SSSB 179: "An Act relating to the taxation of minerals and mining property; relating to contracts approved by municipalities for payments in lieu of taxes; and providing for an effective date."
00 SPONSOR SUBSTITUTE FOR SENATE BILL NO. 179 01 "An Act relating to the taxation of minerals and mining property; relating to contracts 02 approved by municipalities for payments in lieu of taxes; and providing for an effective 03 date." 04 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF ALASKA: 05 * Section 1. AS 29.10.200 is amended by adding a new paragraph to read: 06 (64) AS 29.45.820 (severance taxes on minerals). 07 * Sec. 2. AS 29.45 is amended by adding a new section to read: 08 Sec. 29.45.085. Tax on mining property. (a) Real and tangible personal 09 property used or committed by contract or other agreement for use within the state 10 primarily in the production or transportation of minerals, or in the operation or 11 maintenance of facilities used in the production or transportation of minerals, and 12 located in a municipality incorporated on or after January 1, 2005, or located within an 13 area annexed by a municipality on or after January 1, 2005, may be taxed only in 14 accordance with AS 43.67.
01 (b) The following are exempt from taxation by municipalities incorporated on 02 or after January 1, 2005, or extended by annexation on or after January 1, 2005, if the 03 property is located within the newly annexed area: 04 (1) mineral leases, whether producing or not; 05 (2) minerals in place; 06 (3) minerals produced or extracted in the state; 07 (4) the value of intangible exploration expenses; 08 (5) roads, storage facilities, terminals, docks and other port facilities, 09 and airstrips, publicly owned or privately owned and open to public use. 10 (c) A municipality may negotiate a contract for payments in lieu of taxes with 11 an owner of real or tangible personal property used or committed by contract or other 12 agreement for use within the state primarily in the production or transportation of 13 minerals, or in the operation or maintenance of facilities used in the production or 14 transportation of minerals, unless the property is subject to a state contract for 15 payments in lieu of taxes under AS 43.67.010. If the owner makes the payments 16 required under the contract, the property described in this section of an owner who is a 17 party to a contract for payments in lieu of taxes with a municipality is exempt, as 18 specified in the contract, from assessment of the property identified in the contract and 19 all taxes identified in the contract that would be levied and collected by the 20 municipality on the property. 21 * Sec. 3. AS 29.45 is amended by adding a new section to read: 22 Sec. 29.45.820. Taxes on minerals. A municipality may not impose a 23 severance tax on minerals produced or extracted in the municipality other than a tax 24 imposed before January 1, 2005. If a severance tax on minerals produced or extracted 25 in a municipality was imposed before January 1, 2005, the municipality or its 26 successor may continue to levy the tax, regardless of any subsequent annexation, 27 merger, consolidation, unification, or reclassification of the municipality that imposed 28 the tax before July 1, 2005. This section applies to home rule and general law 29 municipalities. For purposes of this section, "mineral" means ore and mineral 30 products other than sand, gravel, and coal. 31 * Sec. 4. AS 43 is amended by adding a new chapter to read:
01 Chapter 67. Mining Property Tax. 02 Sec. 43.67.010. Levy of tax; payments in lieu of tax. (a) An annual tax is 03 levied each tax year beginning January 1, 2006, on the full and true value of real and 04 tangible personal property used or committed by contract or other agreement for use 05 within this state primarily in the production or transportation of minerals, or in the 06 operation or maintenance of facilities used in the production or transportation of 07 minerals, located on land in the unorganized borough as of January 1, 2005. 08 (b) The tax rate in the unorganized borough is the mill rate specified in 09 AS 14.17.410(b)(2). 10 (c) The tax rate in a municipality incorporated on or after January 1, 2005, and 11 the tax rate within an area annexed by a municipality on or after January 1, 2005, is 12 (1) the tax rate the municipality applies to other real and tangible 13 property on an areawide basis; or 14 (2) if the borough does not impose an areawide property tax, the mill 15 rate required to meet the local contribution required of that municipality under 16 AS 14.17.410(b)(2) plus two mills. 