County of Maui Administration Continues Anti-Agriculture Policies Despite Polls Showing Public Supports Agriculture on Maui
POSTED: November 8, 2009 WAILUKU Maui County finance officials are stepping up efforts to collect delinquent taxes, reclassifying some nonfarmers who claim agricultural tax assessments, and taking other steps that could add to the county’s revenues ahead of what’s expected to be a tight year in 2010.
Other efforts by the Real Property Tax Division include pursuing tax foreclosures against property owners who have been delinquent on their taxes for more than three years and a program to verify that people claiming the homeowner classification really live on their properties.
Some of the programs to tighten tax loopholes were started before county finances began heading for a decline. But Finance Director Kalbert Young said projections for a 10 percent slide in revenues next year brought a greater focus on enforcing rules that have been in place all along.
Chasing down delinquent taxpayers won’t close the estimated $45 million budget deficit, but it will be a step in the right direction, he said.
"Before we ask anybody to pay more taxes, or cut programs, we want to make sure everybody who should be paying is paying their share," he said.
Mayor Charmaine Tavares said that in better times, the county could afford not to make it a priority to pursue delinquencies.
"Now it’s a question of what’s fair," she said. "The rest of us that pay our taxes are subsidizing the ones that don’t."
The county is also increasing efforts to collect on other past-due accounts, such as landfill fees, she said.
The county sent about 8,000 letters in September to landowners who receive agricultural assessments on their property taxes, asking them to confirm they are really using their lands for agriculture, said Real Property Tax Division Chief Scott Teruya.
Properties that receive an agricultural assessment are assigned an artificially low estimated value that significantly reduces what the owners pay in taxes.
"Based on the responses thus far, it is apparent that a very large segment of parcels who were previously receiving the benefits of agricultural use assessments could not, in fact, validate, verify or prove that they were entitled to that benefit," Teruya said.
But the move has some landowners who feel they are entitled to the agricultural assessment anxious that the county may not agree.
They worry the county’s definition of "agriculture" is too subjective, relying on individual inspectors to decide whether a property fits their idea of a farm.
"It’s totally up to them," said Haiku resident and property owner Gregg Blue, who currently receives the agricultural assessment on four properties. "I’m concerned about – if they want to get tough – how they’re going to start defining things."
Since the definition in the county’s rules says inspectors should look at how crops are planted and consider whether they fit "acceptable standards" for farm management, like pruning and weed control, Blue was unsure how his properties would be judged.
One parcel he planted with several hundred palm trees about 20 years ago, and he has sold the trees to nurseries and landscapers a few at a time over the years. The trees are planted in rows, but he doesn’t weed or cut the grass between them, so he was unsure if the property would qualify.
"A lot of people are expressing concern," said Dave DeLeon of the Realtors Association of Maui. "They’re not sure what the criteria’s going to be."
DeLeon, also a Haiku resident, said his longan tree is currently producing fruit, and he sells the surplus to local markets. Earlier in the summer, his lychee tree produced several hundred pounds of fruit, which he sold out of his car.
"It doesn’t pay for your mortgage, but you can make some money," he said. "But will they identify that as a farm? That’s the unknown part of this thing."
Teruya said the county wasn’t changing any requirements for landowners, just asking them to report how they were actually using their land.
"If they are receiving an ag benefit but they are not in active agriculture, they should not be receiving that benefit," Young said.
The Finance Department has a similar effort under way to identify nonresidents who are incorrectly receiving the homeowner tax rate and reclassify them into a higher category.
The county’s lowest property tax rate – and other benefits, such as a $300,000 exemption and access to the circuit-breaker tax credit – is reserved for the more than 25,800 taxpayers in the "homeowner" class, people who use their property as their primary residence.
But the Property Tax Division identified 456 landowners currently receiving the homeowner rate whose mailing addresses don’t match the addresses of the properties they’re claiming as their homes.
Teruya said his office sent letters to all of them, asking them to confirm they really live on their properties, and to provide proof they are at least paying taxes as Hawaii residents.
Of the taxpayers who listed out-of-state mailing addresses, "three out of four failed to qualify," he said.
Two-thirds of taxpayers who listed Oahu addresses did not qualify for the homeowner rate, he said. Teruya estimated the effort would net an additional $750,000 in revenue for the county.
In a number of cases, the original homeowner died, and the land was inherited by descendants who lived somewhere else and didn’t realize they needed to update the property tax classification, he said.
"Let’s say you’re dead and you need to notify me – how do you do that?" Teruya said.
The state Department of Health no longer provides lists of deaths to the county, he added, and the Finance Department is hoping legislation will be passed to resume the practice.
In another program, the county is getting tougher on delinquent taxpayers.
That includes restarting the process of pursuing tax foreclosures on properties that have been delinquent for more than three years – something the county hasn’t done since 1997.
"In the past, without the tax foreclosure process, few delinquents ever made the effort to get current," he said.
Earlier this year the division sent letters to 358 delinquent taxpayers, warning them that if they didn’t pay, the county would pursue foreclosure and their accounts would be published on the county’s Web site. Since then, 112 of the taxpayers settled their accounts – and the county collected about $800,000 of the $4.1 million it was owed.
Young said the county would work with property owners who were making an effort to get current on their taxes.
