Mayors find holes in tax cap proposal

A House bill that would cap the rate at which assessed values of real property could rise each year would harm many of Alaska’s municipalities, Tri-Borough Commission mayors said in Soldotna last week.

The commission includes Kenai Peninsula Borough Mayor John Williams and Mayors Mark Begich and Tim Anderson, of Anchorage and the Mat-Su Borough, respectively.

The bill, sponsored by Rep. Bill Stoltz, R-Wasilla, would limit the annual increase in assessed property value to just 2 percent. Assessments could increase beyond the 2 percent limit only if improvements or renovations had been made since the previous year’s assessment.

“The American dream of homeownership shouldn’t be forestalled for younger prospective owners, or imperiled for older residents on fixed income,” Stoltz said in a sponsor statement. “My legislation seeks to provide some relief for overburdened taxpayers.”

“We have a lot of problems with the bill, and it looks like statewide there are a lot of problems, too,” Mayor Williams said Wednesday afternoon following the Tri-Borough confab. “We probably enumerated a dozen or more issues with the bill. We are taking the position that it is not acceptable to us. We agree there are assessing issues in need of addressing, but not in the manner this bill describes.”

An analysis of a 2 percent cap, Williams said, showed that at that rate, a $200,000 home in 2006 would be assessed at only $253,800 in 2016. But market forces are likely to put the real value much higher — value that could not be taxed under a capped regime.

Alaska law currently requires real property to be assessed at “real and true value,” and it isn’t clear how Stoltz’s proposal would address that.

Also unclear, Williams noted, is the effect of the cap in a year when assessments might go down, but not below the true value of the home. For instance, if in a five-year period the 2 percent cap were applied in four rising-value years, what would happen if the actual value dropped during the fifth year? Could the assessment rise 2 percent anyway as long as the home was actually valued higher than the assessed value?

How the cap might affect school funding through the state’s foundation formula and whether it could impact the ability of municipalities to float bonds based on real property value are other areas of concern, Williams said.

“There are a lot of other little issues,” he commented, “like what constitutes an improvement and what exactly gets capped — buildings? Land? Outbuildings? Boatshed?”

Stoltz also has proposed another measure which would cap the fee paid by property owners to file appeals of assessments at just $10. That could have a big effect on the Kenai Peninsula Borough, which charges fees ranging from $30 to $1,000 depending on the value of the property in question.

Wednesday’s Tri-Borough meeting agenda also included discussion of municipal revenue sharing, proposed fish stock studies in the Matanuska-Susitna Borough and roads and transportation funding.

The mayors also saw a live demonstration of the newly installed Alaska Land Mobile Radio project (ALMR), a system that allows clear and reliable communication between tri-borough community emergency response agencies and other agencies on a statewide basis during disasters and emergencies. Williams said the demonstration went off without a hitch.

The measures are House Bills 391 and 390.