and others turned out to last Thursday to argue against a borough proposal to
increase the local tax paid at the dock.
Island Borough Assembly at its regular meeting last week moved forward a
measure to substantially increase the price of the excise tax on resources.
Maggie Wall has more.
-((Severance Tax 6:53
"The KIB...Thurs night's work session. SOC."))
The Kodiak Island Borough Assembly last week approved
in first reading week an ordinance to change the amount and the internal allocation
of the borough's severance tax. The allocation is largely an accounting matter
as ultimately the borough uses income from the severance tax to offset the
often refer to it as the borough fish tax, but actually it's officially a
severance tax-That is it is charged on resource use when the resource is
severed from its natural environment.
The tax is charged on fish, timber, gravel, minerals and related
natural resources extracted within the borough boundaries.
Right now the tax rate is tied directly to the mill rate
for property taxes, and is set each year as part of the borough's budget
process. Since the borough's property tax rate is 10.5 mills, that works out to
a severance tax of roughly 1 percent of gross value of the product.
proposal would change that to a flat 1.5 percent of gross value. It would also
reallocate the money within the borough's financial accounts.
and others testified that the tax was a hindrance to the industry that supports
the community, an industry that is already struggling to stay afloat.
severance tax for the current year-Fiscal Year 2011-is estimated to be more
than $1 million or roughly 9 percent of the borough's revenue for the year.
Plus, the borough gets a percentage of the state's raw fish tax that is also
collected at the dock.
-((Mel S. 1:02 Boro
is greedy boats go to Homer
Julie Bonnie is an industry spokesperson who represents
both vessel owners and in-shore processors. She echoed Stephen's comments
-((Julie B 1:02 Fish
could go to Kenai Peninsula
Borough finance director Karl Short said the change
wasn't intended to be an assault on fishermen. In fact, Kodiak's severance tax
is lower than most other communities.
-((Karl S :17 Others do it by percentage rate
But fishermen were not the only ones concerned about the
proposed change to the severance tax.
Charlie Powers-Vice President for Community Affairs for
Koniag Inc. called in his comments. He said Koniag has a number or natural
resources subject to the severance tax. And, while, he understands the need to
diversify and spread the tax burden, he urged caution.
-((Charlie P :54
Assembly member Louise Stutes shared the need for the
borough to be cautious in raising taxes. She said it is too soon to make a
decision to change the severance tax, as the borough may not even need to do
:49 Too many unknowns right now
The assembly passed the severance tax ordinance in first
reading which means it will come up for a public hearing at a future assembly
meeting. The item is on the agenda for the assembly's Thursday night work
I'm Maggie Wall.