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Budget chairman: County not ready to go with tiered property tax rates

Maui County Council Budget and Finance Committee Chairman Riki Hokama said Friday that he would not include a tiered scheme for property taxes in his proposed version of the budget because the county’s real property tax system is not yet equipped to handle it.

“My proposal will not show you tiered rates until the system can actually implement it,” Hokama told council members during a committee meeting. “It doesn’t mean there is not enough validity to review it. I think there’s merits. . . . But the time of having a discussion of tiered rates has come, and we will have that discussion after this budget session.”

In his proposed budget, Mayor Alan Arakawa called for establishing a tiered scheme for property taxes designed to increase income from second homes and investment properties. When he introduced the budget last month, Arakawa described the “progressive” tiered structure as another way to pay for projects being proposed in his $820 million fiscal 2019 budget.

The tiered system would have affected four property tax categories: residential, apartment, agricultural and conservation. It proposed lowering rates for owners’ first $500,000 of assessed value, keeping rates the same for values between the $500,000 to $1.5 million, and raising rates for values over $1.5 million.

In addition to citing issues with the county system, Hokama added that he wanted “to ensure that the shortcomings of possible negative impacts are eliminated before we move forward.”

Council members had until Friday afternoon to submit their budget proposals to Hokama, who will produce his version of the budget on Monday.

On Wednesday, the council will hold a public hearing on the proposed property tax rates for fiscal 2019 at 6 p.m. in Council Chambers on the eighth floor of the Kalana O Maui Building.

Budget Director Sandy Baz said the committee would likely vote on the proposed rates Friday evening. He deferred comment on Hokama’s decision to the mayor, who was traveling late Friday afternoon.

Arakawa has proposed that rates remain the same for the other classifications:

• Homeowner, $2.86

• Commercial, $7.28

• Commercial

residential, $4.56

• Industrial, $7.49

• Hotel and resort, $9.37

• Timeshare, $15.43

A property tax rate for the new short-term rental category has not yet been set.

Property taxes are calculated by dividing the net taxable value of a property by 1,000 and then multiplying that by the tax rate in its real property classification.

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