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Maui can afford to extend tax break to fire victims

The following testimony was submitted by the Grassroot Institute of Hawaii for consideration by the Maui County Council on Oct. 20, 2023.
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October 20, 2023
9 a.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: Bill 102 (2023) — To Establish an August 2023 Maui Wildfires Exemption from Real Property Taxation

Comments Only

Dear Chair and Committee Members:

The Grassroot Institute of Hawaii would like to offer its comments on Bill 102 (2023), which would exempt from the real property tax all real property damaged or destroyed by the August 2023 wildfires and deemed uninhabitable or unsafe.

This exemption would run from January 1, 2024 through January 1, 2027 and would apply to delinquent taxes and penalties as well as actual property tax bills. The property tax waiver would terminate if the property were to be sold between the bill’s enactment and its expiration.

The Grassroot Institute believes this measure would be a good way to provide relief to property owners affected by the wildfires.

Many of the homeowners and businesses that would be affected by this bill will not have significant earnings for the foreseeable future, so they will be unable to afford their property tax payments. People in this tragic situation should not face the possibility of losing their properties to foreclosure because they could not pay their taxes.

The County would stand to lose several million in revenues, but this would not handicap its ability to perform core functions. For example, Mayor Richard Bissen’s waiver of fiscal 2024 property taxes for improved structures destroyed in Lahaina, Upcountry and Kihei will deprive the County of $19 million — less than 2% of its $1.07 billion budget for the same year.[1]

Further, whatever revenue loss this bill might cause might be offset by federal and state disaster assistance given to the County.

However, regardless of the revenue implications, the County should help people keep their properties as they wait for cleanup and insurance payments to allow rebuilding.

The Grassroot Institute recommends that the Council adopt policies to determine which “damaged” properties qualify for this exemption and what “uninhabitable or unsafe to conduct business in” means. Clarifying these terms could help deter fraud, which might occur as ineligible owners seek to avoid paying property taxes.

While there is a risk of fraud, it can be mitigated. This bill should move forward. It’s one of many concrete actions the county can take to assist struggling residents.

Thank you for the opportunity to testify.

Sincerely,

Joe Kent
Executive Vice President
Grassroot Institute of Hawaii
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[1] Christine Wilson, “Maui mayor details budget cuts to offset revenue shortfall,” Honolulu Star-Advertiser, Oct. 7, 2023; and  Melissa Tanji, “Council gives final approval to $1.07 billion budget,” The Maui News, June 7, 2023.

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