By JON FAULKNER
In 2023, Haines residents uncovered actions they perceived as unjust methods for assessing private property. As these actions came to light at a local level, a more widespread problem emerged within Alaska’s municipal taxation statutes that are supposed to protect individuals’ rights and the public interest from bad actors.
Subsequently, Alaskans become alarmed. Sen. Jesse Kiehl recently announced that he will be introducing a bill to improve Alaska’s property tax assessment procedure. Kiehl stated that “when the government takes money, it needs transparent, fair processes to do it … Many Alaska municipalities already follow all the best practices I’m drafting into a bill. For them nothing will change. But for others, a few additional guardrails are in order.”
The Real Deal with Kiehl, February 3, 2024
The senator’s announcement comes after months of public outcry, a citizen’s petition that resulted in the cancellation of the Haines assessor’s contract, the resignation of the state assessor, and the publication of a white paper on Restoring Public Trust in Alaska’s property tax assessment process.
Excessive property assessments in Alaska have become a source of bipartisan concern. Assessing property at its full and true market value is required by AS 29.45.110. However, Alaska statutes permit broad interpretations and subjectivity that invite unjust outcomes and undermine the guarantee of a fair, just, and equitable tax structure. This means some properties are assessed excessively, causing a detrimental effect on community investment by making homes and commercial property more unaffordable for both owners and tenants.
One outcome appears to be a loss of public trust in Alaska’s property tax assessment process. The Haines assembly voted unanimously to cancel an agreement for services with the community’s property tax assessor, Michael Dahle. Following months of public outcry and a citizens’ petition requesting the contract cancellation, the action quickly gained bipartisan support and signatures from borough residents.
Haines Borough Mayor Tom Morphet issued a formal apology to the public on the topic during last year’s Nov. 14 assembly meeting, noting the protracted time it took government to fully appreciate the problem and reassuring residents that “we are working as fast as we can to fix the property tax assessment system and make it right for both the Haines Borough and property tax payers.”
Charged with implementing the first phase of a new mass appraisal methodology for the borough’s 2023 property tax assessments, Dahle attempted to implement a new “replacement cost” hybrid methodology, which resulted in assessments in excess of full and true market value for some parcels.
According to former Assembly Member Brenda Josephson, when property owners appealed the excessive values, they received threats of increasing assessments if appeals were filed with the Board of Adjustment (BOA).
Dahle gained attention for his aggressive tactics, which included an assessment increase on appeal from $864,400 to $1.1 million on a modest property in the Haines Mosquito Lake area that was originally appraised at $620,000.
Citizen petitions to Alaska’s State Assessor’s Office resulted in a BOE retraining that occurred on September 21, 2023. During the retraining, State Assessor Joseph Caissie encouraged the BOE to support the municipality’s methodology. Caissie argued that “uniformity” is what matters, even if the model the assessor uses consistently results in assessments at 150% or even up to 200% of the full and true market. In Caissie’s words, the job of the assembly is not to reduce assessments to market value, but instead “the job of the assembly (is) to set the mill rate lower.”
Haines BOE State Assessor Retraining, September 21, 2023
According to Josephson, Dahle lacked credentials, as he did not have either an assessor’s certification with the Alaska Association of Assessing Officers or possess a license in Alaska as an appraiser. The lack of professional credentials was the basis of the petition to not renew Michael Dahle’s contract.
One resident, Dr. Mark Smith, expressed the need to codify safeguards against unjust actions, stating, “We’re pleased with the outcome, but the culture of inept government that allowed this to occur in the first place still exists. It’s like a tumor has been removed, but it will return unless we get the ‘whole body’ well holistically.”
Juneau appears to have suffered a similar experience under Dahle when he served in CBJ’s Assessor’s Office. Juneau commercial properties in 2021 received assessment increases of 50% across the board, regardless of the area they were in or how COVID-19 shutdowns affected their industry.
How to Make Juneau Less Affordable
There, as in Haines, the problem property owners faced was a mass appraisal methodology with a creative hybrid cost-based approach with some market data that ignored actual market sales conditions. The result is inflated assessment values in excess of their full and true value. Juneau appellants also cited the aggressive tactics of the assessor’s office.
Josephson believes that inherent flaws in Alaska’s property tax assessment process led directly to these problems. Her experience is that the process fails to protect individual rights through a board of equalization process that fails to provide for fair hearings, licensing and/or certification of assessors, and the upholding of assessments in excess of their full and true market value.
Haines, there ought to be a law
In December, Caissie announced his resignation as Alaska’s State Assessor, less than three months after he came under criticism for the training advice provided to the Haines BOE members.
Caisse stated in a farewell letter that he would be leaving in January for a full-time job managing a 501(c)(4) that advances Georgism. Georgism is a controversial policy that bases the land’s value on what the government thinks it should be used for rather than its existing one. Caissie stated that, in his new role with the NGO, he would be “pushing for more jurisdictions to adopt this policy.”
In a white paper titled Restoring Public Trust, Josephson and coauthor Greg Adler call attention to problems with Alaska’s assessment process and highlight instances of the negative effects of the existing approach. Arguing that every resident ultimately pays property tax either directly to the government or through rent and lease payments, Josephson asserts that this is a statewide issue.
She said, “The assessment process should never invite this level of confrontation; instead, statewide policies and statutes must be written to protect citizens from unintended consequences and bad actors.”
Jon Faulkner is president of Alaska Gold Communications Inc., which publishes Must Read Alaska.
