With One-Cent Spill Levy, Alaska House Passes First Tax Bill In Years

Since the Murkowski administration, the Alaska House of Representatives has not passed a taxation bill where the levy goes beyond the oil industry. That changed on Wednesday, when the House narrowly passed a surcharge on refined fuel. The tax amounts to one cent per gallon.

The surcharge would replenish the state’s diminished spill prevention and response fund. Right now, the fund is covered exclusively through a nickel-per-barrel fee tied to oil production. As that production has declined, so has the size of the fund. The penny-a-gallon tax on gasoline, vessel fuel, and home heating oil would supplement that fund.Aviation fuel would be exempted.

Juneau Republican Cathy Muñoz sponsored the bill. During her floor speech, she noted that the majority of the spills caused in the state involve refined fuel and not crude oil, and that the surcharge would recharge the fund while spreading the cost among its users. Muñoz added that the fund has been in danger for years, and delaying action on it could cause the spill prevention program to disappear.

“I will be looking at a $7 million shortfall in the division,” said Muñoz, laying out a delay scenario. “We will begin dismantling our core spill prevention and response. And that is a situation that we do not want to be in as a state.”

The bill attracted a mix of opposition from legislators reluctant to instate a new tax, even at a penny. North Pole Republican Tammie Wilson slammed the bill, saying it posed a special burden to Interior residents who heat their homes with refined fuel.

“It is a big deal. You’re making our constituents pay for something that is not our fault,” said Wilson. “You’re make a slush fund because of it, and we’re supposed to just accept that.”

As the state faces a multi-billion-dollar revenue shortfall, the debate also served as a preview of what other taxation discussions could look like.

Rep. Steve Thompson, a Fairbanks Republican, defended the bill, noting that it amounted to a $10 tax for a person who filled up a 20-gallon tank once a week. He added that people pay property taxes that fund schools, even when they do not have children enrolled.

“We hear, ‘Why should I have to pay for it? It’s not my fault.’ Well, sometimes we have to take responsibility and take care of things,” said Thompson. “This is health and safety and environmental protection that we have to make sure happens in our state, or we’re going to have a major problem that we aren’t able to take care of.”

The bill passed 21-19, with no clear partisan or regional logic to the vote. Five members of the Democratic minority joined a bloc of Republicans to pass the legislation, while some of the Legislature’s most liberal members joined its most anti-tax conservatives in opposition.

While Republican leadership has said it does not plan to advance a broader tax bill this session, two others have been introduced. Homer Republican Paul Seaton proposed an income tax earlier this month in the House, which would max out at 6 percent for the very highest bracket. On Tuesday, Fairbanks Republican Click Bishop offered an education head tax, which would vary between $100 to $500 per person based on income level.