Assembly considers change to residential property-tax exemptions

January 30, 2010

Assembly member Harriet Drummond says she's heard a lot of complaints that residential property taxes are too high. (Mike Nederbrock/KTUU-DT)

by Jason Lamb
Friday, January 29, 2010

ANCHORAGE, Alaska -- In a Friday meeting, the Anchorage Assembly tackled a proposal introduced by three of its members last week: a suggestion to allow the city to raise the amount of money you can deduct off your home's value before the city hands you a tax bill.

Right now, that amount is $20,000. The proposal is to raise the exemption amount to $50,000. Those for this change say it will mean real savings to single-family homeowners, while those against it say it may sound good -- but the devil is in the details.

"What I've heard is a lot of complaints from people that their residential property taxes are too high," said Assembly member Harriet Drummond.

"Certain people will benefit, and certain people won't," said city assessor Marty McGee.

The city brings in a lot of money each year, some from homes and some from commercial businesses. Officials say a bigger tax exemption would reduce taxes collected from homes, forcing businesses to pay more and potentially pushing costs on to customers.

"During a recession, I think the last thing you want to do is increase the tax burden on businesses who are trying to recover, grow, help the economy by creating jobs and expanding," said Mayor Dan Sullivan.

But Drummond says the shift in taxes may be appropriate to provide homeowner tax relief.

"I don't hear from the Walmarts, the Costcos and the BPs of the world that their property taxes are too high," Drummond said.

She says the important thing is to ease the burden for single-family homeowners and shift the tax burden.

"It all depends on how much you buy," Drummond said. "People always talk about a sales tax. Same thing's going to happen there -- it's going to shift it one way or another."

The city said based on the way it and the state structures its tax-exemption laws, if a larger tax exemption is put in place, people who own low-value homes would actually see an increase in taxes.

That's because the city would have to increase mill rates to cover the exemption.

Also, the city says commercial properties include apartment buildings, so more taxes for them might mean higher rent bills for the people who live in them.

Before the city can take action, the state has to take this up first and change state law.

Sen. Bill Wielechowski has said there is an effort in Juneau to make sure apartments don't wind up paying more in this plan.

Drummond says she also wants to change current tax law -- basically the maximum percentage people can deduct off their home value -- to make sure low-income homes don't wind up paying more.

Contact Jason Lamb at jlamb@ktuu.com

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