Lahaina’s Darkest Hour: $50 Million Annual Property Tax Revenue Loss

The island paradise of Maui is grappling with economic turmoil in the aftermath of the devastating wildfires that swept through the region, leaving thousands of residents without shelter, food, and other necessities. The wildfires, the deadliest in the U.S. in over a century, have caused significant property loss, especially in the town of Lahaina, a popular tourist destination and an economic engine for Maui. 

The damage is expected to hit the county's coffers hard. Preliminary estimates from the state Department of Business, Economic Development, and Tourism suggest that Maui is already losing over $1 million a day in visitor spending due to the disaster. Furthermore, the loss in property tax revenue could be as high as $40 million to $50 million annually, according to Kalbert Young, a former director of budget and finance for the state. 

Lahaina, which includes Kaanapali and Kapalua beach resorts, had property values totaling over $4 billion in the 2023 fiscal year. Of this, over $3.3 billion was taxable value. The town's historic Front Street and the area west of Route 30, assessed at $1.5 billion for tax purposes and generating at least $11 million in potential tax revenue, were completely destroyed. 

Marilyn Niwao, the immediate past vice chair of the Hawaii Council on Revenues, anticipates that the county will need to defer payment and reassess the entire area, resulting in potential revenue losses for years to come. As it stands, property tax bills, which are due on August 21, are looming over residents and businesses, many of whom have lost everything. 

The wildfires' impact extends beyond property taxes, as Maui County's transient accommodation tax, which was expected to bring in another $60 million, is also at risk. The county, which had projected revenues from property taxes to be over $500 million and make up more than half of its entire estimated revenue for its 2024 operating budget, will now have to revise its budget due to the catastrophic loss.

While the county will receive some aid from federal and state sources, these funds can be slow in arriving. Hawaii's Governor Josh Green has indicated a possible special legislative session to address funding for Maui, and Hawaii's federal congressional delegation has promised federal aid. However, the immediate need for funds to rebuild infrastructure, schools, and other public buildings is enormous. 

Alongside these challenges, the U.S. Small Business Administration (SBA) has announced federal disaster loans for affected Hawaii businesses and residents following President Biden's major disaster declaration. SBA Administrator Isabella Casillas Guzman has stated that the agency is committed to helping Hawaiis small businesses and residents recover and rebuild with a customer-centric approach.

Businesses, nonprofits, and homeowners can borrow up to $2 million to repair or replace damaged assets. The SBA also offers Economic Injury Disaster Loans to help meet working capital needs caused by the disaster, regardless of any property damage. For homeowners and renters, disaster loans up to $500,000 are available to repair or replace damaged real estate, and up to $100,000 to repair or replace personal property.

Despite the significant challenges ahead, Maui's community is rallying together. The road to recovery will be long and arduous, but with federal assistance and a collective effort, the island's residents and businesses are hopeful for a resilient rebound.