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 Mayor Sullivan endorses Taxpayer Protection Act, favors allowing voters to decide the issue 

 Assembly to decide whether voter initiative moves to April ballot 

1/12/2011
Mayor's Office

Contact: Sarah Erkmann  343-7103

Anchorage- Mayor Dan Sullivan today announced his endorsement of the Taxpayer Protection Act, which was introduced by Assembly member Chris Birch and would amend the City Charter to clarify how the tax cap is calculated.

The tax cap was designed to protect taxpayers from potentially dramatic swings in taxation from year to year,” said Mayor Sullivan. “The Taxpayer Protection Act ensures that the tax cap’s original intent is maintained and citizens are protected from a government always looking for ‘more’. I strongly urge Assembly members to allow this critically important issue to be decided by the voters who are at government’s mercy when it comes to property taxes.”

The tax cap was intended to limit how much property taxes could increase from one year to the next by using a “base” to calculate the next year tax cap. For 23 years the “base” was the amount of property taxes collected the prior year, which protected taxpayers against a dramatic upswing in amount of taxes due the next year.

In 2006, the previous administration changed how the tax cap was calculated by using a higher number for the base—the amount of property taxes that could have been collected instead of the amount actually collected. Using this higher number guaranteed a higher tax cap and exposed taxpayers to the potential of dramatic increases in property taxes, which was contrary to the tax cap’s intent.

The Taxpayer Protection Act clearly states that the amount of taxes to be collected is the base for calculating the tax cap. This means that when the amount of property taxes to be collected is less than what is allowed under the Tax Cap, the lower amount is to be used as the base.

The Record:

  • From 1983 to 2005, the lower amount1 was used as the base.
  • From 2006 – 2009, the higher amount that “could have been collected” was used as the base. During these years the tax cap was artificially inflated by $76 million.
  • Now the lower amount is used to calculate the tax cap.

The ordinance must be approved by the Assembly in order to appear on the April ballot. Action on the item was postponed at last night’s Assembly meeting and its future is uncertain.

 

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1  In years in which the Municipality “taxed to the Cap”, the number used in the base would be the same (amount that could be collected equaled the amount collected).

2   During these years the Administrations gave all or part of state funded assistance as “property tax relief”, but then used the higher pre-relief tax amount as the base for the next year tax cap. In 2006 this was $5 million; $37 million in 2007; $16 million in 2008; and $18 million in 2009.

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