Valdez tanker tax ruled unlawful

The Associated Press

The city of Valdez must repay millions of dollars it collected through a property tax on oil tankers, after a judge ruled the levy unconstitutional. But officials said it’s difficult to say who will get what following the decision by Superior Court Judge Peter Michalski in late July.

Two of the five companies that filed the original lawsuit dropped out of the litigation. Two others struck agreements with Valdez that require no payback, said city manager Dave Dengel. And the city plans to appeal, he said.

The one shipper that appears most affected by the ruling, Polar Tankers, a subsidiary of ConocoPhillips Alaska. Valdez owes Polar about $3.5 million, plus interest of about $500,000, Dengel said.

Valdez raises millions of dollars a year through its 20-mill property tax, but most of its revenues come from the oil industry. Within the city limits are the terminus of the trans-Alaska oil pipeline and the marine terminal where North Slope oil is loaded onto tankers. But as facilities aged and North Slope production declined, the property value and taxes have fallen about 60 percent.

In 2000 Valdez extended its property tax to vessels longer than 95 feet, exempting fishing vessels and freighters. In essence, it was a tanker tax that has raised more than $16 million for the city to date.