PUBLISHED: 11:35 AM on Wednesday, March 22, 2006
Money matters
Task force filters public's suggestions on senior sales tax exemption plan
A Juneau task force plans to release recommendations in late April about possible ways to implement a repeal of the senior sales tax exemption.

But no matter what the recommendations, local senior citizens say the repeal would be a hardship to those on a fixed income.

"It's really a bad thing they're doing here. I'm sure there are some abuses in the system, but most seniors are honest people and just can't afford it," said Gary Miller, Juneau resident and chair of the southeast chapter of Retired Public Employees of Alaska. "If you're going to tax the seniors, it doesn't matter what options there are. I don't really see a lot of options. If you take money away from seniors, you're hurting them."

Miller said senior citizens are losing income, giving examples such as lower Permanent Fund dividend checks and the loss of a $250 monthly longevity bonus that had been paid to retired state employees.

"We're studying various methods on if this has to be done, what is the best method of getting rid of the sales tax exemption for seniors," said Juneau Assembly member Randy Wanamaker, who chairs the task force formed to study the impact of the sales tax on city coffers. "The Assembly looks ahead of what the needs of the community are and how to meet those needs."

Wanamaker said he and four other Juneau citizens began working in January. The task force is currently studying suggestions and comments from the public about a list of 15 possible revenue replacements for the current senior sales tax exemption.

According to U.S. Census Bureau's 2000 figures, 1,868 of Juneau's 30,711 citizens are 65 or older and eligible for the senior sales tax exemption.

The city loses about $1.3 million in revenue annually because of the senior sales tax exemption, said city finance director Craig Duncan. The number includes all senior exemptions, not just Juneau residents.

Duncan said the city has cut programs due to a drop in state general funds.

He said the city now pays for programs the state once paid for, which increases the tax burden to citizens.

"In the mid 80s the city received about $10 million in support from the state, but now the city receives no general support," Duncan said. "It's resulted in a cost of services to shift, and it's all shifted to local taxpayers."

Wanamaker said many city programs benefit seniors, such as $700,000 a year spent annually on a caravan service.

"Juneau is a very generous town, but we have to look to see if we can still afford this," Wanamaker said. "The city has a responsibility to look at things to see if services are done in a fair and equitable way."

Wanamaker said many people agree with allowing current recipients to maintain their exemption, but to repeal the exemption for anyone else.

"We've received a number of thoughtful comments. I've heard the least objections to grandfathering in current recipients and eliminating the exemption for people who do not live in Juneau," Wanamaker said. "A number of seniors suggest we look at city services and programs that cost too much."

Juneau resident William Hosey said he is opposed to the dissolution of the senior exemption.

"The bottom line of it is most of these seniors have lived here 40 years, built this town. They should cut us some slack," Hosey said. "It's a pretty emotional thing for seniors."

Hosey said that younger generations can afford to pay sales tax, while many senior citizens cannot.

"I've got three kids in this town and they're all working. They can afford to pay sales tax more than I can," Hosey said. "There are a lot of people who have enough to get along - but barely. There are a lot of seniors in town who are wealthy, but there are people who need (the sales tax exemption) too."

Wanamaker said there are fewer people to carry the tax burden for community programs.

"The burden is going to become greater to younger people in our community and across the nation," Wanamaker said. "We understand that this won't be popular and some people are very dependent on (the tax exemption), but we have to look at the overall community. The number of seniors in Juneau will double in 12 years, but the base of young families continues to shrink."

Duncan said that estimate is based on applications for sales tax exemptions and census information.

Juneau citizen Marie Darlin said dissolving the senior sales tax exemption would hurt seniors who put money into the economy.

"I feel that it's just one thing we'd be taking from seniors. I think it comes back to feeling that seniors do contribute a lot to this community, and not all seniors are rich as people imply," Darlin said. "There's plenty of money that comes into the economy."

Wanamaker said seniors can report city taxes on their federal income taxes.

"If you don't pay local taxes, it goes to the federal government. That's a point most people have not realized," Wanamaker said.

Wanamaker said the senior tax exemption would affect him in the near future, and he understands concerns from the community.

"I married later in life and have young children. The affect of this will be very real on me," Wanamaker said. "The mood I get is that a number of citizens understand we need to look at this as long as we are very careful. Many younger families are struggling financially and don't get a break on taxes and that has to be considered."

Duncan said that the task force is not looking at the current status of the sales tax exemption, but at future implications.

"What seems to be missed is there is no free lunch, and if seniors aren't contributing to taxes others are paying for it or programs are going to get cut," Duncan said.