As the Kenai Peninsula Borough Assembly debated setting new senior citizen property tax residency requirements, Mayor John Williams requested a postponement, saying he intended to bring forward an entirely new ordinance, perhaps by mid-October, which would revamp the entire exemption program.
That measure could include provisions capping the now unlimited tax exemption the borough provides, and likely would base residency simply upon state Permanent Fund eligibility, the mayor said.
Williams also proposed incorporating the so-called “2-percent rule,” a provision permitted under state law that would cap the property tax liability for those on fixed incomes at no more than 2 percent of their annual household incomes, even if market forces drove property assessments through the roof.
For instance, suppose a person has lived in a modest home for years and is now retired with an annual income of $24,000. However, because of market forces beyond his control, his home’s assessed value has grown to $500,000. The borough levies a 6.5-mill property tax, which means the homeowner would normally owe the borough $3,250 in property taxes. But under the 2-percent rule, he would pay just $480 a year a small sum that Williams said would nevertheless contribute something toward paying the cost of borough services.
The assembly declined to postpone action on the property tax exemption ordinance, passing it 6-3, but some members said they would welcome the chance to consider new legislation revamping other parts of the tax-exemption program.
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