Maui looks at property tax relief
By Timothy Hurley
Advertiser Maui County Bureau
WAILUKU, Maui — Proposition 13 on Maui?
Not exactly, but a Maui County Council committee is considering a proposal that contains similarities to the controversial measure that revolutionized property taxes in California.
The proposal, presented yesterday by the community group known as COMET, calls for a property tax assessment cap and a rollback of assessments to 2001 levels. It also requires new, timely assessments at the time of sale.
In related action, the council's Budget and Finance Committee voted unanimously to recommend restoring a tax credit to homeowners with 'ohana units. The recommendation, approved in a vote of all nine council members, will be sent to the full council with the intent of putting the tax credit in place this year.
Leaders of COMET — Committee for More Equitable Taxation — said its proposed acquisition-based tax system would not only shift the property tax burden from longtime homeowners to new buyers and real estate speculators, but also generate an estimated $15 million in additional county revenue.
Property tax assessments would be conducted at the time of the real estate transaction, with the value being the sale price. Currently, assessments reflect a property's value anywhere from 12 to 24 months after the sale. In an appreciating market, that means lost tax revenue.
At the same time, the proposal calls for a 4 percent cap on assessments to rein in large tax increases, as well as a maximum decrease of 4 percent. In addition, assessments would be based on 2001 levels, unless a property's title passed since then.
"The entire objective of this concept is to increase revenue and shift the burden from the longtime resident to the newer resident," said Tony Fisher, a COMET board member.
Fisher, a former California resident, said the proposal takes only the best concepts from Proposition 13, the 1978 voter-approved measure that rolled back property taxes in California and limited local government's ability to raise them.
"This is not Proposition 13. It had some flaws and was ill-conceived," said Fisher, a Kihei resident. "But we can do this thing so much better."
Several people who testified told of recent large tax increases.
"We need you to make this tax system right. You need to fix it," said Alvin Soares of Wailuku Heights, who said his property tax bill increased 58 percent last year.
Ginny Karpovich said property taxes on her north shore property went up recently from $400 to $10,000. She expects them to go up to $28,000 shortly. "We had planned to wait to build, but we are forced to build now," she said.
"We cannot pay these taxes," said Dorothy Williams. "We need action. We need it now."
Other property owners appear to be headed for some relief from yesterday's committee vote.
Under a decision issued two years ago by county attorneys, a change was made in the way the circuit-breaker tax credit was applied. The ruling said only a primary residence on a property may be claimed for the credit, meaning 'ohana units or other buildings would not qualify. But committee members, in voting to recommend reinstating the credit, said the ruling was unfair.
Under the circuit-breaker tax credit, a resident who qualifies for the homeowner's exemption on real property taxes will have a tax bill capped at no more than 3 percent of the taxpayer's adjusted gross annual income.
Reach Timothy Hurley at thurley@honoluluadvertiser.com or (808) 244-4880.
