Assembly defeats gravel tax

MAT-SU -- Area gravel pit owners, construction union officials and others related to the gravel industry gathered recently to voice their protest to an ordinance that would have placed a tax on coal, timber, sand, rock and gravel.

The ordinance, dubbed a waste of time by Borough Mayor Tim Anderson, was soundly defeated, but several Mat-Su Borough Assembly members agreed it would not be the last new tax that was brought before the borough in an attempt to generate additional revenue and diversify the tax base.

The primary fault most assembly and audience members found with the ordinance was that, in their eyes, it did not equally tax every gravel pit operator in the Valley.

"I don't believe the tax is a fair tax," said Jane Campbell, an employee with Anchorage Sand and Gravel. "You should tax all gravel pits."

The ordinance would have applied a tax of 10 cents per ton or 15 cents per yard, whichever was less, to operators who remove more than 50,000 tons of gravel yearly from a single pit location or more than 60,000 tons a year from more than one location.

Others in attendance voiced their belief that singling out the gravel industry while other natural resources go untaxed was also unfair.

"It's not conducive to the business community as such," said assembly member Dan Kelly. Several resource industries -- gold and other mineral mining operations, natural gas and others -- were cited as examples of other industries not touched by the tax.

Seventeen people testified at the public hearing on the ordinance, none of whom were in favor of the proposed tax. But assembly member Kelly Lankford Ladere was not daunted, and staunchly defended the ordinance she had proposed.

Ladere said she could only remember one public hearing at which people pleaded to be taxed -- a public hearing on the budget held after the assembly agreed to fund education to the maximum amount allowed by state law in fiscal year 2002. Nevertheless, she said, the borough needs to consider other ways of bringing in revenue. Despite public testimony that instituting a tax on one industry was regressive, it must be considered, Ladere said.

"Our history as a bedroom community has been regressive in its capacity to meet the cost of services," Ladere said.

She pointed out that other areas in the state have similar natural resource depletion taxes and denounced the idea that instituting such a tax would result in gravel pits in the area closing their doors. She added that the reason many of the larger pits are operating in the Valley is that resources have already been depleted or the land has been used for other purposes in areas like Anchorage.

"To someone who says it's going to put us out of business, I say, 'What do you mean? Where are you going to go to get gravel?'" Ladere said. "You probably wouldn't be hauling gravel 30 to 40 miles, except that you have to … they're very stable companies and I don't believe they'll leave. I'm not trying to put an anchor around their ankle … but I do want to see more partnership from corporations and from other governments in helping this borough meet its obligations."

Assembly member Talis Colberg said he wasn't sure how he was going to vote on the matter when he arrived at the borough building. But after considering the public testimony, he did not feel it was fair to institute a tax for some producers and not others -- it may give the smaller producers an unfair advantage when bidding on projects, he said.

"The state's whole government is based on taxing one industry and not others in the same way; it's not an unusual concept to do this," Colberg said. "But there are ways to approach things like this where it would be equitable -- I'm just not sure how you would do it quickly."

The motion ultimately failed with Ladere alone in support, but she said she felt some good had been accomplished by the public discussion.

"The point is, if I do nothing more than to put in the minds of these respected people, this borough, this one time only, dipped into reserve funds," Ladere said, mentioning actions taken during the last round of budgeting that helped lower the mill levy without passing added costs on to property tax payers. "What are we going to do next year?"