Alaska News

Lawmakers look to add fuel tax to bolster oil-spill fund

JUNEAU -- Republican legislators in the Alaska House and Senate have proposed a new, broad-based fuel tax to prop up the state's oil spill program, which is in the red after years of falling revenues from a per-barrel surcharge on North Slope oil.

Juneau Rep. Cathy Munoz and Soldotna Sen. Peter Micciche each unveiled bills Friday that would impose a new tax on the state's distributors of refined fuels of 1 cent and eight-tenths of 1 cent, respectively -- a charge that could trickle down to drivers and airline passengers, among others.

Munoz last year tried to raise more money for spill response and prevention by increasing the per-barrel tax on crude oil. But that approach didn't get traction in the Legislature and faces resistance from oil companies, who say they already pay for their share of the $15 million program.

Both Munoz and Micciche said in interviews that the new tax was fair because a significant portion of the program's budget goes toward responding to spills of refined fuels from sources ranging from home heating tanks to small boats and mines.

Munoz's proposal, House Bill 158, would generate between $9 million and $10 million a year. Combined with the $6.5 million in crude oil revenue, the state's Department of Environmental Conservation would get slightly more annual revenue than the $15 million it needs to conduct spill response and prevention work.

Micciche's proposal, Senate Bill 86, would generate between $7 million and $8 million a year. Micciche, a ConocoPhillips employee when the Legislature isn't in session, said he set the lower rate because he wants the state to have more of an incentive to recover cleanup costs from spillers.

The oil industry typically pays the state for costs related to their spills, but that's not the case for a large portion of the state's costs tied to spills of refined fuels.

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Micciche said in an interview that he's heard "nothing but support" from his colleagues in the Senate. But two Anchorage Democrats, Sen. Bill Wielechowski and Rep. Les Gara, expressed skepticism about the Republicans' decisions not to make any increase to the producers' per-barrel fee.

And Wielechowski said bluntly he would not support Micciche's measure.

"It's not a huge amount, but particularly for trucking companies and larger companies, I think that's going to add up. It'll have an impact and that'll get passed along to Alaska consumers," he said in a phone interview. "For decades we've had a system in place where spill response has been paid on a per-barrel tax on the oil industry."

The state's spill fund dates back to 1986, and lawmakers passed the per-barrel tax in 1989 after the Exxon Valdez disaster.

About $10 million of the program's $15 million budget goes toward prevention and preparedness work. In the past, state officials have described that work as a "safety net" for oil producers, though in fact some of the state's contingency plans are for vessels that don't carry crude oil, said Kristin Ryan, who directs the program.

Another $5 million of the budget goes toward cleanup of contaminated sites. And 75 to 80 percent of those sites have spills of refined fuels, not crude oil, according to documents prepared by Micciche's office.

The state had originally recommended raising more money for the program through both a new refined fuel tax and a 3 cent increase to the per-barrel tax. It said in a department document that such a change would represent a " 'spiller pays' approach while still expecting oil production to finance the safety net necessary for their work."

Ryan said Friday that the administration of Gov. Bill Walker doesn't yet have an official position on the new legislation, though she added it would be "hard to believe" it wouldn't be supported.

"At a minimum, we would be neutral," she said in a phone interview.

She pointed out that the oil-production industry is a "significant" user of refined fuels and would still be affected by the new taxes proposed by Munoz and Micciche.

"The state wants a solution, and we put forward some ideas to generate the conversation," Ryan said. "Any of these solutions would work for us -- I think there's a valid argument that it be tied to refined fuels."

Micciche said last month he was considering a small raise in the per-barrel tax but ultimately decided against it.

"The more time I spend on it, the more that I realize the risk has been dramatically decreased through the years, yet the producers are still paying the same proportion," he said in an interview. "We sat back and said, 'Where are the spills?'"

Asked how the public should view his choice not to raise the per-barrel tax given his job at ConocoPhillips outside the legislative session, Micciche responded: "That's not what I do here. I'm a policymaker that has to look at the fairness of every situation."

He added that it would be a bigger problem if he tried to avoid working on policies like the fuel tax, saying, "I am not going to shy away from the most important issues facing Alaska."

Munoz pointed out that the oil industry has been paying the cost of the spill response and prevention program for decades even though they haven't been responsible for all its costs.

"You can just do the math that if you count the total funding of the division over those years, the oil industry has covered the activities," she said. "So I think it's appropriate now to look at a broader population -- not to say that the oil industry's off the hook."

Nathaniel Herz

Anchorage-based independent journalist Nathaniel Herz has been a reporter in Alaska for nearly a decade, with stints at the Anchorage Daily News and Alaska Public Media. Read his newsletter, Northern Journal, at natherz.substack.com

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