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Assembly fixes, re-adopts senior tax exemption

Posted: Thursday, September 21, 2006

New residency rules governing senior citizen eligibility for the property tax exemptions adopted Sept. 5 got some technical amendments at Tuesday’s Kenai Peninsula Borough Assembly meeting.

The measure was brought to the table again following a successful reconsideration vote. Clauses were added to ensure that eligibility for the tax exemption clearly extended to the surviving spouses (at least 60 years old) of senior citizens and disabled veterans covered by Ordinance 2006-21.

The amended tax-exemption law passed again by a 5-3 margin.

The measure ties eligibility for the state’s mandatory tax break on the first $150,000 of assessed value to eligibility for an Alaska Permanent Fund dividend. A resident is not required to actually accept a dividend, but he or she must meet the state’s eligibility requirements.

To get the borough’s unlimited tax exemption for assessed value more than $150,000, a qualifying resident must be able to demonstrate that he or she has not been absent from the borough for more than 120 days in the tax year for which an exemption is sought.

There are several exceptions to that rule that would allow absences for longer periods, such as aiding an ailing family member Outside, or certain kinds of employment and the like. Those exceptions largely mirror exceptions allowed for permanent fund dividend eligibility.

Ordinance 2005-21 addresses residency requirements for eligibility, but Mayor John Williams has told the assembly that he is preparing legislation that likely will seek to cap the unlimited borough exemption at some level. The administration has not yet said what that level would be.

Last year, there was an attempt by the assembly to cap the borough’s exemption, but that effort failed, in part due to public pressure.

The borough faces serious revenue shortfalls and capping or eliminating the unlimited tax break altogether would boost revenues. In the late 1980s when the borough created its unlimited tax exemption, it had in mind aiding aging pioneers who were facing ever-higher property taxes on homesteads long after they’d retired. Many were on fixed incomes.

At the time (1988) the revenue lost to the borough through its exemption program was about $131,000. Today, that loss approaches $4.5 million, due in part to higher property values, newcomers building very expensive homes here to enjoy the tax-free status and other factors.

In the eyes of many, it is unfair that that tax burden is now borne by working-age taxpayers who are, in some cases, subsidizing the tax-free status of wealthy snowbirds.

The new rules are meant to ensure that those enjoying the tax break really do regard their peninsula homes as their primary residences and that they spend at least most of their time in Alaska and on the peninsula.

In other business, the assembly:

· Adopted Ordinance 2006-19-13 accepting and appropriating a $20,000 state grant to be used by the Kachemak Gun Club to purchase borough property it is currently leasing as a shooting range near Anchor Point.

· Adopted Ordinance 2006-19-14, accepting and appropriating a $10,000 state grant to buy new respiratory support equipment for South Peninsula Hospital.

· Adopted Ordinance 2006-19-15, accepting a $30,000 state grant for a pre-development study of a senior housing project proposed by Anchor Point Senior Citizens Inc.

· Adopted Ordinance 2006-19-16, accepting a $38,500 state grant for the borough’s Coastal Management Program.

· Adopted Ordinance 2006-19-17, accepting a $17,000 state grant for purchase of a brush fire attack vehicle for the Anchor Point Fire and Emergency Medical Service Area.

· Adopted Ordinance 2006-19-20, accepting a $2,200 federal rural fire assistance grant for the Anchor Point Fire and Emergency Medical Service Area.

· Adopted Ordinance 2006-19-21, accepting a $4,850 state Volunteer Fire Assistance Grant for the Nikiski Fire Service Area.

Four new ordinances were introduced at Tuesday’s Homer meeting. All were given Oct. 10 public hearing dates.

Ordinance 2006-19-23 would accept and appropriate a $22,125 grant from the Alaska Department of Military and Veterans Affairs to support the activities of the Kenai Peninsula Borough Local Emergency Planning Committee.

Ordinance 2006-19-24 would accept and appropriate a $30,216 grant from the Alaska Division of Homeland Security for the Kenai Peninsula Citizens Corps programs.

Ordinance 2006-29-25 would accept and appropriate a $100,000 state grant for the North Peninsula Recreational Service Area. The money would be used to replace outdated ozone and filtration systems at the Nikiski pool.

Ordinance 2006-35 would set the sales tax rate at 2 percent for the remainder of the fiscal year if Proposition 2 fails at the polls Oct. 3. It was discovered that should the proposition fail, the Jan. 1, 2006, effective date of the sales tax increase would require that increase to take affect immediately upon certification of the election results on Oct. 10. Collecting the tax immediately would be impossible, the administration said.



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