The Valdez Star - Serving Prince William Sound and Copper River Basin

Editor, Valdez Star 

No tax breaks for property owners this year

Council keeps 20 mill rate for 2015 by unanimous vote Monday


Property owners in Valdez will not be seeing a tax break this year.

The Valdez City Council officially set this year’s property tax assessment at 20 mills during its regular meeting Monday night. The rate has remained at 20 mills since the 2013 tax year.

Council member Jim Shirrell noted that the 20 mill rate is applied to all property owners.

“When we charge 20 mills it’s for everyone – not just TAPS,” he said, meaning that homeowners and large commercial property owners such as the trans-Alaska pipeline system owners pay the same rate.

What differs is the assessed value of properties.

Property tax mills are calculated by multiplying the assessed value of property by the mill rate and then divide by 1,000. At 20 mills, property with an assessed value of $50,000 will have a property tax bill of $1,000 per year.

This year’s estimates for, oil properties in Valdez were valued at $2,169,013,640 and other private properties – less exemptions – were valued at $274,863,965. The expected revenue tax revenue is $48,877,552.

In 2014, non-oil related properties were valued at $259,929,774 and oil related properties were assessed at a taxable value of U$2,303,919,180. Property tax revenue was expected to generate $51,276,976 for the 2014 tax year.

Oil property tax revenue projections went down by $400,000, while other property values rose nearly $15 million according to city records.

Shirrell noted Monday night that he hoped to see measures that could help address the high cost of living for people in Valdez included in the city’s mid-year budget adjustments.

For the past several years, the council has funded an energy credit of $550 per Valdez household as a sort of de facto tax break, but Shirrell said he would like to see more offsets for residents this year.

Shirrell alluded to the fact that Valdez property taxes are high because the city council has typically set the mill rate high to take advantage of the high revenues generated by taxing oil-related properties. The State of Alaska taxes oil properties at 30 mills, minus any mill rate charged by municipalities or boroughs. The oil-related property owners will pay a full 30 mills in property tax regardless of how the tax is split. In Valdez, oil-related properties are taxed at 20 mills to city coffers and 10 mills to the state.

By law, local taxing authorities may not impose a higher or lower tax rate for any one type of property.

Currently, Valdez gives primary residences an exemption of up to $20,000 off of the assessed value of a home, and has other larger exemptions for senior citizens, disabled veterans and non-profit entities.

The state also imposes a maximum allowable limit on the amount of property tax a local governing body can collect that is based on population.

For Valdez this year, the maximum is $40,150, 676; a loophole in the law allows taxing bodies to collect a higher amount that can only be spent to pay for principal and interest on general obligation bonds.

For the past several years, Valdez has collected several million dollars above the amount it is allowed to collect for education and its general fund; the excess revenue has been used to pay off debt for the hospital building it owns and the new middle school that opened its doors last September. The new harbor project added over $20 million in bond indebtedness. There will be an additional $8.7 million available to pay off bonds this year if the property tax revenue projections hold true.

Earlier this year, a large number of private property owners formally appealed the assessed values of their properties after the city’s assessor, Mike Renfro of Appraisal Company of Alaska, explained that property assessments rose significantly. He said a new contract with the city called for the company re-assess properties to be within 95 percent of the market value.

He explained the methodology this way.

If a property’s assess value is $100,000 and it later sells for $100,000 the sales ratio is then 100 percent. But if the assessed value of a property is $50,000 and it later sells for $100,000, the sales ratio is 50 percent.

TAPS properties are assessed yearly by the state appraiser and value of the property of the oil pipeline and associated facilities has been tied up in litigation for many years.


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