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The Honolulu Advertiser

Posted on: Tuesday, May 24, 2005

Maui council OKs budget with water, sewer rate hikes

By Christie Wilson
Advertiser Neighbor Island Editor

WAILUKU, Maui — The Maui County Council yesterday gave final approval to a balanced $390 million budget for fiscal 2006 — the largest in county history — that included water and sewer rate hikes and a significant increase in the homeowner's exemption to offset higher property tax bills from skyrocketing real-estate prices.

Mayor Alan Arakawa had proposed cutting property tax rates from $3.55 per $1,000 of assessed value to $3 per $1,000. But the council decided on a much smaller decrease to $3.50 per $1,000, in favor of an increase in the owner-occupant exemption — from $110,000 to $200,000 — that would provide greater benefit to owners of homes in the median price range. The exemption for homeowners age 70 and older would go from $130,000 to $200,000.

Budget and Finance Committee Chairman Dain Kane said the higher exemption means owner-occupants with properties valued at $500,000 to $600,000 would experience an average tax increase of only 3 percent to 6 percent. The deal would expire in two years.

The budget contains help for renters and would-be home buyers who also have been affected by escalating property values. Funding of $400,000 was provided for a First-Time Home Buyers Fund, and an equal amount for an Affordable Rental Housing Program. Council Chairman Riki Hokama said the details of both programs have yet to be worked out, but one possibility would be to provide no-interest loans to help buyers make a down payment.

Other budget provisions include a 12 percent increase in water rates and an 11 percent hike in sewer fees.

The budget for the fiscal year that begins July 1 anticipates $162.7 million in property tax revenues, up from $131.5 million in the current budget year. The county also expects an increase of more than $1 million in transient accommodations tax revenues, to $18.8 million.

Jo Anne Johnson of West Maui was the only council member to vote against final passage of the budget, largely over the issue of the council's rejection of Arakawa's proposal to spend $15 million to purchase and repair the One Main Plaza office building in Wailuku to relieve a severe shortage of office space at the nine-story Kalana O Maui building, which is 32 years old.

The council instead set aside $3.3 million to acquire the old Wailuku post office property across the street from county headquarters. The sum includes design costs for two buildings, one at the post office site and one a separate county-owned parcel.

"What is really going to plague us in the long run is going to be the unknown expenses related to building a building, because we all know government is not known for having things come in under budget and on time," Johnson said.

Other expenditures include almost 60 new positions, including police radio dispatchers and staff for the Division of Motor Vehicles & Licensing, which has been besieged by customer complaints about slow service. The council added $500,000 for draining improvements in Kaunakakai, Moloka'i, and $633,000 to handle the island's scrap metal and abandoned-car crisis.

Arakawa has 20 days to sign the final budget. County Budget Director Sheri Morrison said she does not expect the mayor to make major changes.

Reach Christie Wilson at cwilson@honoluluadvertiser.com or (808) 244-4880.