Wrangell has the second oldest population in the state, and the local borough is worried about the growing number of tax-exempt seniors. Those out-of-reach property tax dollars coupled with state cuts are putting aging communities in a tough spot.
Jeff Jabusch attended KSTK’s House District 36 debate last week not as a citizen, but as Wrangell’s borough manager. He asked incumbent Dan Ortiz and Republican candidate Bob Sivertsen if they would be in favor of giving communities more control over senior property tax exemptions.
“Last year, the state assessor sent us a graph that showed Wrangell, by far, had the highest senior exemptions per total assessed value in the state of Alaska,” Jabusch said. “We’re right at 17 percent of our total value exempt through senior exemptions.”
The Alaska Department of Commerce said Wrangell’s exemptions increase about five percent per year. The next highest community is at 11 percent.
“So we’re roughly 50 percent higher than the very next one in the state,” Jabusch said.
Seniors 65 and older on Jan. 1 each year fall under the exemption mandated by the state since 1985, which relieves them of property taxes on homes valued up to $150,000. If an exempt home is valued higher, residents are taxed based on the difference. The state stopped reimbursing communities for those exemptions in 1997.
“If they had said then we’re going to require the local communities to do that, but we’re not going to give you any money, it would haver never passed. Cities would have come unglued,” Jabusch said. “They were able to do it over a long period of time, go down to 90 percent. Ok that’s not a big deal, and pretty soon it was at 70 [percent], 50 [percent] and 30 [percent]. Pretty soon they didn’t do it at all.”
Wrangell exempts about $300,000 per year. That money becomes more tantalizing as many communities are suffering budget cuts from the state. Wrangell has taken about $540,000 in cuts over the past two years including reduced revenue sharing and funding for its jail.
It’s not just Wrangell that’s aging. Southeast Conference Economic Development Director Meilani Schijvens said Southeast Alaska is the oldest region in the state and is also home to the oldest community, Haines.
“So the median age in Wrangell is 47.8 years. If you look at that and compare it to Alaska as a whole, it’s 13.5 years older than the average Alaskan community,” Schijvens said. “It’s also 8.3 years older than the average Southeast Alaskan.”
About one fifth of Wrangell is currently 65 or older and its aging isn’t slowing down anytime soon.
“If you look at tax payers in terms of adults that are actually paying taxes, a quarter of the population is over 65, and in five years that’s going to be a third of your adult population,” Schijvens said.
In eight years, Schijvens said half of Wrangell’s tax-paying population will be 60 or older.
As for Jabusch, he said neither candidate really answered his question and doesn’t expect either to take any action as it may be politically unpopular, which limits options to fund the budget.
“If you raise just property taxes, just the mill rate, then it affects 80 percent of the people and not all the people. And you wonder at some point if that’s fair to the people that have to pay it. It’s a tricky thing and a lot of seniors are on a fixed income,” Jabusch said. “Certainly raising taxes they’ve been getting for free, that’s not a good thing for them either. Of course there’s other seniors that are the wealthier people in town.”
He said Wrangell will have to figure out how to do more with less as its tax bases ages.
Correction: This story has been updated to reflect that Meilani Schijvens said in 8 years, half Wrangell’s “tax-paying population” will be 60 or older, not half the entire Wrangell population.
