Assembly sets property tax rate at same as last year

As Wrangell’s population continues to age, the total value of senior citizen-owned homes exempt from property taxes continues to grow.

About 27% of Wrangell’s population was 65 years or older last year (551 of 2,039 residents), according to Alaska Department of Labor statistics. That’s up from just under 23% in 2020 (482 of 2,127) and 19% in 2015 when the town’s population was much larger at 2,442.

State law requires municipalities to exempt from property taxes the first $150,000 in assessed value on homes owned by senior citizens and disabled veterans. The law also requires the state to reimburse cities and boroughs for the lost revenue, but the Legislature has not appropriated money for the payments in a quarter-century.

More than $41.3 million in senior-owned residential property is exempt from taxes in Wrangell this year, up almost 3% from last year. If the property were fully taxable, owners would pay an additional $400,000 to the borough.

Total taxable residential property in the borough is valued at $160.3 million this year; the vast majority in single-family homes. Apartments are valued at about $1.9 million, almost $1 million for condos and mobile homes at $2.1 million.

There is $32.4 million in taxable commercial property, $3.86 million in industrial property and $24.2 million worth of undeveloped land.

The borough assembly May 28 adopted the property tax assessment rolls for the fiscal year that starts July 1, and set the tax rate at the same levy as last year — 9.75 mills, or $975 per $100,000 of a property’s assessed value for land and buildings on the road system. The votes were unanimous.

The tax rate for properties off the road system, including Meyers Chuck, was set at 4 mills, the same as past years.

Holding the tax rate steady “was a goal of the assembly,” Borough Manager Mason Villarma reported at the May 28 meeting.

The assembly cut the tax rate by about 25% last year after a comprehensive review of the assessed value of every parcel of land and every building in town boosted valuations by a total of 50%.

This year’s total assessed value of all taxable property in town totals $228 million, up 1.7% from last year.

The tax levy will raise an estimated $2.1 million for the budget year that starts July 1.

In addition to senior-owned homes, more than $110 million in property owned by the federal, state and borough governments, nonprofits, the Wrangell Cooperative Association and SEARHC is exempt from taxes.

Setting the tax rate is the first step in the budget process. The assembly will hold a work session at 5:30 p.m. Wednesday, June 5, at City Hall, to review the proposed spending plan, with a public hearing and final vote at the June 25 meeting.

Wrangell property tax bills will go out by July 1. Taxes are due by Oct. 15.

Wrangell is not alone with an aging population cutting into its property tax revenues, though it leads the state. Nenana, a town of about 360 residents, 55 road miles southwest of Fairbanks, is second to Wrangell in the percentage of property covered by the senior exemption. Petersburg, Haines and Ketchikan also exceed the statewide average.

The unfunded tax exemption will cost cities and boroughs across the state more than $100 million this year.

In Wrangell, 316 senior-owned homes are covered by the tax exemption this year, up from 215 in 2016. State law requires the exemption for people age 65 and older or a surviving widow or widower age 60 and older.

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

Wrangell’s population is older than most communities in Alaska. The town’s average age, as of state estimates for 2023, was 48.4 years old — one of the highest in Alaska. The statewide average was 36.5 years old.