The Alaska Senate advanced legislation Monday that would require municipalities to provide property tax deferrals to eligible agricultural operations, with an exemption carved out for Anchorage.

Senate Bill 200 moved to third reading after senators adopted a Senate Resources Committee substitute that excludes municipalities with populations over 200,000 people from the requirement. That effectively exempts Anchorage, the state's only city that size.

The bill fixes property tax problems for farm operations after 2024 statute changes accidentally barred S corporation farms from farm-use property tax assessments. Those changes, widely regarded as an unintended error, required IRS Schedule F for farm income verification, a form S corporations cannot file. The bill would restore eligibility for S-corp farms and expand coverage to non-food agriculture operations like hay or peony farms.

Senator Cathy Giessel explained the substitute version on the floor. "The committee substitute for Senate Bill 200 made the following changes. Number 1, excludes municipalities with population over 200,000 people, which is effectively Anchorage, from having to provide the municipal property tax deferral to eligible agricultural operations. And second, has a February 1st, 2027 effective date at the request of the Department of Commerce, Community and Economic Development. There was no change in the fiscal note," Giessel said.

The Senate Resources Committee substitute was adopted without objection and the bill will advance to third reading on the next legislative calendar.

The bill drew mixed committee recommendations during its path through the Senate. The Community and Regional Affairs Committee issued no recommendation from most members, with one member signing do pass. The Senate Resources Committee split similarly, with the chair and one member signing do pass, four members signing no recommendation, and one member signing amend.

Senator Jesse Bjorkman sponsored the bill. Two senators asked to be added as co-sponsors during Monday's floor session.

The bill will face a final Senate vote on the next legislative calendar. If it passes, it would take effect February 1, 2027, giving municipalities time to adjust their property tax assessment procedures for the 2027 tax year.