HB 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."
00 HOUSE BILL NO. 59 01 "An Act repealing the credit for municipal payments against the state levy of tax on oil 02 and gas exploration, production, and pipeline transportation property; repealing the 03 levy of tax by a municipality on oil and gas exploration, production, and pipeline 04 transportation property; and providing for an effective date." 05 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF ALASKA: 06 * Section 1. AS 14.17.510(a) is amended to read: 07 (a) To determine the amount of required local contribution under 08 AS 14.17.410(b)(2) and to aid the department and the legislature in planning, the 09 Department of Commerce, Community, and Economic Development, in consultation 10 with the assessor for each district in a city or borough, shall determine the full and true 11 value of the taxable real and personal property in each district in a city or borough. If 12 there is no local assessor or current local assessment for a city or borough school 13 district, then the Department of Commerce, Community, and Economic Development 14 shall make the determination of full and true value guided by AS 29.45.110 and based
01 on a determination of full and true value made by the state assessor at least every two 02 years using the best information available, including on-site inspections made by the 03 state assessor in each of those districts at least once every four years. For purposes of 04 this subsection, the full and true value of taxable real and personal property in any area 05 detached shall be excluded from the determination of the full and true value of the 06 municipality from which the property was detached for the two years immediately 07 preceding the effective date of the detachment. Also, in making the determination for a 08 municipality that is a school district, or for a city that is within a borough school 09 district, the assessed value of property taxable under AS 43.56 shall be excluded [IF A 10 TAX IS NOT LEVIED UNDER AS 29.45.080 BY THE MUNICIPALITY THAT IS 11 THE SCHOOL DISTRICT]. The determination of full and true value shall be made by 12 October 1 and sent by certified mail, return receipt requested, on or before that date to 13 the president of the school board in each city or borough school district. Duplicate 14 copies shall be sent to the commissioner. The governing body of a city or borough that 15 is a school district may obtain judicial review of the determination. The superior court 16 may modify the determination of the Department of Commerce, Community, and 17 Economic Development only upon a finding of abuse of discretion or upon a finding 18 that there is no substantial evidence to support the determination. 19 * Sec. 2. AS 29.45.030(a) is amended to read: 20 (a) The following property is exempt from general taxation by a 21 municipality: 22 (1) municipal property, including property held by a public corporation 23 of a municipality, state property, property of the University of Alaska, or land that is 24 in the trust established by the Alaska Mental Health Enabling Act of 1956, P.L. 84- 25 830, 70 Stat. 709, except that 26 (A) a private leasehold, contract, or other interest in the 27 property is taxable to the extent of the interest; however, an interest created by 28 an operating agreement or nonexclusive use agreement between the Alaska 29 Industrial Development and Export Authority and a user of a shipyard or an 30 integrated transportation and port facility, if the shipyard or integrated 31 transportation and port facility is owned by the authority and initially placed in
01 service before January 1, 1999, is taxable only to the extent of, and for the 02 value associated with, those specific improvements used for lodging purposes; 03 (B) notwithstanding any other provision of law, property 04 acquired by an agency, corporation, or other entity of the state through 05 foreclosure or deed in lieu of foreclosure and retained as an investment of a 06 state entity is taxable; this subparagraph does not apply to federal land granted 07 to the University of Alaska under AS 14.40.380 or 14.40.390, or to other land 08 granted to the university by the state to replace land that had been granted 09 under AS 14.40.380 or 14.40.390, or to land conveyed by the state to the 10 university under AS 14.40.365; 11 (C) an ownership interest of a municipality in real property 12 located outside the municipality acquired after December 31, 1990, is taxable 13 by another municipality; however, a borough may not tax an interest in real 14 property located in the borough and owned by a city in that borough; 15 (2) household furniture and personal effects of members of a 16 household; 17 (3) property used exclusively for nonprofit religious, charitable, 18 cemetery, hospital, or educational purposes; 19 (4) property of a nonbusiness organization composed entirely of 20 persons with 90 days or more of active service in the armed forces of the United States 21 whose conditions of service and separation were other than dishonorable, or the 22 property of an auxiliary of that organization; 23 (5) money on deposit; 24 (6) the real property of certain residents of the state to the extent and 25 subject to the conditions provided in (e) of this section; 26 (7) real property or an interest in real property that is 27 (A) exempt from taxation under 43 U.S.C. 1620(d), as 28 amended or under 43 U.S.C. 1636(d), as amended; or 29 (B) acquired from a municipality in exchange for land that is 30 exempt from taxation under (A) of this paragraph, and is not developed or 31 made subject to a lease;
