The following testimony was submitted by the Grassroot Institute of Hawaii for consideration by the Maui County Council on April 26, 2023.
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April 26, 2023
6 p.m.
Maui County Council Chamber
To: Maui County Council
Alice Lee, Chair
Yuki Lei K. Sugimura, Vice Chair
From: Grassroot Institute of Hawaii
Joe Kent, Executive vice president
RE: RESOLUTION NO. 23-129: ADOPTING THE REAL PROPERTY TAX RATES FOR THE COUNTY OF MAUI. EFFECTIVE JULY 1,2023
Comments Only
Dear Chair and Committee Members:
The Grassroot Institute of Hawaii would like to offer its comments on Resolution No. 23-129, which would set the Maui County property tax rates for the upcoming fiscal year.
We appreciate Mayor Richard Bissen’s proposal to lower the tax rate on the first two tiers for owner-occupied homes.[1] In tandem with a higher homeowner exemption that will apply starting fiscal year 2024, these rate reductions would provide Maui homeowners relief from soaring property assessments.
On the property tax front, we want to offer some suggestions that might assist the Council in looking at further ways to reduce Maui resident’s tax burden.
Nearly all property classes have experienced higher property assessments this year, so virtually all property owners throughout the county are looking at higher tax bills for the upcoming year, even though most rates are likely to remain the same.
In total, Mayor Bissen’s proposed budget projects property taxes to increase this year by about 24%, or $100 million, compared to fiscal 2023.
Scenario 1: Extend the 10 cent-per-$1,000 rate cut
Our first scenario shows the effect of extending the mayor’s proposed 10 cents-per-$1,000 cut to apartment, long-term rentals (tier 1 and 2), agricultural, conservation, commercial, industrial and commercialized residential properties. Such a cut would provide these properties a total of $2,644,412 in tax relief.
Scenario 1
| Class | Net valuation | Rate | Revenue |
| Owner-occupied, tier 1 | $14,387,461,470.00 | 0.0019 | $27,336,177 |
| Owner-occupied, tier 2 | $1,796,575,220.00 | 0.002 | $3,593,150 |
| Owner-occupied, tier 3 | $616,807,150.00 | 0.00275 | $1,696,220 |
| Non-owner-occupied, tier 1 | $10,733,245,090.00 | 0.00585 | $62,789,484 |
| Non-owner-occupied, tier 2 | $4,871,565,780.00 | 0.008 | $38,972,526 |
| Non-owner-occupied, tier 3 | $2,069,555,775.00 | 0.0125 | $25,869,447 |
| Apartment | $516,862,650.00 | 0.0034 | $1,757,333 |
| Hotel and Resort | $4,345,298,900.00 | 0.01175 | $51,057,262 |
| Time Share | $3,745,183,000.00 | 0.0146 | $54,679,672 |
| TVR-STVR | $17,931,358,860.00 | 0.01185 | $212,486,602 |
| Long-term rental, tier 1 | $1,676,758,695.00 | 0.0029 | $4,862,600 |
| Long-term rental, tier 2 | $170,928,440.00 | 0.0049 | $837,549 |
| Long-term rental, tier 3 | $53,836,100.00 | 0.008 | $430,689 |
| Agricultural | $1,643,754,345.00 | 0.00564 | $9,270,775 |
| Conservation | $322,875,180.00 | 0.00633 | $2,043,800 |
| Commercial | $2,890,933,600.00 | 0.00595 | $17,201,055 |
| Industrial | $2,282,246,565.00 | 0.00695 | $15,861,614 |
| Commercialized residential | $286,817,400.00 | 0.0043 | $1,233,315 |
Scenario 2: Revenue freeze
Our second scenario considers what would happen if the county froze revenues at fiscal 2023 levels for owner-occupied (tier 1 and tier 2), apartment, long-term rentals (tier 1 and 2), agricultural, conservation, commercial, industrial and commercialized residential properties.
This freeze would result in automatic rate reductions for each of these property classes, resulting in a tax reduction of about $10.9 million.
