Chilkat Valley News - Serving Haines and Klukwan, Alaska since 1966



At a workshop Tuesday, Haines Borough Assembly members pondered $21 million they need to raise to replace the sewage treatment plant, expand the boat harbor and improve the Lutak Dock.

That hefty cost doesn’t include the price of fixing or replacing the Chilkat Center or public safety building, upgrading the school with essentials like working locker rooms and a roof that doesn’t leak, or building a new swimming pool.

Because of numbers like these, borough staffers deserve credit, not scorn, for pointing out that the senior citizens’ tax exemption will cause a reduction in property tax income as more Baby Boomers (defined as those born 1946-1964) become eligible for the state-mandated exemption.

Discussion of the senior property tax exemption isn’t a conspiracy. It’s math.

The oldest boomers became eligible for the property tax exemption only four years ago – and as boomers are a huge bulge in the general population and most of them haven’t yet reached age 65 – many more residents will move into eligibility in the coming years.

That will be an issue for the Alaska Legislature, which requires the exemption, and for municipalities like the borough, which will lose more and more property tax income paying for it. Because the exemption is a timepiece, created during an era when Alaska had money and its seniors didn’t, it’s not unreasonable for municipalities to ask the legislature to drop the requirement for the exemption. That would allow towns to offer the exemption based on need.

Senior citizens these days aren’t weary sourdoughs squeaking by in drafty cabins. Many are retirees, including former state workers and contractors who did well during the Alaska oil boom years. Many are blessed with generous pensions and benefits and are considerably wealthier than their children.

Besides the senior tax exemption, borough leaders should re-examine other elements of our local tax structure to see if they too are still appropriate. This discussion is long overdue as the make-up of our town has changed since some of our taxes were established.

For example, with fewer numbers of young families here, our schools are shrinking and reducing offerings and our town is losing youthful energy. Rather than seeking elimination of the property tax exemption, we might extend it to the first $100,000 of value on homes of all residents – and make up the difference by increasing the tax rate on the value of property above $200,000. Such a change would tend to help younger, working-class people, allowing them to get a foothold here, potentially creating jobs and launching families. It would also require taxpayers to reconsider the wisdom of the current property tax cap.

Removing or reducing the sales tax on groceries also would tend to help families. It can be strongly argued that taxing food is unethical, as it potentially takes food from the mouths of people who need it.

Where to make up the difference? How about a severance tax on minerals removed from the valley? How about raising from $5,000 the value of project construction materials subject to sales tax per year? How about a separate, local tax on alcohol? About seven Alaskan towns adopted local alcohol taxes in the 1980s until the legislature, under the heel of alcohol interests, passed a law prohibiting towns from setting separate taxes on booze.

How can legislators who insist we must reduce taxes on the oil industry morally defend state laws that prevent us from collecting income from local property or sales of alcohol? Where will the money come from to run our towns?

In Haines, a half percent sales tax we are charged on groceries pays for borough medical services, including the ambulance that picks up the late-night victims of alcohol. In that sense, sales of bread and butter subsidize drinking here.

Here’s a potential alternative: Eliminate the half percent sales tax for medical services and (with help from the legislature) raise the same amount from a local liquor tax. The municipality would save about $250,000 per year. Or it could spend that amount on infrastructure improvements, a real recreation program, or keeping a school going at Mosquito Lake.

There are myriad other options, or combination of options, to consider. Discussing them is important because the costs of maintaining our town are coming due. Until we own up to them, including by deciding our most appropriate tax policy, we’ re likely to agonize over how to pay those bills.

-- Tom Morphet


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