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Governor Calls For Fairness In Gasline Incentives
Seeks Payback of Tax Incentives, Community Impact Assistance

 

May 07, 2002
Tuesday - 12:15 am


Saying a successful partnership goes two ways, Gov. Tony Knowles on Saturday proposed amendments to pending gasline incentive legislation, House Bill 519, that both helps industry and is fair to Alaskans. Knowles' amendments would ensure that any property tax deferrals are eventually paid back to the state and would fund community impact assistance.

"As we craft the right kind of incentives for industry, we must ensure that when the good times roll, Alaskans share those benefits," Knowles said. "When Alaska assumes the risk by foregoing property taxes during project construction, Alaskans deserve to share in that bright future with a payback of deferred taxes."

The current version of HB 519 would provide a direct, up-front property tax exemption that could cost Alaskans more than $760 million and requires no payback. Incentives in pending federal energy legislation include such a payback provision, however.

"The commodity price floor provision reduces the federal tax burden when the price of natural gas is low, but requires project sponsors to re-pay the federal government when prices are high," Knowles said. "We believe the same provision should be in place at the state level. What's good for the feds should be good for the state."

Knowles also announced a proposal to fund assistance to communities impacted by gasline development. "Right now, there is a provision in HB 519 to provide for local communities impact assistance, but no way to pay for it," Knowles said. "We're insisting this be done through a type of payment in lieu of taxes with new lower temporary state property tax, which would be imposed during construction."

This revenue would then flow into an impact fund that would make available assistance to both state agencies and local governments to address impacts to communities during construction.

Knowles said these changes to HB 519 would make a complete package that is fair to Alaskans and industry - the foundation of a good two-way partnership - and one that all Alaskans can get behind in supporting. Knowles' proposal is in addition to four other amendments to HB 519 proposed earlier this week:

  • Linking incentives to start-up of a gasline project by the end of this year;
  • Limiting the facilities that could be subject to property tax holiday to only those essential to this project;
  • Insisting that any tax holiday be limited to the construction phase of the project;
  • Stronger provisions for Alaska hire, use of Alaska businesses and a project labor agreement.

Knowles noted that since day one of the Knowles-Ulmer Administration, good jobs and a healthy economy have been their number one priority and that many people believe we're closer than ever to making the Alaska Highway natural gas pipeline a reality.

"America's factories and homes need the natural gas Alaska can supply as the clean-burning, inexpensive, and efficient fuel of the 21st Century," Knowles said. "Over the past two years, we have come a long way, beginning with my way is the highway. Thanks to the great efforts of the Natural Gas Policy Council, the Legislature, and Congress, we have state and federal legislation committed to the southern route."

Knowles noted that federal legislation that meets other Alaska needs and provides incentives for industry is poised to pass Congress with bipartisan support. Knowles also sponsored bills in the state Legislature that would save project sponsors more than a billion dollars in the form of tax exempt bonding that could be offered through the Alaska Railroad.

"Many believe America's energy future is bright for natural gas. Today, gas prices are around $3.75 per thousand cubic feet. Many expect prices to be higher in the next decade and Alaska and its communities should share in those profits," Knowles said. "With the changes I propose today, I believe we can structure the right kind of incentive package for both industry and Alaska. My bottom line is this: this bill must reflect a two-way partnership that's fair, reasonable, and acceptable to Alaskans."

 

 

Source of News Release:

Office of the Governor
Web Site

 

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