Valdez opposes using oil, gas property taxes for state

Valdez, Alaska. Photo by Emily Mesner/The Cordova Times

A resolution passed by the Valdez City Council opposes legislation proposed by Gov. Mike Dunleavy that would prevent municipalities from continuing to levy and collect property taxes on oil and gas properties within their boundaries.

“Seizing municipal taxes from oil and gas property within Valdez city limits essentially eliminates 90 percent of our annual operating budget, prevents us from meeting existing contractual and debt obligations, and devastates our ability to provide municipal services and emergency response for our rural community,” Valdez Mayor Jeremy O’Neil said.

The council’s resolution, passed during a special council meeting on Feb. 26, addressed Senate Bill 57 and House Bill 59, introduced by Dunleavy on Feb. 13. The bills would allow the state to seize municipal property taxes from oil and gas properties within the Fairbanks North Star Borough, Matanuska-Susitna Borough, municipality of Anchorage, North Slope Borough, Kenai Peninsula Borough, and the cities of Cordova and Valdez.

“SB 57 and HB 59 would also set dangerous precedent where the state might then begin to seize municipal property taxes from other types of property to fund state deficits,” O’Neil said. “The city of Valdez is committed to working alongside our colleagues from municipalities around the state to oppose SB 57 and HB 59 and evaluate all available means of challenging the legislation,” he said.

The Valdez City Council said that Alaskan municipalities rely on those property taxes to fund essential municipal services, including emergency response, police and fire protection, public works, water and sanitation, roads, harbors and public education.

The right of municipalities to collect taxes on property within their boundaries has been an essential part of government structure in Alaska since at least 1912, the council said.


While the state determines the value of these types of properties, municipalities maintain the right to collect property taxes based on that valuation to fund municipal services and to address the substantial risks and costs associated with transportation of crude oil within municipal boundaries, the council said.