Kenai Peninsula Borough considers lowering senior tax exemption

As the Kenai Peninsula Borough Assembly works its way through proposed changes to the tax codes, the idea to phase out the senior property tax exemption has garnered the most public comment.

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The Kenai Peninsula has become a magnet for senior citizens, and now that state cuts are putting pressure on local government, those seniors are being targeted to share more of the borough’s financial burden through property taxes. Terry Wilson, of Kenai, will soon be one of them, and she is concerned.

“The exemptions won’t affect me for a couple years down the road, but I built my house thinking this is going to be available. I would hate to lose it,” Wilson said.

Wilson testified about the issue before the Kenai Peninsula Borough Assembly at its June 21 meeting in Soldotna.

Currently, between the state’s $150,000 senior exemption and the borough’s $150,000 senior and $50,000 residential exemption, seniors on the Kenai don’t pay taxes on $350,000 in property value. That’s more than anywhere else in the state,” Assembly Member Gary Knopp said.

“We are the only borough in the entire state that offers the optional $150,000. … Even if the exemption optional goes away, there’s still $200,000 exemption. I think it’s still generous,” Knopp said.

If passed, the ordinance would phase out the $150,000 exemption offered by the borough to seniors in seven years, starting in 2018, and zeroing out in 2024.

If the proposal goes through, seniors would still be eligible for the $150,000 exemption mandated by the state, which still comes out of the borough’s pockets. Seniors on the Kenai would also still be eligible for the $50,000 residential tax exemption that the borough offers everyone. In addition, the borough would continue to offer its hardship provision, which limits a low-income senior’s property tax bill to 2 percent of their annual household income.

Public comment has largely been opposed to the measure.

“I see it as a great incentive to get seniors to stay here year-round. All through the winter they volunteer in the hundreds, not only in our organization, but in many of the nonprofit organizations in our community,” said Alan Humphries, pastor at Soldotna Church of God.

Humphries noted particularly the work senior volunteers do at area hospitals. Several others have worried that losing the exemption would make it difficult for some seniors to make ends meet. Pricilla Mott lives near Soldotna.

“The seniors, they have a fixed income. Most of them do not have a great retirement. I think that the senior exemption really does encourage a lot of long-time Alaskans to stay here, and they are a benefit to our community,” Mott said.

Borough Mayor Mike Navarre points out, though, that with the senior population rising on the peninsula, continuing to offer such a large exemption to seniors in effect shifts the tax burden to the younger population, who might also be struggling financially.

“The senior population is growing at 10 times the rate of the regular population. So, if we get to a point where we have 50 percent seniors, should the non-seniors pay twice as much in order to pay for the services for the seniors? Young families, single-parent families also struggle and have significant needs, but state law doesn’t allow us to do an exemption for them,” Navarre said.

The mayor’s office has information available on the measure on its website.

The measure would need to go to a public vote this fall to be enacted, and has one more public hearing before the assembly will vote whether to put it on the ballot. That hearing will be at the July 26 assembly meeting in Soldotna.