Property values increased an average 10.9 percent across the Kenai Peninsula Borough over the passed year; a fact not lost on recipients of latest round of municipal tax assessment notices.
Peninsula real property values have been rising steadily for several years, but since 2005 they’ve gone up some 31.3 percent. Oil and gas property values are projected to jump 9.1 percent over last year’s values, according to the Kenai Peninsula Borough.
The current year, fiscal year 2007, saw taxable values on real property reach a kind of milestone Ð a historic high of $5.33 billion. While this can be viewed as an indicator of the borough’s strong economy, it nevertheless translates into a stiffer tax burden on property owners.
State law governs how assessments are done, and the borough has little control over the requirement that assessments closely match fair and true market value. What the borough can control, through assembly action, is the actual mill levy.
“If we get more revenue (from higher assessments), then we should look to cut taxes,” reasons Williams.
The assembly recently approved an increase in the sales tax to 3 percent effective Jan. 1 of next year. Contingent on that, Williams has promised to introduce an ordinance cutting the tax levy by a full mill over two years.
Alaskans, by comparison with most states, live in a relatively gentle tax environment. The borough has only two main sources of revenue -- it’s sales tax, currently 2 percent, and its mill levy on real property.
A third element once existed -- state municipal revenue sharing. For years, revenues were evenly split between the three streams. But in the late 1990s, municipal savings began to disappear and today is largely gone.
Meanwhile, revenue from property taxes grew. Today, property taxes generate about twice what comes from the sales tax. Williams’ proposal would bring the two into approximate balance.
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