Council OKs flat property tax rates
But revenues will rise $18 million from current year
Despite many lower or flat property tax rates approved Friday by the Maui County Council, higher property valuations certified before the pandemic hit will bring $18 million more in county revenues for the next fiscal year that begins July 1.
The county is forecast to raise $373.7 million in the 2020-21 fiscal year from property taxes, the county’s largest income generator, according to county documents. For the current fiscal year, expected revenue from real property taxes is $355.7 million.
The Finance Department has certified the county’s total valuation of properties for the 2020-21 fiscal year at $54.8 billion, a 7 percent increase from the current year. That means if rates were left the same, the county would still gain a 7 percent increase in revenues.
Tax bills are determined by two components — the rates and assessed valuation of the property.
The council Friday voted 7-2, with members Yuki Lei Sugimura and Riki Hokama dissenting, to approve a resolution adopting real property tax rates for the upcoming fiscal year.
Sugimura floated a last-ditch effort to drop the hotel and resort rate from $10.70 to $9.37, citing a struggling tourism industry, but the motion failed 8-1. The current rate is $11.
Maui County Mayor Michael Victorino on Friday night said he was disappointed about the council’s hotel-and-resort-rate decision. The mayor proposed a $9.37 rate.
“I’m very sad to see the council raise real property taxes for hotels and resorts, relative to my proposal, as hotels face the worst economic period to ever hit our visitor industry,” he said in a statement. “Our hotels and resorts already face many challenges reopening in the future and this adds another hurdle to bringing employees back to work.”
About 44 people, including council staff, participated in the council’s online meeting Friday, with a handful of testifiers speaking on a range of issues. Most sought lower rates for both the hotel and short-term rental categories.
Rod Antone, Maui Hotel and Lodging Association executive director, pointed to a recent University of Hawaii Economic Research Organization analysis that said the tourism industry will be the last to recover in Hawaii.
Antone said $1 makes a big difference in the rates and can equal $800,000 versus $1.5 million in property taxes. He also noted the additional investments of “several hundred thousand dollars” the industry has to make when they reopen to ensure safety for staff and guests, including retraining employees, purchasing personal protective equipment, new cleaning equipment and a keyless door entry system that would avoid repeatedly cleaning key cards.
There are an estimated 12,000 people in Maui’s visitor industry who are out of work due to the pandemic shutdowns, Antone added.
“People are suffering,” he said. “We’re going to be hurting for a while.”
Dean Frampton, who worked on tax appeals consultation for Montage Kapalua Bay, asked the council to take another look at the hotel rates. He said hotels will be paying the same tax bill as they did in 2019, and 2019 was the industry’s busiest year on record.
“There is a lot of financial pain left on this pandemic horizon,” he said during testimony. “I worry that tax rates could possibly cost jobs for local families, people employed by the hotels.”
The council is using a new tiered-rate system. The rates per $1,000 of net taxable assessed valuation are as follows:
• Nonowner occupied. $5.45 for Tier 1 (up to $800,000); $6.05 for Tier 2 ($800,001 to $1,500,000); $6.90 for Tier 3 (more than $1,500,000).
• Apartment. $5.55.
• Commercial. $6.29 for all three tiers.
• Industrial. $7.20.
• Agricultural. $5.94.
• Conservation. $6.43.
• Hotel and Resort. $10.70.
• Timeshare. $14.40.
• Short-term rental. $11.08 for all three tiers.
• Owner-occupied. $2.51 for Tier 1 (up to $800,000); $2.56 for Tier 2 ($800,001 to $1,500,000); $2.61 for Tier 3 (more than $1,500,000).
• Commercialized residential. $4.40.
The council is wrapping up its review of the fiscal 2020-21 budget, which begins July 1. The Economic Development and Budget Committee has sent to the full council an $816.8 million proposed budget, which is $50 million less than the mayor’s proposal.
* Kehaulani Cerizo can be reached at firstname.lastname@example.org.