Juneau to lower mill rate

Tax reduction would return $2.3 million to property owners

Posted: Thursday, May 05, 2005

With a budget surplus, the city of Juneau expects to give $2.3 million back to property owners by lowering the tax rate by 0.7 mills.

At its Wednesday meeting, the Assembly Finance Committee decided to lower the mill rate from 12 to 11.30 for fiscal year 2006. The Juneau Assembly needs to approve a rate by June 15. Statements go out July 1.

Property tax is determined by assessment values and the mill rate. A mill is one-tenth of a penny, or $1 of tax for each $1,000 of assessed value. The current 12-mill levy is made up of a 10.80 operational mill levy and a 1.20 mill debt-service levy. The Finance Committee voted to lower the operational levy to 10.10.

A person who owns a $200,000 house would pay $2,400 in property tax with a 12 mill levy, and $2,260 with the proposed 11.30 mill levy.

Because Juneau expects a $6 million surplus from sales and property tax, City Manager Rod Swope recommended that the Assembly lower the mill levy to alleviate taxpayers' burden. Swope said the city is considering further lowering the mill rate next year.

"That will affect how people feel about the 1 percent sales tax," Swope said.

Juneau's 1 percent sales tax is up for renewal in January. The city plans to put it on the October ballot. The 1 percent tax can generate $30 million in five years for the city.

Assembly members said they have received a lot of complaints from residents since the city sent out property assessment notices April 5. Assessed values have increased by an average of 16 percent. City Assessor Jim Canary attributes the growth to record low mortgage interest rates.

Although the city expects the assessed values to continue increasing next year, most Assembly members didn't support a deeper cut.

Assembly member Jeff Bush said a cut more than 0.7 mills might hurt the city's bottom line. The city is considering adopting some tax-reduction proposals, such as raising the minimum exemption amount of business personal property tax.

"I am concerned that we are going to limit our options," Bush said.

Marc Wheeler and Merrill Sanford were the only two Assembly members who voted against lowering the mill rate by 0.7. Wheeler proposed lowering the mill rate by 1 but failed to garner enough support.

"We have a very conservative city finance department," Wheeler said. "I feel comfortable that the (1 mill levy) reduction will be able to meet the future needs."

City Manager Rod Swope said he feels more comfortable with a 0.7-mill reduction than a 1-mill reduction.

"I don't want to cut too close," Swope said. "Things can change radically. This gives us some cushion and comfort."

• I-Chun Che can be reached at ichun.che@juneauempire.com.

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