Crime deterrence morphs into tax relief

Posted: Sunday, February 24, 2008

An Alaska House measure introduced last year to allow municipalities to exempt police officers from property taxes if they moved into high crime neighborhoods has become an omnibus bill for assorted tax relief proposals.

Co-sponsored by Reps. Mike Chenault, R-Nikiski, and Max Gruenberg, D-Anchorage, who introduced it at the start of last year's session, House Bill 67 has since morphed into a Senate substitute with new provisions added during House and Senate committee hearings.

As originally drafted, HB 67 would allow municipalities, by ordinance, to make designated areas eligible for exemptions from taxes (on values up to $150,000) for parcels of residential property owned and occupied by law enforcement officers. The measure is seen as a way to deter crime.

Such areas would have to show statistically higher occurrences of crime than the municipality as a whole, and the exemption would be optional.

During committee hearings in the House last year, new provisions were added.

One would extend an existing exemption to widows and widowers of disabled veterans.

A new section would exempt certain properties of private, nonprofit four-year colleges or universities that are not subject to mandatory exemptions described in other state statutes.

A section added by Reps. Kurt Olson, R-Soldotna, and Bill Stoltz, R-Chugiak, would allow municipal voters to decide whether to exclude, exempt or partially exempt from taxes property of fraternal societies, orders, or associations that are exempt from federal taxes under internal revenue codes.

Properties would have to be used predominantly for religious, charitable, scientific, literary, educational or fraternal purposes.

Frequently such places are used as community halls in rural areas.

After reaching the Senate, HB 67 got an additional amendment.

Sen. Joe Thomas, D-Fairbanks, added a provision upping the annual property tax exemption from $20,000 in assessed value to $40,000. The exemption is optional. The Kenai Peninsula Borough currently extends the $20,000 exemption to eligible property owners.

During a Senate Finance Committee hearing Thursday, still another amendment was adopted that would allow municipalities to recover certain costs associated with collecting sales taxes on behalf of cities where city and borough taxes are not uniform.

Introduced by Chenault, the measure would allow the Kenai Peninsula Borough, for instance, to recover some of the cost of accommodating sales tax collection for the city of Seward, which just increased its sales tax cap from $500 to $1,000, necessitating a revamping of the borough's data-handling software.

Speaking before the Senate Finance Committee, Gruenberg said the original "cop in the neighborhood bill" was aimed at deterring crime, but it has since grown.

"The bill itself has served as a repository for various reforms for tax relief, in most cases optional property tax relief for municipalities," he said. "I think it is a good bill and I hope that you will pass it."

Steve Van Sant, state assessor, said a municipality's decision to enact the optional tax relief measures would not affect that municipality's assessed value as that figure is used in determining state aid to schools. That is, if a property were assessed at $100,000 but eligible for an exemption, the value applied to school-funding calculations would still be $100,000.

The bill remains before the Senate Finance Committee where consideration is being given to combining HB 67 with other tax relief bills. One that could be pulled together with HB 67 is SB 204, a measure that would provide property tax exemptions to the widows or widowers of soldiers killed in action.

Hal Spence can be reached at

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