Alaska News

Croft, Sullivan debate property tax relief, sales tax ideas

Editor's note: Anchorage mayoral candidates Dan Sullivan and Eric Croft have each talked about providing property tax relief. Both say they would do it partly by cutting city expenses.

Sullivan has talked about replacing property taxes with sales taxes, though he says he doesn't have a specific plan yet and would wait to hear from constituents.

Croft proposes to increase the exemption that a person who lives in his own home gets on property taxes. Currently, the city exempts the first 10 percent of value, with the exemption capped at $20,000. Croft would exempt the first 20 percent, up to $50,000. To offset the lost revenue and avoid raising taxes on remaining properties, he says he'll significantly reduce city spending.

Here are excerpts of what the two candidates said about taxes Wednesday on KSKA's Community Forum.

TARGETED TAX RELIEF?

Eric Croft: I want to get very targeted property tax relief targeted on the middle class. So we've got to come forward with ideas on how we can find cost savings. ... Dan had put forward a sales tax proposal, one that would completely fund government off sales taxes. I think that would be unstable and we're seeing a lot of states, that because they rely too heavily on sales tax, their budgets go down way too fast in economic downturns.

Also it would be unfair. It shifts a lot of the burden onto middle class families and away from big Outside landowners. ...

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We want it to be focused on the middle and upper level incomes. You do that by increasing the exemption on every home. ...

I'm against a sales tax because it hurts working families. ... It shifts the burden of the taxation onto working families, families with children, seniors, those are the ones that lose in this situation.

And the big winners are the big Outside landowners. The entities that make out very well are the biggest buildings on our skyline ... because they're not buying things.

A 14 PERCENT SALES TAX?

Caller: But where's the money going to come from (if you cut property taxes)? We need to keep the city going.

Croft: We passed a tax cap, Proposition 9, that's going to force some savings. ... I been very specific about ways I think we can find efficiencies.

Dan said for a long time that he wanted a sales tax. He wouldn't add any new services, he would just deduct from property taxes. Using the tax Sullivan proposed (in 2006, when voters turned down a 3 percent sales tax that exempted a lot of items), you would need 14 percent rate to replace property tax. That would be by far the biggest in the nation.

He said, "No no, I'm not talking about that." ... I think it's incumbent on him to tell us what he is proposing other than what he supported in 2006.

REBUILD CONFIDENCE IN GOVERNMENT

Dan Sullivan: Eric has continually misrepresented my position. In 2005 (Assemblyman) Dan Coffey put together a proposal for a fairly minor sales tax, 3 percent, with lots of exemptions that didn't raise much revenue. And the public rejected it soundly.

To suggest you would just multiply that (tax) by 3 or 4 ... it's just silly. I never proposed a tax at that level and never would. ... I would engage this community in a year-long discussion ... to find out what does the public want.

I put forth no plan now. But one thing I have said is I think the public is so distrustful of their city government now I don't think they want two taxes right now. Show them you can rebuild their confidence in government. Then maybe you can come out there with a plan.

Croft: We can't look anywhere to find your sales tax plan?

Sullivan: Eric -- what I have heard from the public is the only sales tax they would accept right now is one that totally replaced property taxes because they don't want two taxes. I don't have a plan. I was reflecting what I'm hearing from the public. ... You've been trying to distort it by putting out some 14 percent number that you know I have never said. If you can find anywhere it says I support a 14 percent sales tax, I'll eat that piece of paper. You know I don't have a 14 percent plan.

Croft: What do you got, Dan?

Sullivan: The first thing you do is listen to your constituents and you try to formulate a plan they will accept at the ballot box. ... I will take as long as it takes until I think there's consensus in the community. (For prior sales tax votes) there was really no advocacy behind it and that's why they failed.

Croft: While he's doing that, we don't have any property tax relief. That's the problem. I've been listening to voters. They don't want a sales tax.

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PROPERTY TAX EXEMPTIONS?

(The discussion turned to property tax exemptions.)

Sullivan: Exemptions are a gimmicky way to get property tax relief. All you do is shift it from one person to another. Eric's plan shifts (the burden) particularly to renters.

Croft: The last exemption we passed, the $20,000 -- where Dan Sullivan was the only vote against it on the Assembly --- delivered real property tax relief to exactly those people who mostly needed it.

Sullivan: I want property tax that's even and fair. (The exemption) shifted it to the small-business community. Hey, those are working families too. You don't get property tax relief on the shift and shaft. ...

The rest of this question is whether the property tax really is burdensome. It (the burden) comes from the fact that it is the main source -- it's over 50 percent of what is collected in revenues for funding city government.

I agree that we live in a modern progressive city. It takes taxes to make the city run. If you don't want taxes you can move up to Skwentna or somewhere else out in rural Alaska. The real trick is to provide value for the tax. ...

A diversified portfolio (of revenues), just like in your investments, probably makes sense for a city. That's why you have a good discussion, communitywide, about what other revenue sources you might what to look at.

I don't think we're doing as good as job as we can providing the services that people want for their property tax.

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