The Maui County Council on Wednesday unanimously approved the largest budget in its history: a $1.07 billion spending plan that includes more money than ever to tackle the affordable housing crisis, $54 million for a Native Hawaiian arts center and investments in parking, environmental protection and food security while at the same time lowering the tax burden on families who live in their homes year-round.

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With more funding from federal and state governments, an estimated additional $60 million from a new tax on hotels, plus higher taxes on high-end second homes and short-term rentals, Maui’s budget for next fiscal year is a big jump from the last budget of $844 million.

It kicks in July 1, detailing how much will go to basic government services like roads, police and firefighters along with other county and social programs, like those that support local farmers, pay for summer child care workers and remove invasive species from the islands’ delicate natural ecosystems.

“$1 billion sounds like a lot of money, and it is a lot of money,” Council member Keani Rawlins-Fernandez, who leads the budget committee, told her colleagues during Wednesday’s meeting. “But I think it’s important to understand where the money is coming from … We were able to provide a lot of services to our residents and not just that — to provide tax relief.”

A beach near Lahaina in West Maui.
Maui County’s new $1 billion budget takes effect July 1. Nathan Eagle/Civil Beat/2022

This spring, council members spent dozens of hours meeting with county department heads to hash out where to increase — or cut — spending on programs and employees. When giving the budget final approval, however, some council members raised concerns over its sheer size, including the council’s chair, Alice Lee, who questioned whether the county would be able to spend all the money it set aside for programs over the next year.

“I think a good budget is a budget that is less symbolic and more realistic,” Lee said. “And more realistic means a budget that can be implemented.”

But other council members celebrated the spending plan as the culmination of years of policy changes aimed at shifting tax burdens away from Maui’s working families, and instead placing the load on wealthy second homeowners and businesses that profit from hotel rooms and vacation rentals.

Council members also changed the way the county taxes property, lowering bills for homeowners and property owners who use their homes as long-term rentals and instead raising rates for short-term rentals and luxury second homes. The state also recently allowed counties to start charging an additional 3% tax on resorts and hotel rooms, on top of the state’s existing 10.25% hotel room tax — an option Maui decided to do to bring in an estimated extra $60 million.

“Over 80% of the funding in property taxes is coming from the tourism industry, which generations before us created so that it can help to make residents’ lives better, not worse,” said Rawlins-Fernandez.

Here are some of the biggest changes and projects on the books for the next year.

Property Taxes

Wailea in south Maui
Full-time Maui residents could see their tax bills lowered, but vacation homeowners will be paying higher taxes. Nathan Eagle/Civil Beat/2022

Two years ago, the council hired a consultant for $300,000 to come up with a plan to spur the construction of 5,000 affordable homes in five years. To pay for development and the necessary roads, water lines and sewers to serve new homes, the plan recommended that the county raise taxes on short-term rentals and luxury vacation homes that might sit empty most of the year.

This budget session, council members agreed to do just that while at the same time lowering tax rates for most homeowners who live on Maui full-time and landlords who use their properties as long-term rentals. Instead, property owners who own second homes or investment properties valued at more than $4.5 million will instead face some of the heftiest increases.

Some tax policy experts and housing advocates have called Maui’s tax structure the most progressive in Hawaii.

“This budget is a moral document where we put our money where our mouth is,” said Council member Gabe Johnson.

Addressing The Housing Crisis

Housing costs on Maui have skyrocketed in recent years, threatening to squeeze a growing number of families out of their homes. The presence of people living unsheltered has also become more visible, spurring the council to put $200,000 aside so the county can create the first safe zone for people living out of their cars.

To help families keep their homes when faced with hefty repair bills, the council also put $270,000 toward restoring homes in each of the nine council districts. But the biggest move to tackle Maui’s housing crisis was made possible by raising tax rates, which is allowing the council to funnel $58 million into the county’s affordable housing fund, the largest sum in history.

“Now we need leadership to spend it wisely,” said Council member Tamara Paltin. “There’s only so much we can do from the council, and we need solid leadership to create the projects, to spend the funds to get people in housing.”

Tackling Parking Problems

A photo of the county-owned parking lot at Polo Beach.
The county owns the parking lot at Polo Beach, which means it could charge visitors to park there. Marina Riker/Civil Beat/2022

In crowded beach towns and tourism hotspots like Lahaina and Paia, parking is always a struggle. To help ease growing frustration among Maui residents who have to compete with tourists for scarce spots, the county put $3.8 million into a new program that would charge visitors for parking at busy county-owned lots and beach parks. The details are still being hammered out, but the county is expected to have more information in the months to come about where — and how much — visitors might expect to pay for spots.

The county is also setting aside millions of dollars to improve parking lots across Maui, including county-owned lots in Paia and at South Maui beaches like Poolenalena, Wailea Beach Park, Waipuilani Beach Park and Haycraft Beach Park.

Environmental Protection

Although Mayor Michael Victorino has said he’s staunchly opposed to the idea, the council set aside $9.5 million to replace Maalaea’s old injection wells — which pump wastewater into the ground and can pollute the ocean — with a modern wastewater treatment facility. Victorino, however, has said that having the county pay to upgrade the old private system “would set a precedent for other privately owned systems to transfer liabilities of their own aging systems to the people of Maui County.”

But that’s just one project that the county could tackle over the next year to try to protect Maui’s ocean, land and streams. The county also set aside $3 million to remove invasive species and is planning to hire several more workers so that the county can continue to maintain properties after it banned pesticides from being used on county-owned land.

Shoring Up Against Climate Change

Front Street Promenade in the morning
Maui County officials are already beginning to grapple with how to deal with sea-level rise. Ludwig Laab/Civil Beat/2021

As Maui has faced more severe and destructive storms in recent months, at least $10 million is set aside for bridge and drainage projects. Another $5.2 million will go toward fixing the seawall that runs along Lahaina’s historic Front Street.

Maui has also experienced serious drought in recent years, spurring the county to order residents to conserve water. To save water and ease the demand on the system as a whole, the county is planning to spend millions of dollars on projects that will help communities recycle water.

The budget — which includes $806 million for operating costs and $264 million for capital improvements — now heads to Victorino, who has 10 days to approve or veto it.

Civil Beat’s coverage of Maui County is supported in part by grants from the Nuestro Futuro Foundation and the Fred Baldwin Memorial Foundation.

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