17 (d) The department may negotiate a contract for payments in lieu of the tax 18 levied under this section. The department shall follow the procedures specified in 19 AS 43.82.400(a) and (b), 43.82.410 - 43.82.430, except that the department need not 20 consult with a municipal advisory group or provide copies of a proposed contract to 21 the chairs of the special committees on oil and gas, and AS 43.82.435. If the 22 legislature passes a bill that becomes law authorizing the contract, the parties may 23 execute the contract. Nothing in this subsection or the sections cited shall be 24 construed to preclude the legislature from changing the terms of the contract for 25 payments in lieu of taxes. 26 Sec. 43.67.020. Terms of contracts for payments in lieu of taxes relating to 27 hiring of Alaska residents and contracting with Alaska businesses. (a) The 28 commissioner shall include in a contract under AS 43.67.010(d) a term requiring the 29 property owner to comply with all valid federal, state, and municipal laws relating to 30 hiring Alaska residents and contracting with Alaska businesses to work in the state on 31 the approved qualified project and not to discriminate against Alaska residents or
01 Alaska businesses. Within the constraints of law, the commissioner shall also include 02 in a contract under AS 43.67.010(d) a term that requires the property owner to employ 03 Alaska residents and to contract with Alaska businesses to work in the state on the 04 approved qualified project to the extent the residents and businesses are available, 05 competitively priced, and qualified. 06 (b) The commissioner shall include in a contract under AS 43.67.010(d) a 07 term requiring the qualified sponsor or qualified sponsor group and contractors of the 08 qualified sponsor or qualified sponsor group to 09 (1) advertise for available positions in newspapers in the location 10 where the work is to be performed and in other publications distributed throughout the 11 state, including in rural areas; and 12 (2) use Alaska job service organizations located throughout the state 13 and not just in the location where the work is to be performed in order to notify 14 Alaskans of work opportunities on the approved qualified project. 15 (c) Subject to the voluntary agreement of the qualified sponsor, the 16 commissioner may include a term in the contract providing for incentives to encourage 17 training and hiring of Alaska residents. 18 (d) This section does not create or abridge individual rights and does not 19 create a private right of action for any person. 20 (e) For purposes of this section, 21 (1) "Alaska business" means a firm or contractor that 22 (A) has held an Alaska business license for the preceding 12 23 months; 24 (B) maintains, and has maintained for the preceding 12 months, 25 a place of business in the state that competently and professionally deals in 26 supplies, services, or construction of the nature required for the approved 27 qualified project; and 28 (C) is 29 (i) a sole proprietorship and the proprietor is an Alaska 30 resident; 31 (ii) a partnership and more than 50 percent of the
01 partnership interest is held by Alaska residents; 02 (iii) a limited liability company and more than 50 03 percent of the membership interest is held by Alaska residents; 04 (iv) a corporation that has been incorporated in the state 05 or is authorized to do business in the state; or 06 (v) a joint venture and a majority of the venturers 07 qualify as Alaska businesses under this paragraph; 08 (2) "Alaska job service organizations" means those offices maintained 09 by the state and recommended by the Department of Labor and Workforce 10 Development whose functions are to aid the unemployed or underemployed in finding 11 employment; 12 (3) "Alaska resident" means a natural person who 13 (A) receives a permanent fund dividend under AS 43.23; or 14 (B) is registered to vote under AS 15 and qualifies for a 15 resident fishing, hunting, or trapping license under AS 16; 16 (4) "available," as applied to an Alaska resident or Alaska business, 17 means that the resident or business is available for employment at the time required 18 and is located anywhere in the state, not just in the area of the state where the work is 19 to be performed; 20 (5) "qualified," as applied to an Alaska resident or Alaska business, 21 means that the resident or business possesses the requisite education, training, skills, 22 certification, or experience to perform the work necessary for a particular position or 23 to perform a particular service. 24 Sec. 43.67.030. In place of municipal taxes. For a period of 15 years after 25 the production commencement date, the taxes levied or authorized under 26 AS 43.67.010 are in place of the following taxes that might otherwise be imposed by a 27 municipality incorporated on or after January 1, 2005, on the property, or imposed by 28 a municipality incorporated before January 1, 2005, on property located within an area 29 annexed by the municipality on or after January 1, 2005: 30 (1) taxes on the sale or use of minerals; 31 (2) taxes on or measured by gross or net income from the taxable
