The following commentary was published originally by The Maui News on April 25, 2023.
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At his inauguration, Maui Mayor Richard Bissen promised a prudent approach to the county’s finances.
“There are two things you need to know about my views on fiscal responsibility,” he told the audience. “First, I drove a 1994 Ford Bronco for 26 years. And yes, I bought that car used. That’s the same view I hold on how we manage our county finances.”
And so far, he is living up to that promise.
Last month, Bissen submitted a $1.227 billion budget to the County Council for consideration, and though that figure may seem large, it is only a 1.3% increase — $15.6 million — over last year’s budget.
Notably, the budget proposal contains a commitment to pay down county debts and liabilities to lower mandatory interest payments in future years. Only 5.7% of the budget, $61.3 million, would be dedicated to paying interest on bonds.
By way of comparison, Honolulu routinely spends close to 20% of its budget on interest payments because of large city debts, many of which are related to the over-budget rail project.
Bissen’s budget also would slash the county’s reliance on bond debt to just $64 million — down $87 million from last year’s budget. By relying less on bonds, the county would be able to lower its interest payments over time, which would free up those monies to go toward lower taxes or other priorities.
It also contains a proposal to increase payments on unfunded liabilities for health benefits for retirees, which could more quickly pay off that debt. As of July 2022, the county’s unfunded retirement benefits stood at $160.4 million.
“My administration will be increasing our annual contribution from $3 million to $10 million dollars next year,” the mayor said in his March 21 State of the County speech. He added that continuing these advance payments could pay off the liability by 2029.
As with lower reliance on debt, reducing retirement liabilities now would save county taxpayers money in the future. The downside is that this money must come from somewhere. And that would be from property taxes.
Bissen’s budget projects county property tax revenues will increase by more than $100 million in fiscal 2024, which would help offset the county’s lower reliance on debt and pay for some of the mayor’s other initiatives.
Bissen has suggested a rate cut for certain owner-occupied homes, and Maui’s homeowner exemption will increase from $200,000 to $300,000 next year. Both policies would help homeowners afford the state’s high cost of living.
For example, an owner of a $900,000 home in Kahului would see their tax bill go down from $1,400 last year to $1,140 for the upcoming year. In general, most homeowners would see their tax bills drop by several hundred dollars each.
That would leave the homeowners with more money to pay for basic maintenance or repairs to their properties, or spend on utilities, groceries, clothing, transportation or other basic necessities.
Business owners, farmers and other property owners, on the other hand, are looking at bigger tax bills since Bissen’s budget does not include any tax relief for them. His budget also includes a small tax rate increase on homes valued more than $3 million.
As Council members debate the mayor’s budget, they should keep in mind his promise to be fiscally responsible. They should also retain his suggestions to lower debt and pay off liabilities.
In addition, perhaps the Council could find ways to trim government spending to provide further tax relief.
The Council is already trying to determine how many job positions each agency received funding for in last year’s budget but that still remain vacant. Council members are also considering how much carryover money each agency expects to have by the end of this fiscal year, which if any, would allow it to reduce how much it allocates to each agency for fiscal 2024..
Beyond that, the Council could consider contracting with the private sector to accomplish certain functions, such as reducing the county’s water meter permitting backlog, which also would save tax dollars.
The county’s annual budget process is always a balancing act. But Maui residents need a responsible plan to help secure their prosperity for years to come.
