Measure would allow larger property tax exemption

Posted: Wednesday, March 19, 2003

KENAI (AP) A measure introduced in the Alaska Senate would allow municipalities to exempt up to $50,000 of real estate value from local property taxes.

The current limit is $10,000, and five municipalities now offer the exemption. They are the Kenai Peninsula Borough, the Bristol Bay Borough, the Fairbanks North Star Borough, the North Slope Borough and the city of Valdez.

The only property taxes collected by the state are assessed on oil industry properties. But because of a 20-mill total property tax cap imposed by state law, what municipalities assess against those same oil properties reduces the state's share.

Of the five municipalities that offer the current exemption, only the Kenai Peninsula Borough has a sales tax.

We have a lower mill rate because we also have a sales tax,'' Mary Jackson, chief of staff to Sen. Tom Wagoner, R-Kenai, chair of the Senate Community and Regional Affairs Committee.

And because the borough collects some of its revenues from sales taxes about $14 million this year more of the property taxes collected from oil properties is available to go to the state.

What we are trying to say is the Kenai Peninsula Borough is already giving $14 million to the state because we are collecting a sales tax instead of doing it all on property taxes as everyone else is doing,'' she said.

Senate Bill 136 would permit the local governments to go on collecting the sales tax from visitors and residents alike, but offer some counter tax relief to borough property taxpayers.

Jackson said similar measures in the past have raised concerns within the Department of Community and Economic Development that raising the property tax break might lead municipalities to offer the break, but up their mill rates. That, in turn, would limit state revenue from oil properties.

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