01 property, including income from the exploration for, production of, or transportation 02 of minerals or taxable property; and 03 (3) any license, excise, fee, charge, severance, throughput, or other tax 04 on or pertaining to the taxable property or services used in or associated with the 05 taxable property or in its maintenance or operation unless the tax is also levied on 06 property or services not subject to tax under AS 43.67.010(a). 07 Sec. 43.67.040. Assessment. (a) The state assessor shall assess property for 08 the tax levied under AS 43.67.010 at its full and true value as of January 1 of the 09 assessment year except that the first assessment date shall be the production 10 commencement date. If the production commencement date is used as the assessment 11 date, the tax payable shall be prorated on the basis of the assessment year remaining. 12 (b) The full and true value of taxable property is 13 (1) on the production commencement date, the actual capital cost 14 incurred or accrued with respect to the property as of the date of assessment; 15 (2) determined on each January 1 after the commencement date on the 16 basis of replacement cost less depreciation. 17 (c) For purposes of this section, "actual capital cost" and "replacement cost" 18 do not include interest capitalized before or during the period of construction or the 19 value of intangible expenses. 20 Sec. 43.67.050. Returns. (a) The state assessor by notice may require every 21 person having ownership or control of an interest in taxable property to submit a 22 return within 30 days after the production commencement date and by January 31 of 23 each year following the production commencement date in the form prescribed by the 24 state assessor, based on property values existing on January 1 of each year, except as 25 otherwise provided in this chapter. 26 (b) The state assessor by written notice may require a person to provide 27 additional information within 30 days after the notice. 28 Sec. 43.67.060. Investigation. (a) The state assessor may investigate 29 property that is taxable under this chapter. The assessor may make a valuation of the 30 taxable property, which is prima facie evidence of full and true value. 31 (b) The state assessor may enter premises necessary for the investigation
01 during reasonable hours and may, subject to reasonable safety regulations generally 02 imposed, examine property and appropriate records. The owner of the taxable 03 property upon request shall furnish to the state assessor reasonable assistance required 04 for the investigation. If refused entry, the state assessor may seek a court order to 05 compel entry. 06 (c) For the purpose of the investigation the owner of the taxable property or a 07 representative of the owner may be required to appear for examination under oath by 08 the department. 09 Sec. 43.67.070. Assessment roll. The state assessor shall prepare annually the 10 assessment roll for taxation under this chapter. The roll must contain 11 (1) a description of all taxable property; 12 (2) the assessed value of all taxable property; 13 (3) the names and addresses of persons owning property subject to 14 assessment and taxation. 15 Sec. 43.67.080. Assessment notice. (a) On or before March 1 of each year, 16 the state assessor shall send to every owner of taxable property named in the 17 assessment roll a notice of assessment, showing the assessed value of the property. 18 Notice of assessment is effective on the date of mailing. 19 (b) The state assessor shall send to a municipality a copy of the notice of 20 assessment on taxable property that is assessed under the provisions of this chapter 21 and that is located in the municipality. 22 Sec. 43.67.090. Objection. (a) An owner of taxable property or a 23 municipality receiving an assessment notice may object to the assessment by advising 24 the state assessor in writing of the objection to the assessment within 20 days after the 25 effective date of the notice. 26 (b) The state assessor shall provide by regulation for notices of objections to 27 the owners of taxable property and municipalities. 28 (c) Following an objection, the state assessor may adjust the assessment and 29 the assessment roll. An adjustment based on an objection from an owner of taxable 30 property or a municipality shall be made within 30 days after the effective date of the 31 notice of assessment.
