Anchorage voters will weigh in on boosting property tax exemptions for homeowners

In April, ballots in Anchorage’s local election will likely ask whether residents want a bigger tax write-off for homeowners. An ordinance introduced at Tuesday’s Assembly meeting hasn’t yet won approval from elected officials but is unlikely to encounter resistance, in which case it will go before voters.

As it stands, homeowners can write off 20% of the value of their primary residence, up to $50,000. The new proposal would raise that ceiling to $75,000, and adjust the percentage rate slightly in the case of less expensive homes.

The change was made possible by passage of a bill in the Alaska Legislature signed into law on Monday that will take effect in October.

“Anchorage homeowners are feeling the impacts of record rates of inflation, and residential property appraisals increased an average of 8-10% in 2022 while commercial values remained flat or decreased at a similar rate,” wrote the sponsors of the local ordinance, which includes Assembly Vice Chair Christopher Constant, as well as members Forrest Dunbar and Austin Quinn-Davidson. “A larger residential exemption could provide much-needed relief for homeowners beginning with 2023 tax bills.”

Under the current tax scheme, the owner of a $350,000 house in Anchorage is taxed as though the house were worth $300,000. Should voters pass the ballot proposal, that same house would be taxed at $275,000.

Even in a polarized political environment, the Anchorage electorate tends to come together when it comes to property tax exemptions: A similar measure in 2018 raising the rate from 10% to 20% passed nearly 3-to-1.

“The 2022 budget passed by the Assembly kept property taxes flat for most homeowners this year,” said Quinn-Davidson, the Budget and Finance Committee co-chair. “Nevertheless, Anchorage taxpayers deserve a break. This new law offers a common-sense solution, providing residential property taxpayers relief while allowing the Municipality to continue funding vital public services.”

Since the pandemic, property values and the local revenues built on them have been upended. Home values across the municipality have leapt upward owing to a hot real estate market. Meanwhile many commercial properties, including hotels, declined in value, stuck at diminished capacity in some cases because of travel restrictions and work-from-home policies to curb viral transmission. That, in turn, has hampered revenues for local governments across the country, including Anchorage. Fiscal holes were plugged by federal relief dollars, but those were temporary.

Locally, the exemption measure would drop homeowner taxes slightly but keep the municipality’s overall revenues stable.

“It shifts the tax burden off just residential property taxpayers, who are the majority of taxpayers, onto commercial taxpayers,” Dunbar said.

[A Spenard development is rapidly reshaping the neighborhood. It’s barely making a dent in Anchorage’s housing demand.]

Property taxes are always a political issue, but especially this year after a letter sent out with tax bills by Mayor Dave Bronson accused the Assembly of hiking what homeowners are on the hook for. Assembly members pushed back, saying the figures Bronson included were misleading. They’ve complained that in the weeks since the letters were mailed out, they’ve not only had to field a barrage of calls and emails from constituents, but spend significant amounts of time simply clarifying or correcting misinformation on local taxes and budgeting.

“The mayor’s large act of deception has taken painstaking work to undo,” Dunbar said. “That letter had sort of politicized the tax cap and how the budget works.”

If approved by voters in next April’s election, the increased tax exemption would take effect in 2023.