Since Municipal Revenue Sharing Was Eliminated
Local Taxpayers and Communities Have Been Subsidizing State Government Operations through Unfunded Mandates

While the State shared revenue with its municipalities, the cost of State Unfunded Mandates on Local Taxpayers was partially offset. Now that Municipal Revenue Sharing has been eliminated, local property taxpayers absorb the cost of the two largest State Unfunded Mandates on communities:

State Senior Citizen and Disabled Veteran Property Tax Exemption
This exemption was created in 1973 with a statutory promise (see below) to reimburse local taxpayers in the state budget. The State stopped reimbursing local taxpayers completely in 1997. In 2005 this unfunded mandate will cost local taxpayers approximately $40 million.

“AS 29.45.030 (g) The state shall reimburse a borough or city, as appropriate, for the real property tax revenues lost to it by the operation of (e) ($150,000 State Senior Citizen/Disabled Veteran Property Tax Exemption) of this section.”

State Constitutional Exemption from Local Taxes for Local Public Services
Through this mandated state tax exemption, local taxpayers must pay for fire protection, police protection, etc. for State lands and facilities in their community.

The Constitutionally mandated property tax exemption for State property is the largest local property tax exemption. The State, like any business, consumes local public services but exempts itself from local taxes. Local Public Services consumed by the State are now subsidized by additional taxes from all local taxpayers. This exemption roughly costs local taxpayers $66 million per year. (Rough estimate based on $4.4 billion state facilities and lands times an average of 15 mill property tax rate.)

The Federal Government and some states, like Connecticut , have implemented a “Payment-in Lieu of Taxes” or “PILT” program to avoid having local taxpayers subsidize local public services for state or federal facilities. The State of Alaska strongly endorses and supports the PILT program on the Federal level to offset the cost of providing services to federal lands and facilities.

Download AML Unfunded Mandates Charts