BY WIN GRUENING
In a recent meeting of the Juneau City and County Finance Committee, a majority of the congregation opposed an attempt to give tax breaks to local property owners.
Michelle Hale’s proposal, supported by Greg Smith and Wade Bryson, would have lowered the mill rate from the current 10.66 mills to 10.56 mills. After some discussion it was rejected with 6: 3 votes. The decision to keep the current milling rate (a reduction of the previously proposed increase of 0.20 million) was submitted to the next Ordinary Assembly on June 14th for final approval.
While the proposal would not have resulted in a significant tax cut on an individual level, it would have sent an important message to residents and businesses that their elected congregation was aware of the past and future economic hardship caused by the pandemic.
If anything, the proposed reduction was shockingly short given the significant property appreciation increases experienced by commercial property owners in Juneau. Keep in mind that many Juneau businesses are struggling after seeing their sophomore year with minimal to zero income and even with the prospect of some cruise arrivals not opening fully by August this year. According to city manager Rorie Watt, the city was “far behind” in updating its commercial ratings in accordance with legal requirements.
The sharp increase in the property values assessed has surprised commercial property owners and will lead to substantial increases in property taxes. Predictably, this has generated a sharp reaction from many downtown business owners. Some owners who have purchased a property in the past few years have reported reviews that have been double their original purchase price.
This year, over 300 tax claims were filed against the city’s most recent tax assessment – three times as many as in a normal year. While the revaluations primarily affected land values, according to the city, companies can expect similar increases in building values over the next year.
Given that property appraisal is a complex, multi-faceted process, a cursory review of the tax bills should be done on the property CBJ website reflect some strange and oversized disparities. The unrepaired waterfront property acquired by Norwegian Cruise Lines last year for $ 20 million is still valued at $ 7.5 million, which equates to about $ 60 per square foot of land.
Even if it were rated at the higher retail value, it would be $ 161 per square foot. However, Archipelago’s downtown property on South Franklin Street is valued at $ 300 per square foot. Some upgraded lots nearby reflect updated land values of $ 450 per square foot – all of which result in double-digit increases in their property taxes.
Some members of the Juneau Congregation believe that continuing with the current mill rate means “keeping the tax” and that is the end of their responsibilities. But everyone knows that the wording of the property tax is a combination of the mill rate and the property valuation – and both should be taken into account when budgeting our taxpayers’ money.
Even amid the pandemic, the gathering lightly approved some large discretionary spending – while the private sector suffered massive layoffs. City workers never thought of serious cuts in business expenses. In the past year, planned salary increases of 1.5 million were planned. Further increases in benefits and remuneration for employees are expected this year.
It also funded a brand new childcare program that will add millions in future spending, along with a $ 1.5 million grant to the Sealaska Heritage Institute, which will fund the $ 14 million art space under construction in downtown Juneau subsidized.
Why are municipal business expenses never reduced, but considering a temporary property tax break for residents and small businesses is considered a tax break for the rich?
The city currently has approximately $ 40 million in reserves and unrestricted fund balances. This is significantly higher than in previous years and more than enough to absorb a significant temporary drop in property taxes. Our economy has started to recover, and as debt falls and VAT revenues increase, so will our municipal revenues.
The economic health of Juneau’s families, businesses, and their employees should be just as important as non-essential CBJ expenses. One of the key ways the gathering can continue to help existing small businesses and attract new startups is to keep property taxes and the total cost of living down.
The assembly can still think about the relief of the property tax. Now is the time to act when Juneau businesses and citizens need it most.
After retiring as senior vice president of commercial banking for Key Bank in Alaska, Win Gruening began commenting on local and national media. Born and raised in Juneau, he graduated from the US Air Force Academy in 1970. He is involved in various local and national organizations and is currently on the board of directors of the Alaska Policy Forum.