contribute to the economy.
He asked for more equitable property tax rates.
"Based on what I've read and heard, we are moving in that direction," Aheong said.
Keith Stephenson, director of state government affairs for the American Resort Development Association, which represents various groups including time shares, also asked for a more equitable property tax rate for time-share properties.
In other sought-after time-share destinations, time-share businesses are attracted by governments exempting owners from paying property taxes, he said. And, when occupancy rates are down at hotels and resorts and during shoulder months in between peak tourist seasons, time-share complexes maintain their occupancy rates, Stephenson pointed out.
Under White's proposed property tax rate schedule, time-share rates would drop from $15.55 per $1,000 of net taxable assessed valuation to $15.07. Arakawa had initially asked for a hike to $16.56 for time shares.
White's proposed real property tax rates are: residential, from $5.75 currently to $5.57; apartment, $6.40 to $6.20; commercial, $7.05 to $6.83; industrial, $7.30 to $7.07; agricultural, $6.05 to $5.86; conservation, $6.25 to $6.06; hotel and resort, $9.40 to $9.11; time share, $15.55 to $15.07; homeowner, $2.87 to $2.78; and commercialized residential from $4.60 to $4.46.
White said that when property valuations were down, property tax rates were increased. But since valuations are rising, tax rates should drop, he said.
Landowner Jonathan Starr told the council to be wary about too many property tax reductions because the county still needs to be able to upkeep operations as well as pay for negotiated employee pay increases.
Council Member Riki Hokama told Starr that the current version of the council's budget is not subtracting from current county levels.
"We are adding. (But) we are not adding as much as requested (by the mayor)," Hokama said.
White's version of the budget is at $594 million or around $35 million higher than last year's approved budget of $559 million. Arakawa has proposed a $623 million budget.
Starr said time shares could carry more of the property tax burden.
Unlike hotels, time shares have lower costs because they do not employ as many workers, he said.
"I'm not about to wipe out all the time shares. (But) I think they could stand higher rates," Starr said.
* Melissa Tanji can be reached at firstname.lastname@example.org.