Property Taxes: Are Anchorage Commercial Properties Paying Their Fair Share?
A couple of weeks ago Mayor Sullivan invited me to his office so that I could conduct an interview for Alaska Health Policy Review about his views on health policy. At the end of that interview, I asked his permission to diverge to a completely different topic — property taxes. He allowed the question…
I want to ask you one question that really comes from a completely different ball park. I want to talk about property taxes. I have only one question on this subject. I noticed in one of your press releases, I think you mentioned that property taxes were going up.
AHPR: I’m the Executive Director for the Alaska Center for Public Policy, so health policy is one thing we do, but we also have an interest in a number of other things, including property taxes. I’ve done, historically, work on that. I don’t have the exact year, but a number of years ago, ISER did a study called “Anchorage Budgets and Property Taxes.” In that study, they determined that, for several decades, the percentage of business contributions to property taxes has been steadily falling, and the percentage of residential contributions has been steadily rising. They actually didn’t say very much more about the causes of that, they just pointed it out. It has the appearance that residents are increasingly, over the decades, paying more and more of businesses’ share of property taxes. I wonder if you could comment on that?
Sullivan: I don’t think that’s a fair characterization that they’re paying businesses’ share. I think what you saw is that Anchorage had pretty good residential growth over the last decade and probably not matched so much by growth in big buildings, if you will. A few new box stores, but for the most part, we had a decade from the mid-nineties through just a year or two ago of just dramatic residential growth. To, where, in fact, we’re pretty much out of land to grow residentially. So, we had quite a boom there. As far as the share, I think one thing that we’re going to be focusing on, if that statement was assumed to be true, that might contribute to it is it’s hard to assess commercial property as accurately as residential property.
Number one, each commercial property is pretty unique. An architect designs a building, and then they want to design another one. And you don’t see cookie-cutter commercial buildings like you do houses, with a very similar style, square footage, that sort of stuff. It’s very easy to assess residential property very near its full value. It’ very difficult to assess commercial property because there’s so few sales, and they’re so uniquely constructed, that it’s traditionally been that commercial property is under assessed in this town. That’s one of the things we’ve been working on, we want to get commercial properties assessed near their full value, just like residential property is. I think that will make up some of that gap. But, again, the other part of it is, you had a decade of amazing residential growth in this town.
There is more descriptive information, but not a lot of actual analysis, in the ISER document Anchorage Budgets and Property Taxes. So, where is the analysis? Are residents paying their fair share of property taxes plus the share of commercial property taxes that businesses have managed to increasingly avoid in recent decades? Is the Mayor cutting municipal services that wouldn’t have to be cut if businesses paid their fair share of property taxes? Maybe, and maybe not. We won’t know until an actual analysis is done, in contrast to the existing plethora of conjecture.