Senior tax exemption covers 25% of Wrangell's residential property

As Wrangell’s population continues to age, an increasing number of homes in town qualify for the state-mandated exemption from property taxes.

About 25% of the assessed value of residential property in Wrangell is senior-owned and exempt from taxes, according to borough data.

The tax-exempt status will cost the borough $427,000 in lost revenue this year. The borough expects to collect almost $1.8 million in property taxes this year on taxable residential and commercial property.

The total assessed value of all privately owned residential property in the community this year is just over $127 million, with $33.6 million exempt from taxes because it is owned by senior citizens, defined in state law as age 65 and older or a surviving widow or widower age 60 and older.

State law since 1972 requires municipalities to exempt from property taxes the first $150,000 in assessed value on a senior-owned home, though some municipalities have gone beyond the minimum exemption.

Seniors in Wrangell pay the full tax rate on any value in excess of $150,000.

The Legislature stopped reimbursing cities and boroughs for the mandatory tax exemption almost 25 years ago, even though the statute says the state shall cover the cost. The Legislature and governors started phasing out the reimbursement during budget deficits 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 $100 million this year.

Wrangell property taxes are due this fall. Assessments are based on property values as of Jan. 1 each year.

Wrangell had a higher percentage of residential property owned by seniors or disabled veterans exempt from taxes than any other municipality in the state, according to the Department of Commerce 2021 Alaska Taxable report, issued in January. Nenana, Petersburg and Haines were next on the list.

The number of senior-owned homes on Wrangell’s tax-exempt list is 295 this year, up from 280 last year, 259 in 2020 and 215 homes in 2016 as Wrangell’s population ages. The community has just over 1,000 households, according to census data.

The state Department of Labor Research and Analysis Division estimates the median age of residents in Wrangell at 47.1 years old in July 2021, based on 2020 census data, an increase from 46.4 years old after the 2010 census. Almost one-quarter of the population is over age 65, according to the Census Bureau.

The statewide median age as of July 2021 was 36 years old, according to the Labor Department numbers.

Wrangell is not alone in its aging population and shrinking tax roll. The median age in Haines was 47.4 years old last year, according to the state, up from 46.9 years old in 2010. More than $38 million in residential property in Haines owned by seniors and disabled veterans was exempt from property taxes in 2021, according to the Alaska Taxable Report.