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If you live in Anchorage, this is how Prop. 11 would impact your wallet

  • Author: Devin Kelly
  • Updated: March 11
  • Published March 11

Most Anchorage homeowners would pay less in property taxes if voters approve a proposition appearing on the upcoming April city ballot.

But there's a trade-off. People who own commercial and rental property, apartment buildings or more than one home will have to pay more in taxes as a result of the proposition. Taxes may also go up for the owners of the most expensive homes, according to data provided by the city.

The initiative, Proposition 11, is an attempt by the administration of Mayor Ethan Berkowitz to shift up the city's tax burden away from people who own and live in their own homes. The measure, while cheered by some homeowners, is drawing a sharp response from business and commercial property groups.

Prop. 11 is one item on a packed ballot in the local election that starts on Tuesday. Anchorage is holding its first-ever vote-by-mail election. The city will mail ballots to registered voters on Tuesday. Ballots can be mailed back with a postage stamp or dropped off at a drop-box or a few accessible voting locations around Anchorage. The last day to vote is April 3.

With Prop. 11, the Berkowitz administration wants to exempt 20 percent of a homeowner's property value from taxes, up to $50,000. That's the limit set by state law. Right now, the city exempts 10 percent of a homeowner's property value up to $20,000.

"We've been hearing for a long time that people wanted property tax relief," Berkowitz, who is running for a second term as mayor, said in an interview Friday.

If you own a $350,000 home and qualify for the exemption, you would see your property tax bill drop roughly $400 if Prop. 11 passes, according to an analysis by the city assessor's office. The analysis was based on 2017 data; the final amount will depend on the tax rate set by the Anchorage Assembly in April, as well as the size of the city's budget.

Property taxes would rise for homes valued at $5 million or more, the assessor's data show.

Meanwhile, taxes on commercial property and other property that doesn't qualify for the exemption would rise about 1.2 percent. Berkowitz said that amounts to an increase of about $114 a year for a $600,000 parcel. He said federal deductions could help defray the hike.

The tax hike on commercial properties would have been higher to make up for the drop in residential taxes. But then the Berkowitz administration  proposed the city's first-ever tax on gasoline and diesel fuel. The gas tax took effect March 1.

"We looked for all the different ways to achieve property tax relief," Berkowitz said. "This package achieves that goal."

Anchorage has a higher property tax rate than the Kenai Peninsula Borough or Juneau, where there are sales taxes in effect.

Rodney Powell is the chair of the Anchorage Home and Landowners Association, known as HALO, and owns a home in Bear Valley. He said the broad feeling in his neighborhood is that homeowners are way overtaxed and businesses don't pay their fair share. He added that not everyone on the Hillside is wealthy.

"People downtown are trying to bleed us dry, that's what people up here think," Powell said.

Powell said his home is valued at about $520,000, and he pays $7,500 a year in property taxes. The proposed exemption change would save him a few hundred dollars. That doesn't feel like that much, Powell said.

Not every homeowner agrees with Berkowitz's plan. David Pelto, who owns a condo in the Campbell Park area, said he's a lifelong Alaskan and thinks he gets what he pays for with his current property tax bill. He said he doesn't see a point in shifting the taxes to other property tax payers, and the city should adopt a sales tax.

"I'm amongst those folks who say, hey, we haven't been paying our way for a long time," Pelto said. "It's time for us to suck it up and start paying."

Meanwhile, a prominent association of commercial property owners, managers and leasing agents has come out against Prop. 11, saying it's unfair.

More than 63 percent of the property in Anchorage is residential, and 29 percent is commercial.

In a recent resolution, the Anchorage Building Owners & Managers Association predicted Prop. 11 would stifle new development and threaten businesses that are dealing with the recession. Commercial building owners were skeptical about the city's estimate of the size of the tax increase. The resolution said higher commercial property taxes would be passed along to tenants with an increase in rents.

"The great majority of these tenants are small businesses-owned and operated by the 'home owners' the mayor believes he is helping," the resolution said.

Rebecca Logan, Berkowitz's main challenger in the mayoral race, said during a recent mayoral forum that Prop. 11 would punish businesses during a recession.

Berkowitz said reducing property taxes for most homeowners would stimulate the local economy. BOMA vice president Kevin Powell, who works in business development at ENSTAR Natural Gas, said the association feared the trickle-down effect of the higher taxes would cancel out any boost to the wider economy.

Powell said he owns a home and not a commercial business, and he would expect to save about $300 in property taxes. But he also said he drives a lot, and the gas tax will cut into any property tax savings brought about by Prop. 11.

"It's kind of a wash, really," Powell said.

Berkowitz, who owns a home as well as several commercial properties in Anchorage, characterized his tax plan as a necessary step to give the city a more diverse revenue stream that relies less on property taxes from homeowners.

"Business owners know there's no easy way to achieve that," Berkowitz said.

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