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North Slope mayor looks for allies in oil industry on bond bill Senate bill would cap borough’s ability to issue bonds, gradually reduce mill rate on oil and gas property by The Associated Press
North Slope Borough Mayor George Ahmaogak is looking for allies in the oil industry to help derail a legislative proposal that would limit his borough’s taxing powers.
Ahmaogak was blunt when he complained about some urban legislators in an Anchorage speech several weeks ago.
“When you have asked us to put a Native face on the effort to open ANWR or build a gas line down the highway, we’ve always been there,” Ahmaogak told members of the Alaska Support Industry Alliance, an organization of oil field contractors. “I’d hate to have you learn the hard way that we’ve got some cards, too.”
The mayor is trying to halt a move to limit his borough’s ability to tax the North Slope oil fields to build schools, power plants and sanitation systems.
Ahmaogak compared the state’s 1973 property tax law to a “treaty” allowing North Slope Inupiat to benefit from the huge pool of oil in their region.
“If your legislators want to back out after all these years, then all bets are off,” Ahmaogak said.
Measure has passed Senate The measure, Senate Bill 186, which would limit the borough’s ability to sell new bonds for construction, passed the state Senate 11-9 in the closing hours of last year’s session. It awaits action by the House in January. North Slope officials say the tax change is another attack on rural Alaska by urban legislators. Sen. Donny Olson, D-Nome, who represents the region in Juneau, called the measure “paint ball legislation.”
Ahmaogak linked the bill to an earlier measure that cut state funding for schools in his borough.
“My thought is it’s racial. They wouldn’t pick on the North Slope Borough if it wasn’t Native,” he said in an interview with the Anchorage Daily News.
Republican leaders of the Senate Finance Committee, who drew up the bill, say the borough is siphoning off money that should go to all Alaskans.
“Every time something doesn’t go right for someone in rural Alaska, they say you’re furthering the urban-rural divide,” said committee co-chairman Pete Kelly of Fairbanks.
The borough has abused the intent of the 1973 tax law, said a statement from the other co-chairman, Sen. Dave Donley, R-Anchorage. He maintains the Senate wants to close a loophole.
Bill would limit per capita debt Donley’s bill would limit a municipality’s per capita debt, effectively shutting down the borough’s future bond sales. The rate at which municipalities could tax oil industry property would also be cut gradually over the next 10 years — from 20 mills to 10 mills — and more money would go to the state, since oil companies deduct municipal taxes from their state tax bill.
Borough officials say the 1973 law was intended to give North Slope villages a brief historical window in which to build the kind of public facilities already available elsewhere.
The state budget has been funded for years by taxes and royalties on oil production. The property tax raises “piddling amounts” compared to those revenues, said borough finance director John Ames.
The borough has raised billions of dollars for construction projects by selling bonds to be paid off with future property tax revenues. The borough has built underground utility corridors, health-care facilities and schools in an expensive Arctic environment. Water and sewer were provided without federal and state aid, borough officials say.
The North Slope has about 7,500 year-round residents spread among eight villages. Today, the borough has a debt of $1.1 billion, or about $132,000 for each of the 7,500 borough residents.
Anchorage had a debt of $2,734 per resident in 1999, Donley said. His bill would bar municipalities from bonding more than $15,000 per resident. The North Slope Borough is the only municipality over that limit.
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