Supporters say the surcharge will fund projects that benefit all county residents. Others have their doubts.

The Maui County Council is giving residents a chance to share feedback Monday evening on a proposal to boost funding for housing infrastructure by adding a surcharge to the state general excise tax, which is tacked on like a sales tax to almost every business transaction. 

Maui County locator map

State lawmakers opened the door earlier this year for counties across Hawaii to use a 0.5% surcharge on top of the state’s 4% GET to pay for specific types of “housing infrastructure,” defined as water projects, drainage, sewers, waste disposal and waste treatment systems. It also includes walking paths and sidewalks “on a county road near or around a public school.”

The proposal has so far won support from Maui Mayor Richard Bissen and several key officials. The county’s finance director said during a recent meeting that the government could bring in an estimated $400 million within five years, millions of which would come from the tourism industry and be funneled toward projects that will benefit the county as a whole. 

But some council members and residents have concerns about how the higher tax on goods and services ranging from fuel to food might affect families already struggling to get by. They fear there aren’t enough assurances that the additional revenue would benefit all residents across Maui, Molokai and Lanai. 

Council members typically meet during the day but are holding a special meeting Monday evening in hopes of hearing from more residents. (Marina Riker/Civil Beat/2023)

Right now, there aren’t specifics in the state law that dictate where — or what type — of housing the taxpayer-funded projects need to benefit, whether that be multimillion-dollar mansions in Wailea or government-subsidized rentals for working families.

The law generally notes “housing” and says related infrastructure costs can’t be passed on to developers, which is fueling concern among residents who have watched neighborhoods transform into vacation rentals and luxury estates they can’t afford.

“What guarantee is there, if the infrastructure is paid for by the county, that that savings will be passed on to the buyers?” South Maui resident Madge Schaefer asked during a recent meeting. “How do you enforce that?”

Yuki Lei Sugimura chairs the council’s budget committee which is hearing the GET surcharge proposal Monday. (Courtesy: Democratic Party of Hawaii/2021)

The debate over whether to raise the additional tax is unfolding as Maui County is in the throes of a housing crisis. The typical price of a single-family home on Maui stands at around $1.2 million. Rental prices have also soared in recent years, leaving families scrambling to afford food, medical care and gasoline. 

The GET is Hawaii’s alternative to a sales tax. The state says it’s a “tax on the business for the privilege of doing business in Hawaii,” but it generally ends up being passed onto customers whenever they make a purchase, including for basic necessities.

During a recent meeting, Maui Finance Director Scott Teruya told council members that the average person is estimated to pay an additional $370 per year if the county adopts the surcharge. So far, the county is looking at using the tax revenue to pay for a massive wastewater treatment facility in Central Maui that will in part serve new affordable housing projects.

“Believe me, we’re going to try to our best to do what’s best for the community as a whole,” Teruya told council members.

But some council members have asked officials to provide a list of other possible projects and how they will serve residents across the entire county, from those in rural communities like Hana and Molokai to those living in towns overwhelmed by tourism in West and South Maui. They’ve also asked for more specifics on how the county will ensure that the cost of housing is lowered because of the tax increase.

For years, Maui County was the only local government in Hawaii that didn’t adopt a GET surcharge. The tax option was first established almost 15 years ago to help Honolulu pay for the rail. In 2019, both Kauai and Hawaii counties adopted it, which at the time had to be used for public transportation including roads, bridges, bus systems, bike paths and sidewalks.

Lawmakers this year gave the counties the option to extend the surcharge and also allowed it to be used for housing infrastructure. But because Maui County missed the deadline to adopt it years ago, the county will only be able to use the revenue for the new housing-related projects, not public transportation like roads or buses.

The council will hold its meeting virtually and in-person starting at 6 p.m. Monday.

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

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