Daily Sitka Sentinel

Property Tax Income For Sitka Up Slightly

By SHANNON HAUGLAND
Sentinel Staff Writer

Property tax assessments went up slightly in the last year, which will result in a slight increase in tax collected, the city finance and assessing offices say.

“One of the things we’re seeing is small increases in the assessed values, offset by increases in the senior citizen and other exemptions,” City Finance Director Melissa Haley said.

The city’s assessed value of real and personal property as of January 1, 2021, is about $1.176 billion.

City Assessor Larry Reeder said in a May 5 memo to the Assembly that this year’s assessments represent an overall decrease in assessed values of .002 percent, “mostly due to corrections performed in the 2020 real property land and improvements and the lack of reappraisals due to Covid-19 issues.”

On August 2 the city sent out tax bills totaling $7,060,471, up from last year’s $6,639,823 after corrections were made on some 40 properties in last year’s assessments. These are the amounts after the exemptions have been accounted for.

“Most of that increase is due to new construction,” said Reeder, who has been city assessor for 19 months.

The Assembly sets the property tax rate every year. It has been unchanged at 6 mills for decades, with 4 mills dedicated to schools and 2 mills to general purposes. Reeder explained that six mills is “$6 per $1,000 of taxable value.”

In recent years, the city has given more in school support than the amount collected in property tax. This year, the school support figure is $7.8 million, the finance office said.

The real property roll includes taxable land and building improvements minus the value of the senior citizen and disabled veteran exempted properties. Reeder estimated some 650 seniors qualify for the $150,000 exemption on taxable value that’s authorized under state law.

Haley said the relatively stagnant revenue stream from property tax is a concern for city officials planning for the long-term.

“It means we have to rely on other revenue sources,” Haley said. “With state revenue drying up it puts a lot of pressure on sales tax. That’s our only other source of revenue.”

Statewide the vast majority of tax revenues collected by municipalities is through property tax. The office of the Alaska state assessor said that in 2014 local governments generated about $1.66 billion in revenues from property taxes, sales taxes and other taxes. Of that amount, $1.34 billion was from property taxes.

“It’s a challenge (to be so reliant on sales tax),” said Haley. “Especially when you have fluctuations - whether it’s from a pandemic or fluctuations from cruise ships coming in. It’s a less stable source of revenue.”

She added that Sitka has one of the lowest if not the lowest property tax rates in the state.

Assembly member Kevin Knox said he’s concerned about the reliance on sales tax as well.

“I’ve tried to address the growing senior exemptions with other things, and this is of concern as well,” said Knox, who’s been on the Assembly five years. “Sales tax is more regressive, it hurts lower income people more than the wealthy. And relying on sales tax as our primary means of revenue is problematic to those that are lower income.”

Exemptions from property tax include $91 million in senior citizen and disabled veteran properties; city, state, federal and tribal government properties; optional “community purpose” properties; and schools and hospitals. Most exemptions are mandated by the state; the “community purpose” exemptions are approved by the Assembly.

Reeder, who was an assessor in Oregon before moving to Sitka, said assessing properties in Sitka is a challenge, given the low number of sales and the fact that Alaska is a “nondisclosure state,” which means sales prices do not need to be disclosed.

“In Oregon, where I come from, we were required to do a ratio study – a comparison between prices of the sale and the tax roll,” he said. With more sales prices available – and studies of types of homes – it was easier to see trends in neighborhoods and various types of properties.

“We develop trends out of the ratio study and apply those trends annually to the values,” Reeder said, of his Oregon work. 

In Sitka, the job of assessing is more difficult because homeowners and real estate agents aren’t required to disclose sales prices, and there hasn’t been a huge number of sales. Reeder said COVID precautions added other challenges to the assessing process, since the assessing office wanted to limit face to face contact with property owners.

He said the real estate market appears to be “hot” right now, with homes generally going for what the owners are asking for.

“The market for some reason is very hot – stuff is moving and stuff appears to be going for the asking price,” he said.

Property tax is due on October 2, and the city accepts payment by credit card, cash or check. Payments may be made in-person 10 a.m. – 4 p.m. Monday through Friday at the first floor utility bill office at city hall.

Checks can be mailed to City and Borough of Sitka, 100 Lincoln Street; credit card payments can be made by calling 747-1818, or online at www.xpressbillpay.com/.

“Please note that the City and Borough of Sitka does not have the option of autopay for payment of property tax,” the city said in a notice to taxpayers.