A bipartisan bill sits on President Joe Biden’s desk that would exempt survivors of disasters, including the 2023 Maui wildfires, from having to pay federal income tax on settlement money.
The bill was co-sponsored by U.S. Sen. Brian Schatz of Hawaii, who said passage of the Federal Disaster Tax Relief Act represents “very good news for Maui families.”
It will not count any compensation for expenses or losses incurred from a fire disaster for income tax purposes.
Schatz said any settlements paid to Maui survivors must stay in their hands and not go to the federal government.
In a statement, U.S. Sen. Mazie Hirono, also a Democrat from Hawaii, said, “The Federal Disaster Tax Relief Act will help to ease the financial burden on communities impacted by wildfires, as well as other disasters, across our country. … I will continue working to help ensure our communities have the necessary resources to support themselves and I look forward to President Biden signing this crucial legislation into law.”
At the same time, Schatz and U.S. Rep. Jill Tokuda, whose district includes the neighbor islands, continue to push their colleagues in the Senate and House to pass disaster relief funding that would help Maui survivors as well as people in states devastated by hurricanes this year.
“It’s absolutely bipartisan,” Schatz said. “Disasters do not discriminate between red and blue states.”
He hopes his Senate colleagues pass a bill by the time they adjourn at the end of this week.
But the question remains how close they’ll get to the original funding proposal of more than a $100 billion, which would mean more than $1 billion for Maui.
“We have a divided government and it’s an intense time for Congress as we wrap up our work,” Schatz said. “I am telling everyone that we must not adjourn this Congress without providing disaster relief. We’ve never adjourned without passing disaster relief. I don’t consider that an option. I am more hopeful than I was six weeks ago.”
Two weeks ago, the House passed Tokuda’s Lahaina National Heritage Area Study Act to recognize Lahaina’s historic and cultural significance. It would direct the National Park Service to study the possibility of designating Lahaina as a National Heritage Area.
Maui County surveys of Lahaina residents overwhelmingly showed a preference to rebuild Lahaina like it was before the fires, but to modern-day standards, while providing ways to reduce the risk of future disasters.
There are 62 National Heritage Areas in the country but none in Hawaii, according to Tokuda’s office, although Kaena Point remains under consideration.
The Lahaina National Heritage Area Study Act moves over to the Senate.
Some 16 months after the fires, landlords continue to raise rents, exacerbating a housing crisis that only intensified with the loss of hundreds of homes.
Getting fire survivors into permanent homes remains a priority, Schatz said.
“We have to have a singular focus on housing, housing, housing,” Schatz said. “Lahaina can’t recover without housing. People still want a home with a kitchen and a driveway and several bedrooms and a place for the kids to study and maybe a little front yard for the kids to play.”
Rebuilding Lahaina also needs to include fortifying it against coastal inundation, wildfires and storms, Schatz said.
While most survivors want Lahaina to look the same, Tokuda said, “we have to rebuild smarter, better. It’s planning for the future. We know we need wider streets and we need underground utilities.”
Along with housing, Tokuda also wants to ensure mental health needs are provided “for all our survivors,” she said. “The need will continue and there will be a lot of secondary, tertiary trauma. We need to make sure mental health support is available when they need it. It’s the disaster that comes after the disaster.”
