An ordinance that would have capped the unlimited exemption from property taxes allowed seniors citizens and disabled veterans earned a narrow one-vote defeat at introduction at Tuesday’s meeting of the Kenai Peninsula Borough Assembly.
The assembly’s reluctance to introduce Ordinance 2007-08 centered, in part, on the fact that just last fall the body had made revisions to exemption requirements based on residency and Alaska Permanent Fund dividend eligibility.
That law, meant to capture tax revenue from snowbirds who actually spend little of the year in the borough, has yet to take effect and wouldn’t until Jan. 1, 2008.
Assembly member Gary Superman, of Nikiski, said he wanted to give the September ordinance a chance, adding that he believed it would likely have an impact on the same small number of property owners as would be affected by the borough mayor’s proposed cap.
Several assembly members also suggested that the constant revisiting of the exemption issue was stressful to seniors, even those whose property values would fall far below the proposed $300,000 assessed value threshold.
Others said the exemption continues to come back to the assembly because the central issue of fairness is devilishly tough to resolve.
Assembly President Ron Long, and others, said the issue — whether to leave the cap as is, cut it to a new cap or reduce it altogether to the mandated state level — was one voters likely should decide.
The exemption law was first established in the mid-1980s when the state exempted seniors and disabled vets from taxes on the first $150,000 of assessed value, and the borough — the only municipality in the state to do so — made the exemption level unlimited. In 1986, the cost of the state exemption was $131,000, which the state paid.
By the late 1990s, the state had stopped reimbursing municipalities for the lost property tax revenue, which by that time had grown significantly. This year, the total fiscal impact from the tax exemption on the borough and its service areas has been estimated at nearly $5 million.
That lost revenue stream is expected to grow annually, and the burden continually shifted to younger taxpayers, the administration has argued.
Nevertheless, the assembly voted against introduction. Following the meeting, Borough Mayor John Williams said the next step might indeed be putting the question of an exemption on the ballot.
How it might be worded could be critical, but Williams suggested the rapidly rising property assessments and a growing pool of exempted properties might produce “a kind of backlash” against the senior exemption.
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