The Anchorage Assembly on May 20 discussed Assembly Ordinance (AO) 2025-56, which would raise the business personal property tax exemption currently set at $20,000 to a higher threshold intended to ease costs for small businesses.

Member Volley, the ordinance sponsor, opened the work session with a presentation titled “Cutting Our Small Businesses a Break,” saying the proposal “increases the exemption for business personal property taxes” and that the draft ordinance would move the exemption from $20,000 to $250,000. Volley said the proposal is intended to help small, inventory-heavy retailers and manufacturers that are disadvantaged relative to service businesses.

The ordinance would exempt from taxation equipment, furnishings, vehicles and inventory that businesses use to operate. Volley said a higher exemption would reduce the number of taxable business filings — easing the assessor’s office workload and enabling targeted enforcement and outreach to larger businesses.

Municipal administration representative Mr. Fossey said the current $20,000 exemption was set in 2005 and noted general agreement with the goals of fairness and efficiency. “If you just unthinkingly said, let’s adjust that for inflation, that would be 33 or $35,000 now,” Mr. Fossey said. He and Assembly members discussed that a $250,000 exemption would likely reduce annual collections by about $5,300,000 based on 2024 values and Tax District 3 projections and that a $100,000 exemption may be a more moderate alternative.

Assembly members raised three main issues: the scale of the revenue effect, where the revenue would be recovered if the exemption were increased, and administration capacity to implement filing changes. Assembly member Jared Kerker urged exploring municipal cost reductions before shifting tax burden to homeowners: “Rather than shift the cost, I’d like to see us have a conversation about cutting our cost instead.”

Presenters and staff provided illustrative figures: Anchorage’s assessed personal-property value was presented at roughly $3.3 billion, with approximately $54 million annually collected from business personal property under the current regime. Staff projected that moving to a $250,000 exemption would reduce collections by about $5.3 million; a $100,000 exemption would produce a smaller reduction and would exempt a larger share of currently taxable small businesses (staff estimated roughly 2,800 taxable businesses under the current $20,000 threshold, about 1,700 taxed at a $100,000 threshold, and roughly 1,000 taxed at $250,000, all numbers described by staff as approximate).

Staff also estimated homeowner impacts for the alternatives: a $100,000 exemption would add roughly $6 per $100,000 of assessed residential value (about $30 annually on a $500,000 home), while the $250,000 draft would increase the per-$100,000 rate by about $16, producing roughly $70–$80 additional on an average homeowner’s bill, according to presentation slides and the administration’s calculations.

Assembly members and staff discussed implementation details if the exemption were raised, including removing the filing requirement for small, fully exempt businesses or creating a short-form declaration so exempt businesses would not complete the full long form each year. The assessor’s office said earlier filing and process changes would require coordination but that an effective date of Jan. 1, 2026, would give the office time to prepare if the Assembly acts promptly.

Several members asked for further analysis to identify a “sweet spot” — an exemption level that balances administrative efficiency, fairness and limited revenue displacement — and for detailed revenue estimates at intermediate levels ($100,000, $150,000, $200,000). The administration said it is willing to work with sponsoring members on an S-version of the ordinance (a substitute) and on operational changes to filing requirements.

No formal vote or ordinance adoption occurred at the work session; members indicated the item would return for committee and Assembly consideration with additional analysis and potential amendments.

The Assembly’s discussion also noted differences in other Alaska jurisdictions: staff cited that the Matanuska-Susitna Borough exempts personal property and inventory under $1,000,000 in some fashion, Kenai exempts $100,000 and inventory held for resale, and Juneau exempts business personal property, illustrating how Anchorage’s exemption compares regionally.

The matter remains under active consideration; sponsoring members said they expect to draft an S-version that would likely contemplate a more modest exemption (staff and members repeatedly referenced $100,000 as a likely compromise) and implement a streamlined filing path for fully exempt businesses.