Growing number of seniors receive property tax break

The number of senior citizens receiving a state-mandated property tax break on their homes continues to climb in Wrangell, totaling 280 homes this year and costing the borough $400,000 in lost tax revenues.

Wrangell is not alone in the rising number, as several Alaska communities are seeing consistent growth in their senior citizen population. More than one in five Wrangell residents is age 65 or older, according to state statistics.

About 15% of the assessed property value in Wrangell is exempt from borough taxes under the state-required partial exemption for homes owned by seniors and disabled veterans.

Nenana, about 55 highway miles south of Fairbanks, leads the state at 16.5%, according to the 2020 Alaska Taxable report issued by the state Department of Commerce, Community and Economic Development. Petersburg was third at 11%.

Though state law requires municipalities to exempt from property taxes the first $150,000 in assessed value on a senior-owned home, the Legislature stopped reimbursing cities and boroughs for the cost almost 25 years ago, even though the statute says the state shall cover the cost.

The law has been on the books since 1972, and the Legislature and governors started phasing out the reimbursement in 1986 before completely stopping the payments to cities and boroughs in 1997.

The unfunded tax exemption will cost cities and boroughs across the state about $94 million this year, according to the Alaska Municipal League.

“We bring it up every year,” Wrangell Mayor Steve Prysunka said, adding that the lack of state reimbursement is always on the community’s legislative priority list.

“I want the state to either do away with it or pay us back,” he said. “It would make a huge difference for our budget.”

The tax break represents almost 10% of Wrangell’s total revenues from all taxes, state and federal payments.

Though the revenue hit to the borough is substantial, the mayor added, “There’s not a senior in town who would say they could afford it” if the state removed the mandatory tax exemption.

In Wrangell, this year’s total of 280 homes with the tax break is an increase of 21 homes over last year, when the tax loss was about $369,000. The average tax savings for a senior-owned home in Wrangell was $1,414 in 2019, according to the Alaska Taxable report.

In 2016, 215 senior citizen homeowners qualified for the exemption, at a cost to the borough of $310,000.

Wrangell’s over-65 population has grown from 374 in 2010 to 528 in 2019, according to state statistics. The tax exemption is limited to one senior per household.

Statewide, 12% of the population in 2019 was 65 and older, up from 3% in 1980 and 8% in 2010, according to the Alaska Department of Labor’s latest population report.

Alaska “is following the nationwide aging trend,” the report said.

“Some parts of Alaska had higher concentrations of older Alaskans than others,” the report added. “Southeast was highest. Hoonah-Angoon Census Area led the state with 23%, followed by Haines Borough and City and Borough of Wrangell at 22%.”