Reader: There’s a better way when it comes to taxes

Posted: Friday, April 13, 2007

The borough and city property tax mill rate caps are only half the equation. The proposed House Bill 23 or something similar is the other desperately needed half. As ad valorum real property assessments continue to rise, often at excessive and unpredictable rates, our annual property tax bills keep getting ratcheted up.

Where is all of this additional money going? Why can’t our borough and city governments learn to live within their means? We are all facing higher energy costs and seeing our incomes whittled away by inflation, but should our local governments wish to tax us out of our homes and businesses just to balance their budgets and fund their new programs?

Mayor Williams just doesn’t seem to get it. He describes the assessment increases of recent years as “a horrendous amount,” but then falls back on old cliques of state mandates and class inequities to defend doing nothing about fixing the problem. No tax system is totally fair, but at least the “acquisition model” of property taxation (see for background on California’s Prop 13) provides predictability about your future year tax bills, since the valuation assessment is based upon the purchase price or construction cost of the property and cannot be increased more than 2 percent per year until the property is sold.

Yes this means that over time your neighbor’s newly purchased house might have a higher tax bill than your older home, or visa versa, but at least everyone has a tax bill that they can predict and plan for. All properties eventually sell, at which point the assessment increases to the “new” full-market value, and the government eventually gets its tax revenues.

Another benefit is that the tax assessors can concentrate on reassessing only those properties that change hands or are newly built or remodeled, instead of the hopeless task of trying to keep the assessments annually current on all parcels in the borough. Indeed, the overwhelming workload of the current ad valorum system is partly responsible for the “drive-by” assessments that create the inequities that exist now, in which it sometimes takes several years for new buildings to even show up on the tax roles.

The real question that the mayors should be grappling with is whether they want our peninsula communities to be predominately wealthy retirees from other states and seasonal vacation homeowners or a place where those of us who have made Alaska our home can afford to live our lives.

Walter H. Ward


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