Maui No Ka $$

by Tom Yamachika, President, Tax Foundation Hawaii

Maui, our Valley Island, has been on the move lately. It recently passed a budget, its largest ever, where it proposes to spend more than One Billion Dollars in this fiscal year. This, by the way, is a 26% increase over last fiscal year’s budget of $844 million.

Where is all this moola coming from? For one thing, Maui jumped on the bandwagon when the counties were allowed to enact a surcharge on top of the State hotel room tax. The state tax is 10.25% and Maui County will be adding another three percentage points to it. That surcharge was estimated to add $60 million to Maui County coffers. But we need to remember that the $60 million is not all new money. The same bill that allowed the surcharge also scuppered $23.484 million in state transient accommodations taxes that were being paid over to Maui County as revenue sharing.

Then, Maui County is dropping its property tax rate on year-round residents while hoisting the rates on resorts and high-end second homes.

It’s going to spend more money than ever before on affordable housing. Of course, 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. In the end, though, the staggering size of the budget prompted some Council members to question whether county government would even be able to spend all of the moneys budgeted.

One of the more interesting observations on the budget was made by Councilmember Gabe Johnson. As reported in Honolulu Civil Beat, he said, “This budget is a moral document where we put our money where our mouth is.”

A budget is a moral document? So it’s not a matter of providing for products and services to serve the people of Maui, but it’s also about legislating morality?

We can’t deny that many legislative actions, including taxes, exemptions, credits and other features in the tax world, are there to encourage or mandate social policy. But it makes me wonder if the legislators sponsoring those measures have come to grips with the idea that they are supposed to be serving those who have elected them into office, and not the other way around. “You elected me,” some legislators may think, “which gives me the moral authority to encourage or require you and others to follow what I say is right and moral.”

Long-term residents are moral. Visitors, especially the wealthy ones, are cows to be milked for their money. Is that the kind of morality that Maui is all about? I thought we were more friendly and welcoming than that. Shouldn’t the Aloha Spirit be part of our morality too?

And, of course, this is not just a Maui problem. We too often have seen local politicians of all stripes take aim at transient or part-time residents. In 2017, we raised the transient accommodations tax to a record level, 10.25%, and a mere four years later we’re adding another 3 percentage points. Both the state and some counties have proposed a vacant homes tax. The list goes on.

Our lawmakers need to be aware that people can vote in different ways. One is at the ballot box. Another is with their feet. If they don’t like the environment, they can jump on a plane or a boat and off they go. They can also these days record their displeasure on social media for others to see, like an online review of a shop or restaurant but with the subject being the state or the county instead.

If we don’t watch out, that favorite old song might get reworded in the future: “They say that Maui no ka $$, and I agree… Maui no ka $$ surely ain’t the place for me.”