01 (8) property of a political subdivision, agency, corporation, or other 02 entity of the United States to the extent required by federal law; except that a private 03 leasehold, contract, or other interest in the property is taxable to the extent of that 04 interest unless the property is located on a military base or installation and the 05 property interest is created under 10 U.S.C. 2871 - 2885 (Military Housing 06 Privatization Initiative), if the leaseholder enters into an agreement to make a payment 07 in lieu of taxes to the political subdivision that has taxing authority; 08 (9) natural resources in place including coal, ore bodies, mineral 09 deposits, and other proven and unproven deposits of valuable materials laid down by 10 natural processes, unharvested aquatic plants and animals, and timber; 11 (10) property not exempt under (3) of this subsection that 12 (A) is owned by a private, nonprofit college or university that is 13 accredited by a regional or national accrediting agency recognized by the 14 Council for Higher Education Accreditation or the United States Department 15 of Education, or both; and 16 (B) was subject to a private leasehold, contract, or other private 17 interest on January 1, 2010, except that a holder of a private leasehold, 18 contract, or other interest in the property shall be taxed to the extent of that 19 interest; 20 (11) taxable property taxable under AS 43.56 and property exempt 21 from taxation under AS 43.56.020. 22 * Sec. 3. AS 29.45.030(a), as amended by sec. 3, ch. 10, SLA 2010, is amended to read: 23 (a) The following property is exempt from general taxation by a 24 municipality: 25 (1) municipal property, including property held by a public corporation 26 of a municipality, state property, property of the University of Alaska, or land that is 27 in the trust established by the Alaska Mental Health Enabling Act of 1956, P.L. 84- 28 830, 70 Stat. 709, except that 29 (A) a private leasehold, contract, or other interest in the 30 property is taxable to the extent of the interest; 31 (B) notwithstanding any other provision of law, property
01 acquired by an agency, corporation, or other entity of the state through 02 foreclosure or deed in lieu of foreclosure and retained as an investment of a 03 state entity is taxable; this subparagraph does not apply to federal land granted 04 to the University of Alaska under AS 14.40.380 or 14.40.390, or to other land 05 granted to the university by the state to replace land that had been granted 06 under AS 14.40.380 or 14.40.390, or to land conveyed by the state to the 07 university under AS 14.40.365; 08 (C) an ownership interest of a municipality in real property 09 located outside the municipality acquired after December 31, 1990, is taxable 10 by another municipality; however, a borough may not tax an interest in real 11 property located in the borough and owned by a city in that borough; 12 (2) household furniture and personal effects of members of a 13 household; 14 (3) property used exclusively for nonprofit religious, charitable, 15 cemetery, hospital, or educational purposes; 16 (4) property of a nonbusiness organization composed entirely of 17 persons with 90 days or more of active service in the armed forces of the United States 18 whose conditions of service and separation were other than dishonorable, or the 19 property of an auxiliary of that organization; 20 (5) money on deposit; 21 (6) the real property of certain residents of the state to the extent and 22 subject to the conditions provided in (e) of this section; 23 (7) real property or an interest in real property that is 24 (A) exempt from taxation under 43 U.S.C. 1620(d), as 25 amended or under 43 U.S.C. 1636(d), as amended; or 26 (B) acquired from a municipality in exchange for land that 27 is exempt from taxation under (A) of this paragraph, and is not developed 28 or made subject to a lease; 29 (8) property of a political subdivision, agency, corporation, or other 30 entity of the United States to the extent required by federal law; except that a private 31 leasehold, contract, or other interest in the property is taxable to the extent of that
