Alaska editorial: Let's think through the benefits of tax breaks

Posted: Wednesday, May 16, 2007

This editorial appeared in the Anchorage Daily News:

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There's nothing sweeter to an elected official than lowering property taxes. So it's no surprise that the House voted 33-4 earlier this month to exempt private colleges and universities from municipal property taxes. The bill also allows municipalities to exempt property owned by nonprofit fraternal, charitable, educational and religious orders.

And one more exemption: House Bill 67 would allow municipalities to exempt from property taxes the first $150,000 in value of homes owned and occupied by police or state troopers - as long as the home is within a high-crime area.

The police and trooper tax break would require a vote of the city or borough assembly; the fraternal organization break would require voter approval.

Nothing against the Elks, the Moose or Shriners, police or troopers, or Alaska Pacific University in Anchorage. But every time the state expands the list of tax-exempt property, or allows cities to expand the list, it means everyone else has to pay a little bit more to cover the lost revenues.

This is an important policy call, one that the Senate should seriously consider and one that the public should fully realize before accepting the tax breaks as a painless way to say thank you to deserving people and institutions.

If, after really thinking through the benefits and its effect on city finances and other taxpayers, legislators and the public accept the deal, then go ahead and get the bill signed into law. Just don't come back later and complain about lost property tax revenues and a hole in the budget.

Co-sponsors Reps. Max Gruenberg, D-Anchorage, and Mike Chenault, R-Nikiski, say it is good legislation. Giving police a tax savings - worth about $2,000 a year in Anchorage, if the Assembly were to adopt the optional tax break - might encourage more police to live in high-crime areas. That could be a deterrent to crime. But maybe police, knowing the area, would rather pay full price and live in a safer neighborhood.

The argument in favor of a tax break for private universities is that the state university already gets one - so fair is fair, give it to everyone.

And because fraternal organizations do good deeds for the community, especially in smaller communities, the co-sponsors say, cities and boroughs should have the option of asking voter approval to grant the nonprofits a tax break.

No argument with any of that logic. Just remember that as the list of tax-exempt properties grows - lawmakers last year added church-owned housing used by religious school teachers - it transfers the load to others. It's not a huge transfer, but in times of tight budgets and rising property tax bills, every tax break means that others pay.

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