Budget Problems Resolved: Why Your Property Tax Will Increase

Murkowski was right and that means we are tax free right? Well, sort-of.

As I wrote before Fran probably wouldn’t have put a tax into place just because she was in office, after all it was a fall-back plan, but Alaska can rest assured that times aren’t quite as dire as they were made out to be. I also wrote that every time Frank said “tax” it was preceded by “income”. The last estimates I saw in the newspapers and on the news were expecting the budget surplus to last at least another 2 years beyond the previous estimates used in the gubernatorial debates.

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The budget problem happens every year and I’m surprised at how much people agonize over it. Last year we were short money yet we found a way to make it through to today and this year’s budget isn’t any different.

The budget issue does not affect just the state government; it affects the local municipalities as well. This year the Anchorage Municipality was short 2 million dollars due to the assembly’s rejection of a budget line that wanted Anchorage Water and Waste Water to pay the 2 million dollars to up-keep the fire hydrants (meaning that your water and waste water bill would go up.) Since that single line was rejected the budget was unbalanced by 2 million dollars. Put in perspective, 2 million dollars is not that much money. The solution came from just two funds, the road vehicle maintenance fund and the unemployment and benefits fund. About $800,000 came from the road vehicle maintenance fund because the budget was allocating money to vehicles that are no longer in service. The other 1.2 million dollars came from unemployment and benefits.

So now that the budgets are either balanced or not as bad as we thought they would be we shouldn’t see any tax increases, right? Well not exactly. Speaking mostly for the Anchorage Municipality area we are going to see an increase of about $300 in our property taxes. That adds another $25 to your monthly mortgage if you pay your taxes into an escrow account. Since I purchased my house just over 2 years ago I have seen the last two dollar digits go from 15 to 48 to 67 and now I’ll see those digits tick over to add another 100 because of the increase in taxes and the increase in homeowners’ insurance. That’s another $100 a month in just 2 years and honestly, while I do not like it at all, I am at ease with it.

Property tax is a sticky issue but when you start to compare rates I feel the tax is just. I pay 5 times more property tax than my father does. He lives in Douglas County in Oregon on a 10 acre mini-ranch with a really nice barn and an older house. Move north into Lane County and the taxes are fairly even compared to Anchorage. In Idaho property taxes are about 2/3 of what they are here but Idaho has an income tax and a sales tax.

Even if you don't own the property or house where you live, if the property taxes go up you may be affected by the tax increase. Most landlords will not take a profit hit to pay more taxes.

Here is why I am OK with paying property tax. Although I can barely afford to own a house I do and that means I make a certain income to be able to afford to have a house. Keeping that in mind I should have some excess. I look at property tax as a “luxury” tax. I don’t like the idea of luxury tax either, though, except for when it applies to alcohol and cigarettes. I don’t smoke or drink so taxing those items is a great way for me to get other people to pay the bill.

To get to the point property tax, while it goes up, is not based on your income in-so-much that it raises when you start making more money. Income tax, on the other hand, is a constant leech that grows with your income. If you make more money and only have property taxes you get to pocket all of the money the feds don’t take. On the flip side, if you make less money you still have to pay your property tax. Property tax, then, isn’t incremental and it isn’t really a flat tax either. It is more like a yearly fee that you have to pay to be a part of the group of people that own property and/or houses.

OK so back to the property tax increase. The $300 for the Anchorage area is broken up into two parts, the state and local governments. The state is going to be collecting about $100 while the city of Anchorage is going to be collecting another $200. $200 is an estimate because the Anchorage School Board has not finalized their budget yet and they will affect your property tax.

Like most people, I hate paying tax. On some level, almost every single person resents having to give up so much of their paychecks. I do want to pay taxes though; I really enjoy being able to drive on highways and having public schools. I don’t think society could survive without the men and women that protect and serve the public in the many divisions that are supported by tax dollars.

I hate paying taxes because I don’t think the government spends the money wisely. The only efforts that I seem to be willing to take to improve government spending are to support tax caps and elect politicians that are anti-tax. While I do not see either of these efforts working so well that the problem is eliminated, I at least feel I’m making a difference and for now I’m satisfied with that.

I have been following this story for months now and all along I knew that there wasn't such a large gap in any budget. If you ever balanced your own budget you know that you are always short money no matter how much you seem to make...yet most of the time you pull through. I even listen to that radio talk show channel to get more information about the budgets...that's a big deal because I love my music.