01 interest unless the property is located on a military base or installation and the 02 property interest is created under 10 U.S.C. 2871 - 2885 (Military Housing 03 Privatization Initiative), if [PROVIDED THAT] the leaseholder enters into an 04 agreement to make a payment in lieu of taxes to the political subdivision that has 05 taxing authority; 06 (9) natural resources in place including coal, ore bodies, mineral 07 deposits, and other proven and unproven deposits of valuable materials laid down by 08 natural processes, unharvested aquatic plants and animals, and timber; 09 (10) property not exempt under (3) of this subsection that is owned by 10 a private, nonprofit college or university that is accredited by a regional or national 11 accrediting agency recognized by the Council for Higher Education Accreditation or 12 the United States Department of Education, or both, except that a private leasehold, 13 contract, or other interest in the property is taxable to the extent of the private interest; 14 and 15 (11) taxable property taxable under AS 43.56 and property exempt 16 from taxation under AS 43.56.020. 17 * Sec. 4. AS 29.45.030(a), as amended by sec. 2, ch. 64, SLA 2018, is amended to read: 18 (a) The following property is exempt from general taxation by a 19 municipality: 20 (1) municipal property, including property held by a public corporation 21 of a municipality, state property, property of the University of Alaska, or land that is 22 in the trust established by the Alaska Mental Health Enabling Act of 1956, P.L. 84- 23 830, 70 Stat. 709, except that 24 (A) a private leasehold, contract, or other interest in the 25 property is taxable to the extent of the interest; 26 (B) notwithstanding any other provision of law, property 27 acquired by an agency, corporation, or other entity of the state through 28 foreclosure or deed in lieu of foreclosure and retained as an investment of a 29 state entity is taxable; this subparagraph does not apply to federal land granted 30 to the University of Alaska under AS 14.40.380 or 14.40.390, or to other land 31 granted to the university by the state to replace land that had been granted
01 under AS 14.40.380 or 14.40.390, or to land conveyed by the state to the 02 university under AS 14.40.365; 03 (C) an ownership interest of a municipality in real property 04 located outside the municipality acquired after December 31, 1990, is taxable 05 by another municipality; however, a borough may not tax an interest in real 06 property located in the borough and owned by a city in that borough; 07 (2) household furniture and personal effects of members of a 08 household; 09 (3) property used exclusively for nonprofit religious, charitable, 10 cemetery, hospital, or educational purposes; 11 (4) property of a nonbusiness organization composed entirely of 12 persons with 90 days or more of active service in the armed forces of the United States 13 whose conditions of service and separation were other than dishonorable, or the 14 property of an auxiliary of that organization; 15 (5) money on deposit; 16 (6) the real property of certain residents of the state to the extent and 17 subject to the conditions provided in (e) of this section; 18 (7) real property or an interest in real property that is 19 (A) exempt from taxation under 43 U.S.C. 1620(d), as 20 amended or under 43 U.S.C. 1636(d), as amended; or 21 (B) acquired from a municipality in exchange for land that is 22 exempt from taxation under (A) of this paragraph, and is not developed or 23 made subject to a lease; 24 (8) property of a political subdivision, agency, corporation, or other 25 entity of the United States to the extent required by federal law; except that a private 26 leasehold, contract, or other interest in the property is taxable to the extent of that 27 interest unless the property is located on a military base or installation and the 28 property interest is created under 10 U.S.C. 2871 - 2885 (Military Housing 29 Privatization Initiative), if the leaseholder enters into an agreement to make a payment 30 in lieu of taxes to the political subdivision that has taxing authority; 31 (9) natural resources in place including coal, ore bodies, mineral
01 deposits, and other proven and unproven deposits of valuable materials laid down by 02 natural processes, unharvested aquatic plants and animals, and timber; 03 (10) property not exempt under (3) of this subsection that 04 (A) is owned by a private, nonprofit college or university that is 05 accredited by a regional or national accrediting agency recognized by the 06 Council for Higher Education Accreditation or the United States Department 07 of Education, or both; and 08 (B) was subject to a private leasehold, contract, or other private 09 interest on January 1, 2010, except that a holder of a private leasehold, 10 contract, or other interest in the property shall be taxed to the extent of that 11 interest; 12 (11) taxable property taxable under AS 43.56 and property exempt 13 from taxation under AS 43.56.020. 