New exemption rules pitched

Proposal would simplify borough tax law for seniors

Posted: Thursday, November 15, 2007

Borough Mayor John Williams and Assemblyman Paul Fischer have proposed an ordinance lifting a provision of the property tax exemption law that now limits the time qualifying senior homeowners may be absent from the borough to 120 days per tax year.

Ordinance 2007-39 would apply exactly the same criteria used by the state in determining eligibility for the state's mandated tax exemption on the first $150,000 of prime residence value. That is, seniors could not be absent from the borough for more than 183 days, the same restriction required to be eligible for an Alaska Permanent Fund Dividend check.

Gone would be the more restrictive 120-day limitation required for eligibility for the borough's exemption above $150,000. That restriction was added when the assembly adopted Ordinance 2006-21 in September of last year.

That same ordinance included the provision requiring seniors to have received or at least to have been eligible for a permanent fund dividend even if they did not apply.

"Since the ordinance was enacted, it has become apparent that there will be significant difficulties with enforcing the additional restrictions," Williams and Fischer wrote in a memo to the assembly.

Williams was in Anchorage for meetings, but his chief of staff, Tim Navarre, said Wednesday that the main problem facing the borough is that it has no way to police the 120-day restriction, not even a filing procedure that would reliably show compliance.

On the other hand, the state has a well-funded anti-fraud program that does monitor the 183-day rule. For the borough to do the same would be costly, he said.

During the recent municipal election, voters approved capping the previously unlimited borough exemption (beyond the state's mandated $150,000) at $300,000. That is, seniors with homes valued above $300,000 would owe taxes on the excess value.

The cap is expected to reduce the financial impact of lost revenue on the borough significantly. The new tax regime goes into effect on Jan. 1, 2008.

"Given the change in the magnitude of the exemption and the practical problems with enforcement, the borough's best interests would be served by making the qualifications for the exemption the same, regardless of the value of the property," Williams and Fischer said.

A shortened hearing schedule has been requested in order to pass the measure and give the assessor time to send out notices to affected property owners. If the assembly agrees to introduce Ordinance 2007-39 at its meeting Nov. 20, a public hearing would be held Dec. 4.

Hal Spence can be reached at hspence@ptialaska.net.



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