City looks at raising exemption on property tax for businesses

Posted: Friday, April 22, 2005

With a budget surplus, the city is considering a proposal to exempt more businesses from personal property taxes.

Right now, about 1,100 Juneau merchants don't need to pay any business personal property tax because the total value of their tools, computers and furniture is below $2,000.

The tax is separate from what building owners pay on their real estate.

Since 2004, the Juneau Chamber of Commerce has been asking the city to increase the maximum exemption to $100,000.

Merchants with $100,000 in personal property pay $1,200 in business personal property tax. While some city leaders are uneasy with a figure that high, they are considering an increase in the exemption.

"The higher the exemption, the more money the business can utilize," said Chris Wyatt, executive director of the Juneau Chamber of Commerce.

The city expects about a $6 million budget surplus from property and sales taxes.

City Manager Rod Swope said increasing the personal property tax exemption will boost business.

"People haven't been investing in their business," Swope said in an Assembly Finance Committee meeting. "This will encourage business to grow."

The chamber estimates the $100,000 tax exemption would remove 93 percent of Juneau's business taxpayers while still keeping intact 80 percent of the revenues from the existing business personal property tax.

The Assembly will decide the issue before June 15. If approved, the new exemption amount will take effect in January of 2006.

Mayor Bruce Botelho said he would feel more comfortable if the maximum amount is $20,000. "I get worried beyond that," he said.

If the exemption bar were $20,000, the city would exempt 2,241 businesses and lose about $211,000 in revenues.

City finance staff members are cautious about changing the policy.

Assessor Jim Canary said the proposal moves the tax burden from one end to the other end.

"Somebody else has to pick it up," Canary said.

The city would lose about $500,000 in revenues with a $100,000 exemption.

Merchants have differing views about whether the proposal can help them.

James Barrett, who has owned Bergman Hotel for four years, said the money would help his small business and others.

"It is not a substantial tax but it is still significant," said Barrett, who paid about $450 in business personal property tax last year. He would be exempted if the Assembly approves the chamber's proposal.

Chuck Collins, owner of Copy Express, said that although increasing the maximum exemption amount wouldn't affect him much, he believes Juneau's overall economy would benefit from it.

"I am over the threshold," said Collins, who has owned the printing shop for nine years. "But what is good for small business is good for the town. It will free up some time and money to improve our economy."

Daryl Miller, owner of Commercial Signs and Printing, is skeptical about the exemption because the city will have to raise the money some other way, which will probably affect businesses.

"I doubt the city would give us a discount whatsoever," Miller said. "They will take it back somewhere else."

• I-Chun Che can be reached at

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