Local air carriers got a property tax break Monday after company owners said city assessments on aircraft were unfair.
Juneau's Board of Equalization, made up of Juneau Assembly members sitting as a quasi-judicial body, agreed to establish the value of airplanes and helicopters at 85 percent of the value set by city assessors. Wings of Alaska attorney Budd Simpson told the board the city was risking a lawsuit if it taxed aircraft at a higher rate than other business property.
Wings of Alaska, Inian Inc., Ward Air, Era Helicopters, TEMSCO Helicopters and Coastal Helicopters appealed city business property tax assessments on aircraft. Wings President Bob Jacobsen said high property taxes make it harder for carriers to upgrade to quieter aircraft and make safety improvements.
"We don't believe this type of equity is fair," he said. "We're penalized by bringing technology to Juneau."
Jacobsen said Wings of Alaska's property tax assessments were twice last year's value, creating a burden on rural travelers.
Federal law gives aircraft owners property tax leeway because they are an important part of the transportation network, Simpson said. Airplanes and helicopters are valuable and easy to find, which makes assessing them simpler than other property, he said.
"With other pieces of property, there are more of them and individually they aren't worth as much," he said. "It was probably done in good faith as an administrative convenience."
City assessors received specialized training to assess the values of Alaska aircraft this year, according to City Finance Director Craig Duncan. After the training, assessors reduced the value of local aircraft, he said. He said more aircraft were assessed this year and city staff made an effort to place property values at market levels.
"The changes we put into effect this year ... were intended to reach better equability between taxpayers," he said.
Mayor Sally Smith said the Assembly will look into the possibility of a "flat tax" on business personal property and will request additional legal research on the issue. Sitting as the Board of Equalization, members couldn't address questions dealing with code or city ordinances, she said.
Deputy Mayor John MacKinnon said flat tax discussion brings questions about how cement trucks and other business items are valued.
According to the city assessor's office, commercial aircraft in Juneau are valued at approximately $41.8 million. The assessment change approved by the assembly will reduce that value by $6.2 million, City Assessor Tom Pitts said.
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