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Modify ‘circuit breaker’ credit to keep up with rising home values

The following testimony was submitted by the Grassroot Institute of Hawaii for consideration by the Maui County Council on June 21, 2024.
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June 21, 2024, 9 a.m.
Council Chamber, Kalana O Maui Building

To: Maui County Council
      Alice Lee, Chair
      Yuki Lei Sugimura, Vice-Chair

From: Jonathan Helton, Policy Researcher
           Grassroot Institute of Hawaii

RE: BILL 85 — A BILL FOR AN ORDINANCE AMENDING SECTION 3.48.810, MAUI COUNTY CODE, RELATING TO THE CIRCUIT BREAKER TAX CREDIT

Aloha Chair Lee, Vice-Chair Sugimura and other members of the Council,

The Grassroot Institute of Hawaii would like to offer its support for Bill 85 (2024), FD1, which would modify the County’s “circuit breaker” tax credit by increasing the value of the credit and its income and home-value eligibility limits.

Maui’s circuit breaker offers relief to people who own and live in their homes and have filed for homeowner property-tax exemptions. The program applies to residents who have annual household incomes of $100,000 or less and have received the homeowner exemption for at least five of the past six years.

In addition, the home must be valued at $750,000 or less for the homeowner to receive the full value of the credit, but homeowners whose homes are valued at between $750,000 and $800,000 can receive between 80% and 20% of the credit’s value.

The program works by capping the tax bill of the homeowners at no more than 2% of their household incomes, provided that the value of the credit does not exceed $6,500. For fiscal 2025, 400 taxpayers — mostly aged 70 years or older — will receive $293,838 from the credit.[1]

This bill proposes three important changes: It would increase the maximum value of the credit from $6,500 to $8,200; the annual income limit from $100,000 to $126,000; and the eligible home value from $800,000 to $1.3 million.

We appreciate the Council’s decision to adopt the amendment suggested in our last testimony to raise the upper limit from the originally proposed $1.1 million to $1.3 million, with special thanks to Councilmember Tamara Paltin for introducing it.

Increasing the maximum value of the credit is a good idea because it would help offset some of the effects of increased assessments and higher tax bills.

Enacting this bill would be a good step toward ensuring that the circuit-breaker tax credit can keep giving property tax relief to low- and middle-income homeowners.

Thank you for the opportunity to testify.

Jonathan Helton
Policy Researcher
Grassroot Institute of Hawaii
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[1]Selected Real Property Statistics for Budget Consideration FY 2024-2025,” Maui Real Property Assessment Division, pp. 25-26.

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