2019-02-20                     House Journal                      Page 0181
HB 59                                                                                                                         
HOUSE BILL NO. 59 by the House Rules Committee by request of                                                                    
the Governor, entitled:                                                                                                         
                                                                                                                                
     "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."                                                             
                                                                                                                                
was read the first time and referred to the Resources, Community &                                                              
Regional Affairs, and Finance Committees.                                                                                       
                                                                                                                                
The following fiscal note(s) apply:                                                                                             
                                                                                                                                
1. Zero, Dept. of Commerce, Community, & Economic                                                                               
 Development                                                                                                                    
2. Zero, Dept. of Education & Early Development                                                                                 
3. Fiscal, Dept. of Education & Early Development/Fund                                                                          
 Capitalization                                                                                                                 
4. Fiscal, Dept. of Revenue                                                                                                     
                                                                                                                                
The Governor's transmittal letter dated February 12 follows:                                                                    
                                                                                                                                
"Dear Chief Clerk:                                                                                                              
                                                                                                                                
Under the authority of Article III, Section 18, of the Alaska                                                                   
Constitution, I am transmitting a bill relating to repealing the credit for                                                     
municipal payment against the state levy of tax on oil and gas                                                                  
exploration, production, and pipeline transportation property and the                                                           
levy of tax by a municipality on oil and gas exploration, production,                                                           
and pipeline transportation property.                                                                                           
                                                                                                                                
Under current law, the state assesses the value of oil and gas                                                                  
exploration, production, and pipeline transportation property.                                                                  
Municipalities with this property in their jurisdiction can then levy a                                                         
property tax based on the state's assessment. Taxpayers are then                                                                
required to pay a tax to two taxing jurisdictions – the municipality and                                                        
the state. This system is inefficient for both taxpayers and the state.                                                         
Taxpayers are allowed to credit payments made to a municipality                                                                 

2019-02-20                     House Journal                      Page 0182
against the tax due to the state. Due to the credit allowed against the                                                         
state tax levy for municipal tax payments, the state general fund                                                               
receives only a fraction of the revenues generated by this tax. This                                                            
results in lower general fund revenues, from vital properties of                                                                
statewide economic importance, to be appropriated to municipalities                                                             
around the state and support of vital state programs.                                                                           
                                                                                                                                
This bill would repeal the ability of municipalities to levy tax on these                                                       
properties of vital statewide importance. Therefore, the bill would also                                                        
repeal the credit for a payment made to a municipality against the state                                                        
tax. Instead, the state would assess and collect all of the tax on these                                                        
properties. As a result of the exclusion of these properties from a                                                             
municipality's tax base, the required local contribution for public                                                             
school funding would be reduced.                                                                                                
                                                                                                                                
The bill would also implement efficiencies in administration of the                                                             
tax.  Taxpayers would only have one taxing jurisdiction to report to on                                                         
these properties. The bill would streamline the appeals process to be                                                           
consistent with other administrative appeals by eliminating automatic                                                           
trial de novo at the superior court level. Taxpayers could still appeal to                                                      
the specialized State Assessment Review Board for a hearing.                                                                    
                                                                                                                                
I urge your favorable action on this measure.                                                                                   
                                                                                                                                
Sincerely,                                                                                                                      
/s/                                                                                                                             
Michael J. Dunleavy                                                                                                             
Governor"