City looks to tighten hardship exemption

Posted: Thursday, November 04, 2010

The Juneau City Assembly and staff are working on tightening up tax code language that gives senior citizens and disabled veterans an extra tax break for hardships under an optional Alaska law.

City finance director Craig Duncan said most cities in Alaska don't offer the optional exemption. The only borough he is aware of that does so aside from the City and Borough of Juneau is Mat-Su, which has even harsher requirements.

The exemption states $150,000 of the assessed value your personal residence can be exempted each year.

Under the formula the state sets out, a person with a home valued at $1.4 million could get a hardship exemption from the city. Duncan presented the Assembly Committee Of the Whole with a list of high dollar homes and incomes that received hardship exemptions in 2010, with all other personal identifiers removed. The average assessed property value for 2010 was $463,000.

Duncan said that potentially, with the current formula someone could make more than $600,000 a year and still be eligible. Duncan said that scenario negates the purpose of the hardship exemption.

"What has happened up to here, anybody could apply," he said. "It didn't matter how much money anybody made. Under the provision put forward, we're putting a limit as to who can qualify for it."

That limit requires a person to have property tax liability in excess of 2 percent of the household's gross income. Only one hardship exemption per household is allowed. Another financial restriction is that the applicant's gross household income from the prior year may not exceed 400 percent of the poverty guidelines for Alaska issued by the U.S. Department of Health and Human Services. Exceptions are when people can document an extenuating circumstance resulting in a one-time expense that results in the gross family income dropping below 400 percent of the poverty guidelines.

Duncan said this could be, for example, a large unexpected medical expense.

The hardship exemption also provides a 100 percent tax exemption for those who show a case of extreme hardship, but must be approved by a two-thirds vote of the governing body.

The hardship exemption is intended to help out seniors and disabled veterans who likely purchased a home that grew in value throughout the years they lived there and now that they're on restricted incomes and can no longer afford to live in their homes. Duncan said valuations continue to increase even when property tax may not.

"The decision was to try to target this to really be a hardship, rather than just an exemption that anybody could apply for," Duncan said.

Assemblyman Bob Doll said the Commission on Aging attempted to meet before the committee meeting Monday, however it lacked a quorum. He said the discussion among the seniors present was that the new language was favorable. Doll said they even felt that the 400 percent was perhaps too high.

"They were surprisingly rigorous in their opinions," Doll said.

This issue also has become more of a concern because of the number of people applying. In 2007 there were 39 applicants. In 2008, there were 51 and this year there were more than 100.

Assemblyman Jonathan Anderson felt there should be more done for others facing financial hardships, not solely seniors and disabled veterans.

"I want all people to stay," he said. "I am uncomfortable with the differential treatment. There are people below poverty level that are under 65. They pay their taxes or they get their house taken. You want people over 65 to stay. I want people in their 30s to stay."

Several assembly members had said they wanted to do what they could to keep seniors in Juneau and in their homes.

Assemblywoman Ruth Danner asked if they could differentiate between seniors and disabled veterans. Legally, they can. She said that disabled veterans have given more than anyone could possibly give back and the city should err on the side of generosity.

Danner had also hinted at Anderson's sentiments by saying that the younger workforce is going to have the burden of supporting Juneau.

"I don't know if we're going to paint ourselves into a box until there's no one here but seniors and there will be no one to pay our taxes," she said.

• Contact reporter Sarah Day at 523-2279 or at

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