Governor pledges to leave petroleum property tax, fisheries tax to local governments

Published: Nov. 21, 2019 at 6:40 PM AKST
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At the Alaska Municipal League annual conference, Gov. Mike Dunleavy appeared by video link, telling members that his administration would not take two major sources of revenue from local governments this year.

The Petroleum Property Tax provides roughly $400 million per year for boroughs that sit along the trans-Alaska Pipeline. The North Slope Borough alone collects $372 million per year from the tax.

In February, the governor proposed Senate Bill 57, legislation that would redirect the revenue from municipalities to state coffers. At the same time, Senate Bill 63 was introduced, a bill that would take nearly $30 million in revenue from fishing communities and again redirect it to the state.

The purpose of redirecting the revenue was to close a roughly $1.6 billion deficit at the state level. The two proposals were rejected by the Alaska Legislature and local leaders from across Alaska.

On Wednesday, the governor told AML members his administration would not be advancing either tax change this year, “Due to your feedback.”

Dunleavy spoke about his administration’s success in reducing the deficit by a third but conceded that “there’s no doubt that many Alaskans disagree with the size and scope of the reductions made. This was made loud and clear.”

He struck a collaborative tone and says that his administration has been meeting with local government leaders to gain their input to help formulate the budget for fiscal year 2021.

According to statute, the governor must publish a budget proposal by Dec. 15.

Nils Andreassen, the executive director of AML, confirmed that that there had been “some really good outreach” with the governor’s office. Despite the collaboration, Andreassen relayed some of the concerns he had heard from mayors across the state.

“Local government leaders are expressing a lot of concern for where we’re at, challenges that they’re able to identify in their communities often connected to state decision making, and really budget cuts and potentially some cost-shifting,” he said.

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