Opinion ID: 2524427
Heading Depth: 4
Heading Rank: 2

Heading: Alaska Statute 29.45.080: municipal taxation and the tax on oil and gas production and pipeline property

Text: In enacting the statutes at issue here, the legislature has attempted to strike a balance between the municipalities and the state. The statutes therefore impose limits on municipalities' authority to tax oil and gas property so that the state may also benefit from taxing oil and gas property. Specifically, AS 29.45.080(b) imposes a cap on the total tax revenue the municipality can recover, and AS 29.45.080(c) caps the total value of property the municipality may tax.
Alaska Statute 29.45 addresses municipal taxation, and subsection .080 specifically addresses oil and gas taxation as provided for in 43.56, discussed above. This section describes the two methods by which municipalities may levy and collect taxes on 43.56 property. Alaska Statute 29.45.080(b) describes the first method by which municipalities may tax oil and gas property. This method is based on the total tax revenue that the municipality may collect in a given year. It imposes a $1,500 a year per-person cap on revenue: A municipality may levy and collect a tax on the full and true value of taxable property taxable under AS 43.56 as valued by the Department of Revenue at a rate not to exceed that which produces an amount of revenue from the total municipal property tax equivalent to $1,500 a year for each person residing in its boundaries. Thus, this section requires municipalities to adjust mill rates such that the total tax revenue from 43.56 property and other taxable property does not exceed $1,500 per person. Moreover, AS 43.56.010(b), discussed above, requires the municipality to tax the 43.56 property at the same rate that it applies to other taxable property.
The more ambiguous provision is AS 29.45.080(c) which imposes a limit on the total property value that a municipality may tax. This section, which is the primary subject of this appeal, limits the total taxable property value to 225% of the average per capita value of property in the state, times the number of residents in the municipality. When the total property value in the municipality exceeds this value, the municipality must reduce the total taxable property value in order to bring the municipality's total tax base within the limit imposed by the 225% valuation cap. The statute does not make clear how the municipality should make this reduction, however, and the present case asks us to settle this confusion. Subsection .080(c) provides: A municipality may levy and collect a tax on the full and true value of that portion of taxable property taxable under AS 43.56 as assessed by the Department of Revenue which value, when combined with the value of property otherwise taxable by the municipality, does not exceed the product of 225 percent of the average per capita assessed full and true value of property in the state multiplied by the number of residents of the taxing municipality. Thus, the equation to find the maximum taxable property value is