The Kenai Peninsula Borough won’t ask state lawmakers to expand its taxing powers – for now. That’s after borough assembly members voted down an initiative aiming to ease the financial burden of residential property tax hikes.
The nonbinding resolution would have asked the Alaska Legislature to give local governments permission to cap how much a property’s assessed value changes year to year to five percent.
It was proposed by Borough Mayor Peter Micciche, who says a cap could help stabilize assessment spikes.
“When you have valuation that’s increasing this quickly, it’s very difficult for our families and seniors to budget, people that are on a fixed income or that are low- to mid-income,” he said. “And we’re just trying to smooth that increase in annual expenses for them.”
Micciche’s proposing a five percent cap, because it’s in line with the borough’s average year to year increase over the last several decades. But he says the exact percentage could change in the future.
“I think we’re making a statement that this escalation is unhealthy, unsustainable and we’d like another tool in the tool bag, and you’re the ones who get to make the decision on what the ordinance looks like,” he said.
But some assembly members sought clarification on how the borough could cover owed taxes in cases where a property’s assessed value grows by more than five percent.
Member Brent Johnson is also vice chair of the borough’s Board of Equalization, which hears and decides property tax appeals. He says he sees a lot of cases where assessments increase by a lot more than the cap Micciche is proposing.
“Given a property that goes up in the value of, say, 50%, how do you get back to ground zero?” Johnson asked.
In response, Micciche said the borough’s gotten better about doing accurate assessments more often, which would help avoid big jumps like Johnson described. And he reiterated the resolution would only ask lawmakers for the authority to institute a cap.
“It is going to be a lot less frequently you see properties jumping 50% because they haven’t been looked at in, you know, five years, or seven years, or longer in many cases in the past,” he said.
Assembly member Tyson Cox had similar concerns.
“If we get to a point where we do have a time where it's consistently – where the inflation is consistently above five percent, how do we end up taking care of that?” he asked.
Cox said he’s worried such a situation could force the borough to make up the difference through another revenue source, like the mill rate. And he says mill rates don’t impact all residents in the same way. Seniors, for example, are eligible for property tax exemptions that other residents, like young homeowners, are not.
Other assembly members, like Ryan Tunseth, said the discussion was getting too removed from the resolution.
“To me, it feels like a debate that we're having about something that's not on the table right now,” he said.
The vote came down 5-4 against the resolution.
The assembly didn’t take public comment on the issue during Tuesday’s meeting. That’s because they held one at their last meeting. At that meeting, only one person testified on the resolution.
After assembly members voted the resolution down, Seward resident Becky Dunn said during the general public comment period the resolution could have helped make property in her town more affordable. She says the value of the land her house sits on doubled in three years.
“When you buy a house, you think that's going to be your house payment, but included in the house payment … is your property tax, and when the value of your house goes up, the insurance says it's worth more,” she said. “Your insurance is going up. My payment’s gone up over $400 along with my electric everything else.”
During a presentation to the Kenai and Soldotna chambers of commerce Wednesday, Micciche said the resolution’s failure doesn’t mean he’s giving up on trying to address the problem.
