Assembly told not to change property tax exemptions

A parade of senior citizens and disabled veterans spoke out Tuesday against a proposed reduction in the borough's currently unlimited property tax exemption extended to those groups and their qualifying surviving spouses.

The Kenai Peninsula Borough Assembly took testimony on Ordinance 2005-07, a measure that would lower the exemption to the first $300,000 of the value of an exemptee's primary residence.

Tuesday's hearing was the first of two. A second is scheduled for April 19.

As the law exists today, seniors over age 65 and disabled veterans or their surviving spouses pay no property taxes. A state mandate requires municipalities to exempt the first $150,000 of value. Borough voters made the exemption unlimited in 1986.

For several years, the borough recouped part of what it lost in property tax revenues from the state, which reimbursed municipalities for the impact of the $150,000 exemption. However, since 1997, the state has failed to deliver on its reimbursement promise, effectively costing the borough millions of dollars. The impact has been felt statewide.

The assembly voted 6-3 to protect disabled veterans and their surviving spouses by removing them from the effects of the ordinance, but it left the tax-exemption reduction to $300,000 intact for seniors.

In voting for that amendment, assembly President Gary Superman said the change made the package somewhat better, but that he wouldn't be supporting the ordinance when it comes up for a final vote.

Assembly member Grace Merkes said both groups were important and many were "living on a limited income." She opposed the amendment that essentially would have divided the two groups.

Assembly member Milli Martin of Homer said her own father had to give up his land in Los Angeles when property taxes rose too high. She said she intended to bring an amendment to the table by the next meeting that would use hardship criteria allowed by state law "to ensure that no one would be driven off their property or from their home."

Martin went on to say, however, that she would take a long, hard look at the ordinance. She noted there were some 2,500 senior property tax exemptions in effect today, and that number is growing at about 10 percent per year, resulting in a growing impact on borough revenues.

On a fixed income, Martin said she pays virtually no property taxes on her own 5-acre Skyline Drive property on the bluff above Homer, although that property fronts Skyline Drive for a half mile. Her younger neighbors are paying for services she enjoys.

"Is it fair that my neighbors pay more to support those services? Is it fair that they have to pay more to the borough? My answer to that is 'no,'" she said.

Martin promised to consider the exemption-level reduction ordinance from that "fairness" point of view.

Charles Short of Kenai said he bought his property in 1966 so he could start a welding business, which at one point had as many as 25 employees. Now he lives on the property with his wife on an adjusted gross income of $10,883 (in 2004) before paying for groceries, utilities, insurance and other expenses. He does not think the exemption should be reduced or taken away from seniors.

Medical bills forced the Shorts to refinance their home a few years ago.

"I do think that after a person gets to be 70 years old they should be allowed to work on their own property without employees and still not have to pay any property taxes," he said.

Others who testified noted the rapidly rising assessments that already have driven the value of some properties above the $300,000 level, or would in the near future.

In other business, the assembly:

n Enacted Ordinance 2004-19-40, authorizing South Peninsula Hospital to redirect $115,000 previously appropriated for a hematology analyzer to the purchase of surgical equipment and instruments.

n Enacted Ordinance 2004-19-41, appropriating funds to enhance ice making at the Jason Peterson Memorial Ice Rink in Nikiski.

n Enacted Ordinance 2004-19-42, appropriating funds for the Road Service Area Bruno Bridge capital improvement project.

n Enacted Ordinance 2005-04 (substitute), establishing guidelines for service areas to borrow money from the general fund for capital acquisitions.

n Enacted Ordinance 2005-08, amending borough code to clarify procedures regarding the records management system.