14 * Sec. 5. AS 29.45.560 is amended to read: 15 Sec. 29.45.560. Cities inside boroughs. Home rule and first class cities inside 16 boroughs may levy a property tax. A property tax, if levied, is subject to AS 29.45.010 17 - 29.45.050, [29.45.090 - 29.45.100,] 29.45.250, 29.45.400 - 29.45.440 and 29.45.460 18 - 29.45.500. The council shall by June 15 of each year present to the assembly a 19 statement of the city's rate of levy unless a different date is agreed upon by the 20 borough and city. 21 * Sec. 6. AS 31.25.260(a) is amended to read: 22 (a) The exercise of the powers granted by this chapter is, in all respects, for 23 the benefit of the people of the state, for their well-being and prosperity, and for the 24 improvement of their social and economic conditions, and the corporation is not 25 required to pay a tax or assessment on any property owned by the corporation under 26 the provisions of this chapter or on the income from it, including state taxes levied or 27 authorized under AS 43.56.010(a) [AND MUNICIPAL TAXES UNDER 28 AS 43.56.010(b)] as provided in AS 43.56.020. 29 * Sec. 7. AS 43.56.020(a) is amended to read: 30 (a) The following are exempt from local taxes levied or authorized under 31 AS 29.45 [AS 43.56.010(b)]:
01 (1) property rights attached to or inherent in the right to explore for or 02 produce oil or gas; 03 (2) oil or gas leases or properties, whether producing or not; 04 (3) oil or gas in place; 05 (4) oil or gas produced or extracted in the state; 06 (5) the value of intangible drilling expenses and exploration expenses; 07 (6) an interest in property described in AS 43.55.017(a). 08 * Sec. 8. AS 43.56.020(d) is amended to read: 09 (d) Taxable property of a natural gas pipeline project owned or financed by 10 the Alaska Gasline Development Corporation or a joint venture, partnership, or other 11 entity that includes the Alaska Gasline Development Corporation is exempt from state 12 taxes levied or authorized under AS 43.56.010(a) [AND MUNICIPAL TAXES 13 LEVIED OR AUTHORIZED UNDER AS 43.56.010(b)] before the commencement 14 of commercial operations of that natural gas pipeline project. In this subsection, 15 “commencement of commercial operations” means the first flow of natural gas in the 16 project that generates revenue to the owners of the natural gas pipeline project. 17 * Sec. 9. AS 43.56.030 is amended to read: 18 Sec. 43.56.030. In place of other taxes. Except for those taxes imposed under 19 AS 43.55, the taxes levied or authorized under AS 43.56.010(a) [AS 43.56.010(b)] are 20 in place of 21 (1) all [OTHER] ad valorem taxes or other taxes imposed by a 22 municipality on property subject to tax under this chapter or exempted from taxation 23 by AS 43.56.020; and 24 (2) all [OTHER] taxes imposed by a municipality on or with respect to 25 the property subject to tax under this chapter or exempted from taxation by 26 AS 43.56.020, including, but not limited to, 27 (A) taxes on the retail sale or use of the property except for the 28 retail sales tax on the first $1,000 of each sale; 29 (B) taxes on the sale or use of gas or unrefined oil; 30 (C) taxes on the sale or use of services used in or associated 31 with the property or in its maintenance or operation except for the sales tax on
01 the first $1,000 of each sale; 02 (D) taxes on or measured by gross or net income from the 03 property, including income from the exploration for, production of, or pipeline 04 transportation of gas or unrefined oil or property; and 05 (E) any license, excise, fee, charge or other tax on or pertaining 06 to the property or services. 07 * Sec. 10. AS 43.56.110 is amended to read: 08 Sec. 43.56.110. Appeal to the department. (a) An owner of taxable property 09 [OR A MUNICIPALITY] receiving an assessment notice may object to the 10 assessment by advising the department in writing of the objections to the assessment 11 within 20 days of the effective date of the notice. 12 (b) The department shall provide by regulation for notices of appeals to 13 interested persons [AND MUNICIPALITIES]. 14 (c) Following an objection the department may adjust the assessment and the 15 assessment roll. An adjustment based on an objection from an owner of taxable 16 property [OR A MUNICIPALITY] shall be made within 30 days of the effective date 17 of the notice of assessment. 18 * Sec. 11. AS 43.56.120 is amended to read: 19 Sec. 43.56.120. Appeal to the board. (a) After a ruling by the department on 20 an appeal made under AS 43.56.110, the owner [OR A MUNICIPALITY] may further 21 appeal to the board. The appeal must be filed in writing within 50 days of the effective 22 date of the notice of assessment. 23 (b) The board shall provide by regulation for notices of appeals to interested 24 persons [AND MUNICIPALITIES]. 25 * Sec. 12. AS 43.56.130(c) is amended to read: 26 (c) The board shall provide by regulation for notices of hearings to interested 27 persons [AND MUNICIPALITIES]. 28 * Sec. 13. AS 43.56.130(i) is amended to read: 29 (i) An owner [OR MUNICIPALITY] may appeal the board's action to the 30 superior court as provided by the rules of court applicable to appeals from final 31 decisions of administrative agencies [FOR, AND IS ENTITLED TO, TRIAL DE