Scenario 2
| Class | Net valuation | Rate | Revenue |
| Owner-occupied, tier 1 | $14,387,461,470.00 | 0.00187 | $26,839,693 |
| Owner-occupied, tier 2 | $1,796,575,220.00 | 0.00152 | $2,734,420 |
| Owner-occupied, tier 3 | $616,807,150.00 | 0.00275 | $1,696,220 |
| Non-owner-occupied, tier 1 | $10,733,245,090.00 | 0.00585 | $62,789,484 |
| Non-owner-occupied, tier 2 | $4,871,565,780.00 | 0.008 | $38,972,526 |
| Non-owner-occupied, tier 3 | $2,069,555,775.00 | 0.0125 | $25,869,447 |
| Apartment | $516,862,650.00 | 0.00256 | $1,322,376 |
| Hotel and Resort | $4,345,298,900.00 | 0.01175 | $51,057,262 |
| Time Share | $3,745,183,000.00 | 0.0146 | $54,679,672 |
| TVR-STVR | $17,931,358,860.00 | 0.01185 | $212,486,602 |
| Long-term rental, tier 1 | $1,676,758,695.00 | 0.00176 | $2,957,531 |
| Long-term rental, tier 2 | $170,928,440.00 | 0.00276 | $471,910 |
| Long-term rental, tier 3 | $53,836,100.00 | 0.008 | $430,689 |
| Agricultural | $1,643,754,345.00 | 0.00458 | $7,520,499 |
| Conservation | $322,875,180.00 | 0.00643 | $2,076,087 |
| Commercial | $2,890,933,600.00 | 0.00559 | $16,148,181 |
| Industrial | $2,282,246,565.00 | 0.00641 | $14,626,431 |
| Commercialized residential | $286,817,400.00 | 0.00355 | $1,018,316 |
Scenario 3: 50 cent-per-$1,000 rate cut
Finally, we consider the effects of a 50 cents-per-$1,000 rate cut for owner-occupied (tier 1 and tier 2). In addition to a 10 cent-per-$1,000 rate cut for apartment, long-term rentals (tier 1 and tier 2), agricultural, conservation, commercial, industrial and commercialized residential properties, this reduction would save the owners of these properties about $13 million in the upcoming year.
Scenario 3
| Class | Net valuation | Rate | Revenue |
| Owner-occupied, tier 1 | $14,387,461,470.00 | 0.0015 | $21,581,192 |
| Owner-occupied, tier 2 | $1,796,575,220.00 | 0.0016 | $2,874,520 |
| Owner-occupied, tier 3 | $616,807,150.00 | 0.00275 | $1,696,220 |
| Non-owner-occupied, tier 1 | $10,733,245,090.00 | 0.00585 | $62,789,484 |
| Non-owner-occupied, tier 2 | $4,871,565,780.00 | 0.008 | $38,972,526 |
| Non-owner-occupied, tier 3 | $2,069,555,775.00 | 0.0125 | $25,869,447 |
| Apartment | $516,862,650.00 | 0.003 | $1,550,588 |
| Hotel and Resort | $4,345,298,900.00 | 0.01175 | $51,057,262 |
| Time Share | $3,745,183,000.00 | 0.0146 | $54,679,672 |
| TVR-STVR | $17,931,358,860.00 | 0.01185 | $212,486,602 |
| Long-term rental, tier 1 | $1,676,758,695.00 | 0.0025 | $4,191,897 |
| Long-term rental, tier 2 | $170,928,440.00 | 0.0045 | $769,178 |
| Long-term rental, tier 3 | $53,836,100.00 | 0.008 | $430,689 |
| Agricultural | $1,643,754,345.00 | 0.00524 | $8,613,273 |
| Conservation | $322,875,180.00 | 0.00593 | $1,914,650 |
| Commercial | $2,890,933,600.00 | 0.00555 | $16,044,681 |
| Industrial | $2,282,246,565.00 | 0.00655 | $14,948,715 |
| Commercialized residential | $286,817,400.00 | 0.0039 | $1,118,588 |
The scenarios outlined above are just a few suggestions for how the Council could provide tax relief.
The point of all of this is to say that the tax reductions proposed in the mayor’s budget are a good first step, but they could be supplemented with at least some relief to businesses, farmers and landlords.
In a recently released report, “How Hawaii’s county lawmakers can provide tax relief to offset higher property assessments,” the Grassroot Institute of Hawaii presented other ways Maui and our other counties in Hawaii could provide property tax relief, through measures such as exemptions, tax credits and programs designed to benefit small businesses.
We would be happy to discuss these and any other out-of-the box tax ideas with the Council, and look forward to continued dialogue with you on this important issue.
Thank you for the opportunity to testify.
Sincerely,
Joe Kent
Executive vice president
Grassroot Institute of Hawaii
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[1] Melissa Tanji, “Mayor’s $1B budget request calls for a slight increase,” The Maui News, March 25, 2023.
