The Municipality of Anchorage assessor's office has increased the value of Tom Allen's Chugiak home by more than 80 percent in the last two years, resulting in a steep climb in the property tax bill.
“It's out of control,” Allen said. “My tax bill has doubled in that time because someone says my home is worth twice as much today as it was. Something needs to be done.”
Chugiak Rep. Bill Stoltze is stepping forward with legislation that would limit the amount a home assessment can increase from year to year.
House Bill 23, presented to the Legislature for the second straight year, would cap the property assessment increases at 2 percent a year.
“Many of my constituents are frustrated with the increases,” Stoltze said. “I know of some homesteaders in the area who were forced to take out reverse mortgages on their homes just to pay their property taxes.
“People are just madder than heck about what's happening to their property tax bills,” he said.
Allen hoped Stoltze's bill would find its way out of committee this year and become law. Had it been in place back in 2005, when Allen's home was assessed at just under $160,000, his current assessment would be approximately $165,000 instead of nearly $300,000.
“That's more realistic,” Allen said. “Can they make the 2 percent retroactive if the bill passes?”
Protecting both young homeowners like Allen and longtime residents is what motivated Stoltze to draft the legislation.
“People work hard for the American dream of owning a home, and we're taxing them right out of the market,” Stoltze said. “Seniors who are living on a fixed income can't afford the higher tax bill that comes with the increased assessment and neither can the blue collar guy who is just making enough to get by.”
As written, the bill would apply to all property, including nonresidential property, but Stoltze said he wanted the bill to cover only residential property. He also said the 2 percent figure was just a starting point for discussion.
“I just wanted to get the discussion started,” Stoltze said. “I'm by no means wed to the 2 percent and expect it to change as the bill moves forward.”
The concept of the state limiting the amount the assessment of residential property is nothing new. California voters passed Proposition 13 in 1978, limiting the increase in assessed value at 2 percent each year. Massachusetts passed similar legislation in 1980. Currently, 17 other states have laws limiting the increase in assessed value of homes.
The state's assessor, Steve Van Sant, warned the straightforward bill would have “far-reaching effects.”
Even if the change applied only to residential properties, it would likely shift tax burdens and create inequities and could end up hurting people with homes of lesser value.
“Any of these changes like this simply just shifts the burden to somebody else,” he said.
Limiting assessments could also force municipalities to raise the mill rate to maintain revenues, Van Sant said.
The House Community and Regional Affairs Committee, co-chaired by Rep. Anna Fairclough, held a preliminary hearing on the bill Feb. 13.
The committee also reviewed HB 24, another bill sponsored by Stoltze that would block municipalities from charging a fee to property owners wanting to appeal an assessment.
“A lot of people feel the government process is rigged against them,” said Stoltze, who described the appeal as part of due process that shouldn't be subject to fees.
Van Sant said the fees, which are charged in Anchorage, the Kenai Peninsula Borough and the Ketchikan Gateway Borough, have helped municipalities reduce the number of appeals by people just looking for tax breaks.
“We don't charge the oil companies anything to appeal their tax bills,” Stoltze said. “Why do we allow municipalities to charge homeowners?”
Both HB 23 and HB 24 were kept in the committee for further consideration.
“With Anna as the co-chair, I'm confident the bills will get a fair hearing,” Stoltze said. “The people who elected me asked me to do something about property taxes, and this is what I can do. If the bills aren't passed this year, I'm prepared to keep introducing them until we can provide the tax relief the people want.”