01 NOVO OF THE BOARD'S ACTION]. 02 * Sec. 14. AS 29.45.080, 29.45.090, 29.45.100; AS 43.56.010(b), 43.56.010(c), 03 43.56.010(d), 43.56.060(a), 43.56.060(g), and 43.56.100(b) are repealed. 04 * Sec. 15. The uncodified law of the State of Alaska is amended by adding a new section to 05 read: 06 TRANSITION: LOCAL CONTRIBUTION FOR PUBLIC SCHOOL FUNDING 07 FOR FISCAL YEARS 2020 AND 2021. The assessed value of property taxable under 08 AS 43.56 shall be removed from the full and true value of taxable real and personal property 09 in a district as of January 1 of the second preceding fiscal year for the required local 10 contribution and additional local contribution described in AS 14.17.410(b)(2) and (c)(1) for 11 the purposes of public school funding under AS 14.17.410 for fiscal years 2020 and 2021. 12 * Sec. 16. The uncodified law of the State of Alaska is amended by adding a new section to 13 read: 14 TRANSITION: LEVY, REFUND, LIMITATIONS, AND APPEALS FOR ANNUAL 15 TAX FOR 2019. (a) Notwithstanding the amendment to AS 29.45.030(a) by sec. 2 of this 16 Act, the amendment to AS 31.25.260(a) by sec. 6 of this Act, the amendment to 17 AS 43.56.020(a) by sec. 7 of this Act, the amendment to AS 43.56.020(d) by sec. 8 of this 18 Act, the amendment to AS 43.56.030 by sec. 9 of this Act, and the repeals of AS 29.45.080, 19 AS 43.56.010(b), 43.56.060(a), 43.56.060(g), and 43.56.100(b) by sec. 14 of this Act, 20 effective July 1, 2019, by sec. 22 of this Act, a municipality may levy, collect, and enforce a 21 tax under AS 29.45.080 and AS 43.56.010(b) for the annual tax in 2019 as those statutes and 22 other applicable statutes amended or repealed by this Act read the day before the effective 23 date of secs. 2, 6, 7 - 9, and 14 of this Act. 24 (b) Notwithstanding the repeal of AS 43.56.010(d) by sec. 14 of this Act, effective 25 July 1, 2019, by sec. 22 of this Act, for the annual tax in 2019, a taxpayer may apply to the 26 Department of Revenue for a refund under AS 43.56.010(d) as that statute read the day before 27 the repeal of AS 43.56.010(d) by sec. 14 of this Act for a tax not paid to a municipality until 28 after June 30, 2019. 29 (c) Notwithstanding the amendment to AS 29.45.560 by sec. 5 of this Act and the 30 repeals of AS 29.45.080, 29.45.090, 29.45.100, and AS 43.56.010(c) by sec. 14 of this Act, 31 effective July 1, 2019, by sec. 22 of this Act, for the annual tax in 2019, the limitations in
01 AS 43.56.010(c) and AS 29.45.080 continue to apply as those statutes and other applicable 02 statutes amended or repealed by this Act read the day before the effective date of secs. 5 and 03 14 of this Act. 04 (d) Notwithstanding the amendment to AS 43.56.110 by sec. 10 of this Act, the 05 amendment to AS 43.56.120 by sec. 11 of this Act, the amendment to AS 43.56.130(c) by sec. 06 12 of this Act, and the amendment to AS 43.56.130(i) by sec. 13 of this Act, effective July 1, 07 2019, by sec. 22 of this Act, for the annual tax in 2019, a municipality may appeal an 08 assessment for 2019 as provided under AS 43.56.110, 43.56.120, 43.56.130(c), and 09 43.56.130(i) as those statutes read the day before the effective date of secs. 10 - 13 of this Act. 10 (e) This Act applies to oil and gas exploration, production, and pipeline transportation 11 property assessed after December 31, 2019. 12 * Sec. 17. The uncodified law of the State of Alaska is amended by adding a new section to 13 read: 14 TRANSITION: REGULATIONS. The Department of Revenue may adopt regulations 15 necessary to implement the changes made by this Act. The regulations take effect under 16 AS 44.62 (Administrative Procedure Act), but not before the effective date of the law 17 implemented by the regulation. 18 * Sec. 18. The uncodified law of the State of Alaska is amended by adding a new section to 19 read: 20 TRANSITION: RETROACTIVITY OF REGULATIONS. Notwithstanding any 21 contrary provision of AS 44.62.240, if the Department of Revenue expressly designates in a 22 regulation that the regulation applies retroactively, a regulation adopted by the Department of 23 Revenue to implement, interpret, make specific, or otherwise carry out this Act may apply 24 retroactively to the effective date of the law implemented by the regulation. 25 * Sec. 19. Section 17 of this Act takes effect immediately under AS 01.10.070(c). 26 * Sec. 20. Section 4 of this Act takes effect on the effective date of sec. 2, ch. 64, SLA 27 2018. 28 * Sec. 21. Section 3 of this Act takes effect on the effective date of sec. 3, ch. 10, SLA 29 2010. 30 * Sec. 22. Except as provided in secs. 19 - 21 of this Act, this Act takes effect July 1, 2019.