WAILUKU, Maui — Maui homeowners already enjoy the lowest real property tax rates in the state, and Mayor Charmaine Tavares wants to cut rates even further as escalating property values continue to pump riches into the county treasury.

It would be the second straight year of substantial property tax relief in Maui County.

Tavares, who took office in January, announced the proposed property tax relief yesterday while unveiling her budget for fiscal 2008, which starts July 1.

With property values holding strong and construction expected to remain steady, the mayor said net taxable assessed property values on Maui are projected to increase by $6 billion, or 17 percent, for a total of $40.7 billion.

Last year, the County Council approved an increase in the homeowner exemption from $200,000 to $300,000 and a decrease in the homeowner tax rate from $3.50 to $2.50 per $1,000 of assessed value. The measures reduced the annual tax bill for a $600,000 owner-occupied residence to $750, well below half of what homeowners in other counties pay for the same property.

The new cuts proposed by Tavares would reduce the homeowners rate to $1.85 per $1,000 of assessed value, bringing the bill for a $600,000 owner-occupied home to $555.

All other categories, from agriculture to hotels and time-share, would see tax rate reductions, too.

The across-the-board rate cuts would keep property tax revenues close to current levels, she said. The proposed budget sets revenues at $196.6 million, compared with $192.8 million for the current year.

County Finance Director Kalbert Young described the proposed tax rate cuts as "very bold." Due to rising real estate values, not every property owner would receive a tax bill below or equal to their current bill, he said, but the amount owed "most likely will be very close."

"Maui County is positioned quite well financially and that's why we can afford to propose these rate cuts," Young said.

County Council Chairman Riki Hokama of Lana'i said yesterday that the robust revenue picture and Maui's knack for avoiding sharp economic downturns could mean it is time for rate cuts in all property categories. The council in the past has favored property tax relief in the form of raising the homeowner exemption to target lower-income taxpayers, he said.

Tony Fisher of the Committee for More Equitable Taxation, a citizens group, said tax rate cuts would be welcome, but do not represent true tax reform. His group favors a 4 percent cap on annual property value assessments and other measures it plans to push before the council.

In addition to a reduction in the homeowner tax rate, a budget ordinance the administration plans to submit to the council will propose reducing the unimproved category from $5.86 to $5.35 per $1,000 of assessed value; the hotel/resort category from $8.20 to $7.30; conservation from $4.75 to $4.70; agricultural from $4.50 to $4.15; industrial from $6.50 to $5.70; commercial from $6 to $5.90; apartment from $5 to $4.55; improved residential from $5 to $4.70; and time-share from $14 to $12.75.

While cutting tax rates, Tavares is seeking small increases in water, sewer and garbage collection fees. The increases would add about $8.40 per month to the average residential sewer bill, $1.50 per month for water, and $4 per month for garbage pickup. Tavares said the fees are still a relative bargain.

The typical household now pays $38.25 per month in sewer fees, $42.69 for water and $12 for garbage collection.

The mayor's proposed budget requires $525 million in revenues, a 9 percent increase from the current year.

The county's operating budget is proposed at $421 million, up 15 percent from the current year. The mayor is asking for 127.2 additional positions, mostly in the new Department of Environmental Management that was established by a charter amendment approved in the 2006 election. The fire, parks and recreation, and water departments also would get extra hires.

Also affecting the operating budget is $20 million in contributions to the state retirement system, $2.6 million in wage increases resulting from union contracts, and a $5.8 million emergency allocation to the self-insurance fund for rockfall mitigation and road repairs in Kaupo due to the Oct. 15 earthquakes.

A new fund for affordable housing programs would receive $3.9 million. Voters last year approved a charter amendment that sets aside 2 percent of annual real property tax revenues for the fund. A separate charter amendment approved in 2002 earmarked 1 percent of revenues for preservation of open space and natural and cultural resources, which in fiscal 2008 would amount to almost $2 million under Tavares' plan.

Spending for capital improvement projects is budgeted for $104 million, including a $34.75 million bond issue.

Of the CIP total, $25.7 million would go toward wastewater system improvements, $24.7 million toward water system projects, $26.5 million toward road and drainage projects, and $15.1 million for landfill expansion and improvements.

Hokama praised Tavares for "getting away from the glitter of past budgets" and taking a "back-to-basics" approach that ensures the most critical public services, such as roads, water and sewers, are adequately funded.

The council will schedule public hearings on the budget before deliberating on a final plan.

Reach Christie Wilson at cwilson@honoluluadvertiser.com.