Alaska miners propose taxing themselves

Alaska's minerals industry has taken the surprising step of working with a state legislator to propose a new property tax on large mines. It isn't a purely humanitarian gesture: most of all, mining companies are looking for stability in the tax system and this bill would provide them with a way to estimate their costs more accurately.

Senate Bill 179, introduced by Sen. Gene Therriault, R-North Pole, April 18, after consultation with the Alaska Miners Association, would levy a property tax of 4 mills for 15 years on mines in the unorganized borough, where no property tax currently exists. The tax would go to the state and wording in the bill allows for it to be appropriated for the education fund that the legislature plans to create this year.

"It hopefully will get at some of the concerns here in the Legislature that areas out in unorganized Alaska don't pay any property tax towards the cost of education," Therriault told the Senate Community and Regional Affairs Committee. "That's why specifically we've asked that the 4 mills, minimum 4 mills, be directed into the education fund, to help answer some of that concern." The education request would not be binding, however.

The first $10 million-worth of property would be exempt from the tax. The tax could increase to 6 mills if a borough subsequently formed around the mine, Therriault said.

Placer Dome: contributing to education

Alaska Mining Association Executive Director Steve Borell and Placer Dome's project geologist for Donlin Creek, James Fueg, testified to the committee in support of the tax. Donlin Creek is a $1 billion project, which would make it liable for $4 million in property tax under the new law, enough to cover 90 percent of the state's costs for local education, according to Fueg. The tax would enable Placer Dome to "contribute our fair share to the financing of local government and education," he said.

"This is a unique situation when an industry is volunteering to pay a new tax," Borell told the committee. "This new tax will help remove the tax uncertainty." Smaller mining operations could elect to pay the tax too, if they wished, he added.

The committee discussed the question of whether the proposed rate was fair. Alaska property taxes vary considerably from borough to borough, with the Fairbanks North Star Borough, where Fort Knox gold mine is located, levying 16 mills, and the Lake and Peninsula Borough - home to the Pebble deposit - lacking a property tax altogether. Senators expressed concern that too high a tax would make some mining projects uneconomical, while too low a tax would leave open the possibility that a borough might end up subsidizing services for a mine.