The Valdez Star - Serving Prince William Sound and Copper River Basin

Press release 

Resolution opposes Gov. Dunleavy oil property tax bills

City of Valdez opposes repeal of legislation allowing oil property taxes


February 27, 2019

Valdez City Council passed a resolution Tuesday opposing proposed state legislation which would prevent Alaskan municipalities from continuing to levy and collect property tax on oil and gas properties within their boundaries.

During a special meeting February 26, council unanimously passed Resolution No. 19-09, opposing Senate Bill No. 57 and House Bill No. 59, “An Act repealing the credit for municipal payments against the state levy of tax on oil and gas exploration, production and pipeline transportation property; repealing the levy of tax by a municipality on oil and gas exploration, production and pipeline transportation property; and providing for an effective date” (“SB 57” & “HB 59”).

The proposed legislation, introduced by Governor Dunleavy on February 13th in the Senate and February 20th in the House, would allow an historic overreach by the state of Alaska by seizing municipal property taxes from oil and gas property within the Fairbanks North Star Borough, Matanuska-Susitna Borough, Municipality of Anchorage, Kenai Peninsula Borough, City of Cordova, and City of Valdez.

Alaskan municipalities rely on property taxes to fund essential municipal services, including emergency response, police and fire protection, public works, water and sanitation, roads, harbors and public education. The right of municipalities to collect taxes on property within their boundaries has been an essential part of government structure in Alaska since at least 1912.

Upon adoption of Alaska’s oil and gas laws, the value of oil and gas properties became centrally assessed by the state with legal protections built in to ensure assessments were done properly and uniformly across jurisdictions. While the state of Alaska determines the value of these types of properties, municipalities maintain the right to collect property taxes based upon that valuation to fund municipal services and to address the substantial risks and costs associated with transportation of crude oil within municipal boundaries.

“Seizing municipal taxes from oil and gas property within Valdez city limits essentially eliminates 90 percent of our annual operating budget, prevents us from meeting existing contractual and debt obligations, and devastates our ability to provide municipal services and emergency response for our rural community”, said Jeremy O’Neil, mayor of Valdez. “SB 57 and HB 59 would also set dangerous precedent where the state might then begin to seize municipal property taxes from other types of property to fund state deficits. The City of Valdez is committed to working alongside our colleagues from municipalities around the state to oppose SB 57 and HB 59 and evaluate all available means of challenging the legislation.”

Upon passage of Resolution No. 19-09, the Valdez City Council petitioned the Alaska Senate and Alaska House of Representatives to reject Senate Bill No. 57, House Bill No. 59 and any legislation limiting the right of Alaskan municipalities to continue to levy property tax on oil and gas property.


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