Juneau junket yields little

Assembly gets scant help from Legislature

Posted: Thursday, April 28, 2005

Three members of the Kenai Peninsula Borough Assembly who flew to Juneau last week hoping to impress on lawmakers once again the municipality's need for certain kinds of state aid returned with little in the way of promises for financial help this year

However, they may have set the groundwork for appropriations bills in the next session.

Assembly President Gary Superman of Nikiski said the delegation, which included Milli Martin of Diamond Ridge and Pete Sprague of Soldotna, concentrated its lobbying primarily on issues having to do with the effects of property tax exemptions, education funding and the cost of retirement programs for public employees and teachers.

"The senior exemption issue — that was my primary focus," Superman said, referring to the state's failure since the late 1990s to live up to its promise to reimburse municipalities for lost revenues resulting from the state's mandated $150,000 exemption from real estate taxes on homes owned and occupied by seniors and disabled veterans.

The reimbursement program is effectively history, Superman said. But even appeals for some kind of short-term monetary relief got a less-than-positive response from lawmakers representing the peninsula, he said.

"We got no promises."

One measure on the Legislature's table is House Bill 195, which proposes to spend a little more than $61 million over two years to cover at least a portion of the real property tax revenue municipalities are expected to lose as a result of the exemptions in 2005 and 2006.

That bill languishes in the House Finance Committee, co-chair-ed by Rep. Mike Chenault, R-Nikiski, where it is expected to stay for the rest of this session.

This is only the first session of the 24th Legislature, however, Superman cautioned, and HB 195, or something like it, is likely to be on the table next year. Thus, Superman said he was reluctant to criticize lawmakers too harshly just yet.

He recommended that residents keep pressure on their representatives with phone calls and messages urging action on the revenue issue, though.

"Anything we can get with this would be a major help so we can deal with other issues entwined in the senior exemption issue," Superman said.

One of those issues is residency. Under current law, age is the only criteria for the senior exemption at 65 — or their surviving spouses at 60. That means someone of the right age could move to Alaska, build an expensive home and pay no property taxes at all. Superman said he doesn't believe that is a major problem in terms of numbers, but it is a loophole in need of a plug.

Most Alaska seniors enjoying the exemption are living on fixed incomes in homes they've owned for years, he said. Many might face financial hardships should they suddenly have to start paying taxes.

Other legislation being looked at in Juneau would make the property tax exemption a local option — essentially allowing the state to wash its hands of the program entirely.

"That's not a solution we want and not a fair solution," Superman said.

"It puts the onus on us," Martin said.

Another proposal that would do away with the senior-disabled veteran exemption mandate altogether might not be a good solution either, but it "would put the onus back on them (state lawmakers) where it belongs," Martin added.

The rapid rise of assessments due to the exploding real estate market is hitting homeowners hard on the peninsula. Alaska assesses at true market value, while some other states have passed laws limiting how much assessments can grow in one year. Superman said, however, that it is probably too late in the legislative session for any relief on that front.

"It's not one of their priorities at this point, unfortunately," Superman said.

Skyrocketing assessments have been an issue among seniors on the peninsula who actively have been protesting a proposed borough ordinance that would reduce their unlimited tax exemption.

In the mid-1980s, the borough upped the state's mandated $150,000 exemption to include the entire value of homes owned and occupied by seniors, disabled vets or the qualifying spouses of those groups.

Since then, those residents have paid zero property taxes on their homes.

The proposed ordinance could cap the exemption as low as the first $200,000 of value. In other words, seniors and disabled vets would start paying taxes on value in excess of that amount.

Legislative efforts toward increasing the per-student allocation to state school districts continue, but it is unclear where the final sum will fall, Superman said.

At the heart of that issue is the area cost differential, a factor that serves to increase allocations to rural and Bush schools in recognition of the higher costs of delivering education in remote areas.

As applied here, the area cost differential does not take into account the rural nature of many of the borough schools. The Kenai Peninsula Borough School District is treated more like a major city than the Bush, which has been costing the district money for years, Superman said.

The borough also is dealing with the rising cost of public employee and teacher retirement obligations due mostly to rapid increases in the cost of health-care coverage and the poor performance of retirement fund investments. Municipalities are seeking state aid to help them meet substantial increases in those contributions needed to meet future payouts.

Sprague said he came away from Juneau "fairly optimistic" that the municipalities would see at least a temporary appropriation to the retirement dilemma, as well as some increase in education funding.

As for lawmakers stepping up to help with the senior property tax exemption, Sprague said he got no sense that anything would be done this year. Nor, he said, did he pick up any indication of a move to reinstate the municipal revenue sharing program.

"It was a mixed bag," Sprague said of his trip to Juneau. "It was a little bit of a disappointment because we've heard so much talk about a surplus. There's still two weeks in the session, so things could still happen, but I didn't see a lot of movement while we were there."



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