House Finance strips North Slope Borough tax autonomy in gas line bill

The Alaska House Finance Committee voted 7-4 Wednesday to remove municipalities' ability to negotiate separate tax structures for the proposed Alaska LNG gas pipeline, a change that drew opposition from Co-Chair Neal Foster and Representative Andy Josephson. The broader legislation replaces the project's existing property-tax structure with a throughput-based volumetric tax.

Negotiating Power Removed

Under Amendment 5 as amended, the North Slope Borough would receive 93 percent of gas treatment plant taxes but loses negotiating autonomy. Ken Alper, staff to Representative Andy Josephson, said the borough preferred more money and autonomy.

Foster said he was persuaded by the borough's argument.

I am persuaded by their argument that, you know, the resource comes from the region and they'd like to have more say over what they do within their region.

Alper said the Senate Resources Committee's version gave the North Slope Borough a larger portion of a 10-cent alternative volumetric tax on the gas treatment plant. The House Finance version would be equivalent to a 2- or 3-cent tax on the plant after weighted averages, he said.

From talking to him, and now I have secondhand knowledge, I don't think they're particularly thrilled, to be completely honest. They really wanted the autonomy to be able to negotiate their own way.

Competing Priorities

Representative Calvin Schrage, who supported the amendment, said he was trying to enable the project while protecting the state's interest.

I'm doing what I can to try and enable this project and give it a fighting chance while still protecting the state's interest. I think this amendment moves a significant way in that direction.

Josephson said he opposed the amendment because he did not know whether the foregone revenue was necessary to make the project economical and because he believed municipalities needed more support.

I view my role as in the law they talk about municipalities as being creatures of the state. We create them, but we have to nurture them.