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Maui Hotel & Lodging Association opposes real property tax increase

By Staff | Jun 20, 2019

WAILUKU – The Maui Hotel & Lodging Association (MHLA) opposes the Real Property Tax (RPT) rates proposed by the County Council.

Property taxes were raised with visitor industry properties receiving the highest percentage increases of all property classifications.

MHLA is concerned about the tax increase’s negative affect on the visitor industry, its employees, the state’s economy and worldwide industry competitiveness.

Over 75 percent of Maui County residents are either directly employed by, or work for ancillary businesses of, the visitor industry – the only business classification seeing an increase in RPT rates for fiscal year 2020.

MHLA predicts the visitor industry will see a direct negative impact should the new RPT rate be adopted.

Maui’s major hotels donate an average of $80,000 and 625 labor hours per property each year to community and charitable organizations.

Resorts and hotels are expecting those numbers to decrease as their property tax bill increases by 50 to 60 percent. They also admit to the possibility of cutting staff, which would negatively impact the availability of guest services.

MHLA cites the council’s lack of planning by forecasting revenues before working on expenses. Consequently, the proposed budget includes millions of surplus dollars that likely will not be spent.

MHLA’s membership is comprised of 195 property and allied business members in Maui County. Membership employs over 25,000 residents and represents over 20,000 rooms.

Maui County Mayor Michael Victorino line-item vetoed the Maui County Council’s fiscal year 2020 budget last week Monday, providing a measured reduction of the council’s record-high $823.47 million spending proposal.

The mayor expressed concerns over a lack of needed budget details for operational clarity and property tax rate increases that would impact all residents, with the heaviest toll on hotels and resorts.

“While council members have made changes I support, I’m disappointed that more work wasn’t done to keep spending in check,” Mayor Victorino said.

“While raising property tax revenue, we should not ignore visitor industry concerns that a 17 percent tax rate increase could affect employees, the industry itself or the economy. The visitor industry employs approximately 75 percent of our residents directly or indirectly. Meanwhile, the council also has cut funding by more than $1 million to the Maui Visitors Bureau.”

“The budget document lacks details that I have requested but not yet received. If the information is not received prior to the start of FY 2020, it will be difficult to implement the budget and financial transactions and may result in unintended consequences,” Victorino said.

Council members have ten calendar days, or until June 20, to take action on the vetoed provisions.

On March 25, Mayor Victorino submitted a balanced budget with proposed expenditures of $780.76 million. The council’s proposed budget of $823.47 million represents a 5.4 percent increase of $42.7 million.

Victorino expressed support for additional investment in Maui County’s critical need for affordable housing.

The county administration proposed increasing funding for the Affordable Housing Fund by adding an additional 1 percent, or $3.37 million, on top of the Charter-required 2 percent of real property tax revenues.

The council’s budget adds another 1 percent to the fund.

“Adding over $14 million to the Affordable Housing Fund in FY 2020 will allow the administration to explore and plan for much-needed attainable housing for our working families,” Mayor Victorino said.

“However, we need to be realistic. More housing won’t become a reality without the political will to make it happen and a commitment to well-planned projects that address community needs while following environmental review processes.”

The mayor said he also supports the council’s proposed increases to affordable rental housing programs, homeless programs and substance abuse programs.

“These will further help our residents with getting the necessary assistance they need,” he said.