House passes penny-a-gallon tax for refined fuels
After lengthy debate, the House narrowly passed a bill that would impose a penny-a-gallon tax on refined fuels.
There’s been considerable argument about whether this is truly a tax. Some say it’s a surcharge or a fee. But whatever you call it, the bottom line is Alaskans will pay more for gasoline and home heating oil.
The money is needed to shore up the state’s oil spill prevention fund, which is about $800,000 in the hole — one that could get even deeper next year without new revenue, perhaps by several million dollars or more.
The oil industry already pays a tax on crude oil — about four cents a barrel into the prevention fund and another penny into a spill response program, which used to be enough to take care of both funds. But with North Slope production on the decline and less oil flowing through the pipeline to tax, the prevention account is running in the red.
“The oil industry has covered the majority of the cost of oil spill prevention and response in our state for 30 years or more,” said Rep. Cathy Muñoz, the bill’s primary sponsor.
Muñoz, a Juneau Republican, says it’s unfair to ask the industry to pay more because they’re only responsible for about a fourth of the spills in Alaska. The rest are refined fuel spills.
“1,500 of 2,000 spills that occurred last year, in varying sizes, were due to refined products, not crude oil,” Muñoz said.
Among the top three spills last year:
· Aniak Airport: $6.8 million
· Laundry facility: $6.5 million
· Adak Naval Base: $3.5 million
The bill had the most resistance from Fairbanks, where the cost of energy is high.
“It’s a tax. Anyway you cut. It’s a tax,” said Tammy Wilson, a Republican who represents North Pole. “I cannot support a new tax, especially not one on communities who are struggling to heat their homes.”
Wilson was joined by two Fairbanks Democrats — David Guttenberg and Scott Kawasaki — in the fight to make home heating oil exempt from the penny surcharge.
Normally, as Democrats, they’re on the opposite side of most issues involving Wilson.
“You’ve got to heat your home. It’s expensive as it is. Here’s another penny a gallon. You’ve got to drive to town. Here’s another penny a gallon,” Guttenberg said.
Another Fairbanks Republican — Steve Thompson, who is also co-chair of the Finance Committee — supports the bill.
He believes the penny tax is affordable now and will be offset by the drop in the price of fuel.
“Sometimes you’ve got to take responsibility and take care of things,” Thompson said. “This is health and safety and environmental protection.”
Rep. Dan Saddler of Eagle River agrees.
“I don’t think this is excessive. I don’t think it’s going to break anybody’s bank. I think people in my district value the environment more than their pocketbook,” Saddler said.
Wilson said she felt her region, as well as the rest of rural Alaska, has been unfairly singled out.
“It’s not my fault that we’re on heating oil,” Wilson said.
She argued the tax is easier to swallow for communities that are able to heat their homes with natural gas.
“You can afford to go to the movies. You can afford to eat out while we sit there and watch our heating oil prices go up,” Wilson said. “I’m just really appalled that anybody would say, ‘Well, heating oil is down, so therefore a penny is not going to make a big difference.’”
“I’m just amazed. I feel like the stepchild, anyway, of this state,” Wilson said.
“I hate this bill,” Rep. Lance Pruitt said.
Lawmakers laughed, but Pruitt was serious.
“First and foremost, it shows us the reality we are currently living,” Pruitt said.
One of those realities is the threat to the environment.
While opponents of the bill said they didn’t believe the state was aggressively recouping costs from those responsible for spills, Rep. Muñoz reminded them that sometimes the state doesn’t know who the responsible party is, as in a 100-gallon fuel spill last month in Juneau’s Auke Bay. The state’s Spill Prevention and Response program, also known as SPAR, took care of the immediate threat.
Muñoz fears that unless the program gets adequate funding, the state will lose the capability to protect the environment.
“We will begin dismantling our core spill prevention and response, and this is not a situation we do not want to be in as a state,” Muñoz said.
Alaskans learned some painful lessons in 1989, when the Exxon Valdez tanker spilled millions of gallons of crude oil into Prince William Sound. Neither the industry nor the state was prepared to respond, nor had their been adequate prevention efforts.
Rep. Les Gara said this wouldn’t be a problem now if the Legislature had adopted a measure he proposed years ago, which would have increased the oil industry’s crude oil surcharge.
He believes the oil industry needs to share more of the burden.
“To get a bill through that asks the oil companies to pay a penny, or two pennies, is unbelievably hard and frustratingly hard,” Gara said.
In the end, the bill passed, 21 to 19.
Supporters say if House Bill 158 is signed into law, it will be like paying for an insurance policy that offers protection against disasters big and small.
On average, Alaskans can expect to pay about $5 more a year for gasoline. For those who make a longer commute to work, such as the drive back and forth from Wasilla to Anchorage, the cost will run about $11 more.
For home heating fuel in Fairbanks, the penny charge would raise the average bill by about $20.
HB 158 now moves on to the Senate, where there’s similar legislation pending.