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Mayor’s Proposed Budget Includes Infrastructure Spending, Tax and Fee Increases

“We must fix what is broken; otherwise, we just pass along our problems to the next generation.”

April 11, 2013
Tom Blackburn-Rodriguez - Contributing Writer (tominmaui@me.com) , The Maui Weekly

According to the National Association of Counties (NACO), there are 3,069 counties in the U.S. The first county government, established in 1634 in James City, Virginia, was based on a model that stretched back nearly 1,000 years to the early days of the English Saxon kings.

Since that time, certain things have remained constant. The counties' responsibilities have evolved and grown, costs have increased, the need for taxes and fees has expanded, and each year, a budget has to be created to manage and pay for all that is being done for the taxpayer, upon whom the entire edifice rests.

Which is why, on Monday, March 25, County Council members, members of the county administration, the general public and media representatives gathered in the council's eighth floor chambers to hear a 20-minute address by Mayor Alan Arakawa on his Fiscal Year 2014 county budget proposal.

Article Photos

Mayor County Budget Director Sandy Baz (left) adjusts lighting for Mayor Alan Arakawa before the mayor’s FY 2014 Budget address to the Maui County Council.

The mayor's proposed FY 2014 spending totals $573.6 million--an increase of 4.3 percent over the previous year. This amount includes an operating budget of $482 million.

Saying, "We must fix what is broken; otherwise, we just pass along our problems to the next generation," Arakawa announced that his budget also includes a Capital Improvement Program (CIP) of $91 million.

However, as noted by South Maui Councilmember Don Couch, the CIP budget does not include funding for a gym in Kihei, which is one of Couch's goals for his district. It does, however, project that the new Kihei police station [now under construction] will open this summer.

As outlined in the mayor's presentation, CIP funding is designed to catch up on neglected infrastructure items such as "road improvements, government facilities and developing new water sources."

Major projects include:

$34.5 million for road resurfacing and improvements, up from $30.7 million in FY '13;

$28.6 million for Water Supply improvements, including source development, storage and transmission, up from $26.7 million in FY '13;

$15.5 million for various drainage improvement projects, an increase of nearly $5 million over FY '13;

$20.7 million for wastewater improvements and expansion, including sewer lines, reclamation facilities and pump stations;

$5.3 million for Parks Department facility improvements;

$3 million for Solid Waste improvements, including investments to reduce future operating costs.

To pay for the CIP projects and to balance the budget, the mayor proposes to increase real property tax revenues based on Maui County's estimated property values of $33.4 billion, up .6 of a percent from last year. The goal is to raise $239 million in revenue, which is 71.6 percent of all General Fund revenue and 44 percent of total county revenues.

Revenue derived from the real property tax is the most significant source of revenue for the county. As part of Arakawa's change in real property tax rates, the county will restore parity to classifications that historically had the same rates.

"The Residential, Apartment, Agricultural and Conservation classifications are all proposed to be equal," the mayor said. "Similarly, the Commercial and Industrial classifications are also proposed to be equal."

In addition, the mayor stressed that, "No tax rate increase is proposed for the Homeowner classification because they saw a significant increase last fiscal year."

The county estimates that the average homeowner's tax bill went up 24 percent due to a 10 percent tax increase, coupled with a reduction from $300,000 to $200,000 in the credit allowed under the circuit breaker program that provides a credit to homeowners equal to the amount of their tax bill that exceeds 2 percent of their adjusted gross income.

While this year, homeowners may have enjoyed a respite in their tax rates, the same cannot be said for other classifications. Property tax rate increases of 4.8 to 8.7 percent are projected for several property tax classifications, with larger increases for other categories.

The mayor asks for a 13 percent increase in the residential tax rate to $6.50-per- thousand of assessed value; a time-share tax rate of $17.50-per-thousand, a 12.9 percent increase; and a new rate of 12 percent for hotels and resorts at $10.25-per-thousand.

In addition to property tax revenue, the county expects to receive $21 million as its share of the Transient Accommodations Tax (TAT)--an increase of $2 million from the previous year's budget. After property taxes, the TAT is the next largest single-source of General Fund revenue.

Among increases proposed by the mayor in rates and fees is a rate increase of 5.2 percent for the Water Supply fund.

In addition, the Department of Environmental Management proposes an increase to the Solid Waste tipping fee at county landfills from $61 per ton to $75 per ton. This rate increase is expected to generate $1.3 million in additional revenue.

The Department of Planning also proposes a new rate structure to help recoup up to 30 percent of the cost of issuing planning permits. That rate structure has not yet been put in place.

The mayor illustrated the need for improved government facilities by pointing to the new Kihei Police station that will be operational this summer. He also spoke to increased funding for park facilities repairs and maintenance. The Parks and Recreation Department operating budget would rise significantly from its current level of $297,410 to nearly $2.3 million in FY 2014.

Asked after the presentation about Arakawa's budget, Councilmember Mike White, the Budget and Finance Committee chair, praised the mayor for "putting together a good budget, reaching out and looking into new perspectives on new strategies for operating the county But, at the same time, we have arbitrated agreements coming down from a number of different unions. We've got unfunded liabilities we need to deal with.

"Our job is to make sure we review it [the budget] and look at it piece by piece and really look to having them justify the expenditures, because they are asking for some pretty significant tax increases," said White. "We have even a greater responsibility to make sure that those revenues are necessary."

Council Chair Gladys Baisa praised the mayor for addressing the infrastructure needs of the county and for recognizing the value of investing in nonprofit organizations meeting the critical social and economic needs of Maui's residents.

"I am very excited to see more money going into water, infrastructure and roads," said Baisa. "And, of course, I'm told that there also has been greater attention paid to the nonprofit sector which, as you know, is of special interest to me, and I want to make sure that it is healthy."

Mayor Arakawa's budget proposal is available online at www.mauicounty.gov/budget.

 
 

 

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