Americans for Tax Reform has come out strongly against Senate Bill 77, a “blight tax bill” sponsored by Sen. Forrest Dunbar of Anchorage.
The legislation would allow local government jurisdictions to levy a “blight” tax on property deemed by local authorities to suffer from “blight,” and the tax could be as high as 50% of the property’s current tax.
This could be seen as a taking by the government of property, when there is no definition given by the legislation as to what constitutes “blight.”
“ATR opposes this new tax and its dangerous corresponding expansion of local regulatory authority,” the organization wrote on April 5.
“Seemingly intended to reduce the prevalence of unattractive buildings or those in disrepair, SB 77 implements a framework permitting municipalities to define blighted property and penalize them with a special tax. As written, however, this framework would prove to be one of the broadest local blight-tax authorizations in the nation. Municipalities could adopt virtually any definition of blight, while simultaneously slapping on a heavy new tax burden of up to 50% of existing property taxes,” ATR pointed out.
“For a resident of Anchorage paying the median property tax, a 50% blight-tax hike translates to an additional $1,782 in annual property taxes,” the organization wrote.
The opportunity for abuse are significant. Blight-tax legislation in other states overwhelmingly include specific definitions of what may constitute blighted property, or at the very least offer parameters that a municipality must adhere to when creating and enforcing the tax, ATR noted. “Narrow definitions are critical to preventing overzealous city councils from arbitrarily broadening the blight- tax base in search of more revenue.”
SB 77, with cosponsor Sen. Matt Claman, has been fast-tracked through the Senate and may be heard in the House Community and Regional Affairs Committee as early as this week.
“Unfortunately, SB 77 fails to provide even one such limitation on what might constitute a blighted property. The framework before you is ripe for abuse by city officials and county governments, leaving low-income Alaskans to suffer any number of consequences, including foreclosure on their homes,” ATR said.
It’s not hypothetical. As an example, ATR pointed to how last year in Springfield, Ill., a resident was charged $63,000 in repair costs to his home. Unable to pay the bill, his home was placed in receivership and ultimately foreclosed.