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The Maui County Council received welcome news Monday that despite the destruction of 2,146 structures in the Aug. 8 wildfires, the certified taxable value of property for fiscal year 2025 increased by 4.2% to $73.3 billion.

That translates to about $1.2 million more than was projected in March under Mayor Richard Bissen’s proposed budget, including his changes to tax rates and exemptions, according to acting Finance Director Maria Zielinski. The county is expecting to collect $587.3 million in total revenue from property taxes, she said.

Council member Tamara Paltin, who represents Lahaina, clapped when hearing the new figures during the meeting of the council’s Budget, Finance and Economic Development Committee, which is entering decision-making mode this week on the county’s overall spending plan.

Under the current proposed tax rates, the county would collect nearly 10% more in property taxes for fiscal year 2025, which starts July 1, than it did this fiscal year.

The to discuss the proposed property tax rates at 6 p.m. on Tuesday in Wailuku.

Bissen’s proposed property tax increases are for all non-owner and owner-occupied tier categories, transient vacation rentals and short-term rentals, although the increases are bigger for higher-priced properties.

There were no increases proposed for the categories of hotels and resorts, agriculture, long-term rentals, commercial, conservation, industrial or timeshares.

“I just want to remind the members, to the extent possible, we do not want to raise the budget,” said Council Chair Alice Lee. “That’s why we have to be very careful. If you’re going to raise taxes, you’re going to raise the budget. So, you have to cut someplace.”

Without changes to the proposed tax rates or exemptions, the county would generate 42% of its property tax revenue from short-term rentals, according to a .

The next biggest chunks would come from non-owner-occupied residences at $137.1 million, timeshares at $57 million and hotels at $51.5 million.

Homes and condos lived in by their owners would bring in nearly $40 million in taxes. Three-quarters of that revenue comes from properties under $1 million, the lowest tax tier at a proposed $2 per $1,000 of assessed value. The mayor proposed increasing that from $1.90.

In addition to the low rate, the 27,334 owner-occupied properties also can receive a $300,000 decrease in value to be taxed, the largest amount in the state.

Paltin asked why the tax rate of hotels that are mostly owned by mainland-based companies was staying flat, while the rates of people living in their own homes was going up.

“Our owner-occupied are people that live and work here that contribute to the county functioning, the visitor industry functioning,” Paltin said. “And when we raise that tax, it’s almost like taking food out of people’s mouths.”

Marcy Martin, administrator for the Finance Department’s Real Property Tax Division, said the hotel industry in Maui County experienced a revenue decrease this year of 6% to 15%, but that there has been a sale indicating strong values so the administration decided to keep it flat.

Paltin asked if the county took into consideration the “injection of cash” some hotels received for housing survivors under the state program run by the American Red Cross that’s largely reimbursed by the Federal Emergency Management Agency.

Zielinski said they did not.

In Maui County, the net taxable values have almost doubled over the past decade. It was only $41 billion in 2015-2016.

“The thing about people being priced out of paradise, priced out of our home, is because people will come and spend $2 million for a house next door, and all of a sudden your house is worth more money, and your valuations go up,” council member Tom Cook said.

Assessed values have been steadily increasing since 2013, with the exception of 2021 when the coronavirus first impacted the county and the world. The increase is due to rising market values, new construction of property and subdivisions of existing parcels, Martin said.

For the upcoming fiscal year, there are 3,260 parcels that were impacted by the fire and made non-taxable under the county’s . But due to a new subdivision Upcountry in Haliimaile and other homes that were built, the parcel count for tax purposes is down only 2,924, Martin said.

Paltin introduced the legislation that exempts properties that were destroyed or rendered uninhabitable by the wildfires from property taxes.

In addition to the properties that were destroyed in the wildfires, another 1,162 parcels in the Lahaina burn zone were deemed not accessible or uninhabitable due to a lack of utilities and fell under Bill 95.

Another measure exempted taxes for short-term rentals that were converted into long-term rentals for fire survivors, of which 907 properties fell into this category.

All three of these exemptions will result in a projected loss of $21 million in property taxes for the current fiscal year, which ends June 30.

The county also has 8,804 parcels that qualify for the minimum tax of just $300, although there is one even lower category for severely disabled veterans at $150.

There is a decrease in commercial assessments, although it is a small class with a little more than 2,000 parcels. But Martin said Lahaina had a significant portion of the commercial tax base.

Despite the added revenues from a 3% transient accommodations tax in Maui County and a half-percent increase dedicated to the county from the state sales tax, 47% of county-generated revenue still comes from property taxes, Martin said.

The number of long-term rental exemptions increased by 2,000, all but 101 due to the wildfires.

Martin said that many people still don’t know about the exemption. While the deadline has passed for this fiscal year, the council may consider extending it.

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