There are good reasons to both welcome and fear the property tax cap initiative headed for the November ballot. On one hand, it would save taxpayers a lot of money. On the other, it would cause havoc for local governments, which would face some tough decisions about future budgets.
The tax relief proposal would cap local property taxes at 10 mills. It also would restrict increases in annual property assessments to no more than 2 percent.
There are exceptions. One involves a city's existing debt, or bond pbligations, which a community has pledged to repay with taxes. These taxes would continue to be levied in addition to the 10-mill limit. Another exception would permit the tax assessor to increase the value of a property by more than 2 percent in order to reflect the true value in the event the property is sold for a higher amount.
For the average Anchorage homeowner, the 10-mill cap could mean a savings of about $70 a month. For city government, though, it would mean the loss of some $73 million a year -- $40 million of which would be stripped from municipal government and $33 million from the schools.
This year, with an average levy of 16 mills, the city is collecting about $270 million in property taxes. Just under $150 million of it goes to fund police, fire, road work and other essential city services. Just over $120 million is the local tax contribution to the annual school budget, which combined with state and federal revenues totals about $400 million a year.
If voters approve the tax cap, the question becomes which essential services or schools do we intend to shut down as a consequence of losing $73 million? Or what other kind of taxes do we intend to put in place to make up the lost revenue?
In the months remaining before the big vote, we encourage everyone to give this tax cap proposal serious thought. While the prospect of saving some taxes each month is tempting -- the results may not be worth it.
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