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County officials need to learn to balance budgets and where funds come from

COUNCIL'S 3 MINUTES

Maui County has been able to provide support to our struggling residents, businesses and organizations during the ongoing COVID-19 pandemic. On my home island, the county has partnered with local, independent Lanai farmers to purchase produce for distribution to residents facing hardship due to COVID-19. However, there is always a cost for these services and aid. 

 The county cannot provide more than it can afford; simply put, we cannot give what we don’t have. The challenges we are facing due to the pandemic will test the county’s financial resiliency. As we move into the second half of 2020 and toward a new County Council term, it is more important than ever that our elected officials understand finances. 

A financially sound county ensures healthy families and communities across each island of Maui County. Our county government’s financial strength has taken years of work and maintaining that stability will be paramount as we anticipate a prolonged economic downturn.  

The near-complete shutdown of the hospitality industry has highlighted the importance of tourism as an economic driver. Real property taxes are the county’s main source of revenue and the bulk of that revenue comes from tourism-related property owners. 

In the previous fiscal year, nine of the top 10 principal real property taxpayers were classified as hotel or timeshare. Just these nine taxpayers accounted for over 13 percent of the county’s entire levy.

Many of our constituents have advocated for a reduction in tourism going forward. I do not oppose scaling back tourism, as we do need to diversify our economy and increase our food resiliency. However, if we are to cut back on tourism, what sector is willing to make up the difference?

For the current fiscal year, which began on July 1, 9.8 percent of the county’s tax revenue is estimated to come from the owner-occupied and agricultural classifications. Meanwhile, 50.1 percent is anticipated to come from the short-term rental, timeshare and hotel-resort classifications.

Are we willing to ask our local homeowners and small farmers to shoulder an increased tax burden? If the goal is to maintain the same level of county services, we need our elected officials to understand and explain where the bill will fall. Will this added responsibility be placed on our local residents?

This generated tax revenue allows the county to provide essential services, such as road maintenance, refuse collection, fire prevention and public safety. Sea-level rise and new government standards have made maintaining essential water and sewer infrastructure even more costly. Salaries and wages of county employees have increased based on union labor agreements. These essential costs, along with the county’s debt service, are financed automatically. Understanding the costs to ensure these programs are viable should be a prerequisite for our officials. 

This is before even considering additional services provided by the county, such as our parks, kupuna and child care programs and affordable housing assistance. Many consider these to be essential as well.

The cost of services received by most working-class taxpayers, particularly the owner-occupied classification, exceed the amount of taxes paid. Other property tax classifications subsidize the cost of services for these residents as well as residents who pay no property taxes. 

The county has developed ways to lessen the burden on its tax base, such as using fees paid into revolving funds to finance certain services. The Department of Parks and Recreation, which works with my Healthy Families and Communities Committee, is also in the process of establishing a concession program to bring in revenue. 

Still, the county’s bills are many and complex. Outside of the services already mentioned, Maui County has continually given more money to nonprofit and community organizations through grants and disbursements than any other county in the state. The county also continues to be more hands on with affordable housing development, which comes with a cost. Our county officials need to understand how to balance the ledger. 

If we are intent on shifting our economy away from tourism, and thus, shifting our tax base, our residents deserve to know where we are shifting to and how that affects who pays the bill. That is the only way we can ensure healthy families and communities continue to thrive in Maui County.

* Riki Hokama is chair of the Healthy Families and Communities committee. He holds the council seat for the Lanai residency area. “Council’s 3 Minutes” is a column to explain the latest news on county legislative matters. Go to mauicounty.us for more information.

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