01 Sec. 43.67.100. Appeal to the State Assessment Review Board. The owner 02 of taxable property or a municipality may appeal an assessment to the State 03 Assessment Review Board established under AS 43.56.040. The appeal must be filed 04 in writing within 30 days after an assessment or the adjustment, if any, made under 05 AS 43.67.090. 06 Sec. 43.67.110. Certification. Not later than June 1 of each year, the 07 department shall certify the final assessment roll and mail to the owner of the taxable 08 property or an authorized agent a statement of the amount of tax due. 09 Sec. 43.67.120. Supplementary assessment rolls. The state assessor shall 10 include taxable property omitted from the assessment roll on a supplementary roll 11 using the procedures set out in this chapter for the original roll. 12 Sec. 43.67.130. Collection and deposit. (a) The tax levied by AS 43.67.010 13 is payable to the department on or before June 30 of the taxable year. 14 (b) The department shall provide for voluntary prepayment and for payment 15 by installments. 16 (c) The tax levied under AS 43.67.010 and interest and penalties collected 17 with respect to this levy shall be deposited in a special mining tax property tax account 18 in the general fund. The legislature may appropriate the balance of the account into 19 the public education fund (AS 14.17.300). 20 (d) If jurisdiction over the taxable property is obtained by a municipality, the 21 tax is payable to the municipality. 22 Sec. 43.67.140. Penalty for delinquent taxes. When the tax levied by 23 AS 43.67.010 becomes delinquent, a penalty of 10 percent shall be added. 24 Sec. 43.67.150. Remedy. The remedy of distraint of property set out in 25 AS 43.20.270 applies to the tax levied by AS 43.67.010. However, only property 26 subject to the tax may be distrained. 27 Sec. 43.67.160. Regulations. The board, the state assessor, the Department of 28 Commerce, Community, and Economic Development, and the Department of Revenue 29 may adopt regulations under AS 44.62 (Administrative Procedure Act) as appropriate 30 to carry out their respective duties under this chapter. 31 Sec. 43.67.170. Exemptions from mining property tax. (a) The tax levied
01 under AS 43.67.010 does not apply to roads, storage facilities, terminals, docks and 02 other port facilities, and air strips, publicly owned or privately owned and open to 03 public use. 04 (b) Property used in the production or transportation of minerals where the 05 actual capital cost incurred or accrued with respect to the mine and related facilities is 06 less than $10,000,000 is exempt from taxation under AS 43.67.010. 07 Sec. 43.67.180. Definitions. In this chapter, 08 (1) "board" means the State Assessment Review Board under 09 AS 43.56.040; 10 (2) "minerals" means valuable metals, ores, and coal; 11 (3) "production commencement date" means the date on which the 12 initial shipment of products from mining operations is made; 13 (4) "real and tangible personal property" and "property" include 14 (A) buildings, machinery, appliances, supplies, equipment, 15 transmission lines, power plants, and pipelines; and 16 (B) roads, storage facilities, terminals, docks and other port 17 facilities, and air strips; 18 (5) "taxable property" means property taxable under AS 43.67.010. 19 * Sec. 5. The uncodified law of the State of Alaska is amended by adding a new section to 20 read: 21 TRANSITION: REGULATIONS. The Department of Revenue may proceed to adopt 22 regulations to implement this Act. The regulations take effect under AS 44.62 23 (Administrative Procedure Act), but not before the effective date of sec. 4 of this Act. 24 * Sec. 6. Section 5 of this Act takes effect immediately under AS 01.10.070(c). 25 * Sec. 7. Except as provided in sec. 6 of this Act, this Act takes effect January 1, 2006.