A proposed ballot measure that would cap the senior citizen/disabled veteran property tax exemption passed its first legislative hurdle Tuesday when the Kenai Peninsula Borough Assembly approved its introduction, sending it on to public hearings in May.
The measure would ask voters in October whether the borough should cap the tax exemption at the first $300,000 of assessed value.
A 1986 state law requires municipalities to exempt those citizens or their surviving spouses at least 60 years old from paying property taxes on the first $150,000 of assessed value of their primary residences. A borough law adopted the same year made that exemption unlimited.
However, when first instituted, the two exemptions cost the municipality about $131,000 a year. Additionally, the state was reimbursing the borough for the revenue it lost because of the state’s exemption, a practice the state ended in the late 1990s.
This year, the borough expects to lose almost $5 million because of the exemptions, and that figure is expected to grow every year as more and more citizens become eligible.
Borough assessor Shane Horan said 2007 projections show a $300,000 cap would affect 228 people, 12 of them veterans. The total exempted value in excess of $300,000 is $24,284,000, which equates to a revenue impact of $284,700.
The ordinance is set for public hearings on May 1 and May 15. The May 1 meeting is to be held in Seward.
If approved by the assembly, the ordinance will go to the voters in October. If they approve, the ordinance will cap the exemption at $300,000, meaning property owners in homes valued higher would begin paying taxes on the excess. A hardship clause would free those qualifying as unable to pay from any taxation, but they would have to meet a means test.
Past attempts to eliminate or cap the borough’s exemption have met resistance from seniors and veterans, and the assembly has lacked the collective political will to make the change, though some members have said they would likely support a ballot question on the issue.
Williams has urged the assembly to support the ballot ordinance and has said he welcomes the debate necessary to craft the text of the ballot question itself.
In other business Tuesday, the assembly:
· rejected appropriating $216,000 for the purchase of nine vehicles for the motor pool;
· approved appropriating $2.558 million of general obligation bond proceeds to school capital improvements;
· approved appropriating $102,000 of interest income to fund the purchase of boroughwide emergency communications equipment;
· approved appropriating $28,000 for replacing the surge tank and sand filter systems at Nikiski Pool;
· approved accepting and appropriating a $43,946 grant from the U.S. Department of Homeland Security for firefighting equipment for Kachemak Emergency Service Area;
· approved appropriating $40,000 in supplemental funding to cover costs associated with rebuilding the undercarriage for the Komatsu Dozer at the Central Peninsula Landfill;
· approved appropriating $200,00 to the Disaster Relief Fund to make $50,000 available to respond to disasters that might occur before the end of fiscal year 2007 on June 30, and to provide $150,000 for services and equipment in response to the Kenai River ice jam and flood;
· approved adopting new bylaws for the South Kenai Peninsula Hospital Service Area Board;
· postponed action until April 17 on a measure that would approve the borough’s Emergency Operations Plan; and
· rejected authorizing soliciting proposals for broadcasting assembly meetings. The action keeps in place the current contract with public radio’s KBBI, which includes an automatic one-year renewal clause that takes effect each June 15 in the absence of a termination notice.
Hal Spence can be reached at email@example.com.
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