"At a tax of 20 mills, the valuation will result in $60 million in TAPS property taxes for the state and municipalities in 2005," Corbus said. Alaska statutes provide that the Tax Division is charged with valuing oil and gas property in the state for purposes of both state and local property tax levies.
The Tax Division issued its valuation for all oil and gas properties in the state on March 1. Several appeals followed, including appeals filed by the TAPS owners and the three municipalities through which the pipeline runs, the City of Valdez and the North Slope and Fairbanks North Star boroughs. The next level of appeal was the State Assessment Review Board. The board held three days of lengthy hearings May 17-19 in Anchorage where the TAPS owners argued that the state's assessed value was too high, while the municipalities asserted that it was too low.
The review board rejected the pipeline owners' argument that the "full and true" value of TAPS should be limited by the tariff income stream and set at $1.5 billion for 2005. The board also rejected the municipalities' figures on TAPS value that ranged from $8.9 to $13.9 billion based on several alternative theories.
"The board accepted the department's use of Replacement Cost New Less Depreciation as the appropriate measure of TAPS value," Corbus said. "In addition, the board concluded that the departments value of $3.0 billion was at the low end of the acceptable range of values but was not deemed to be unequal, excessive, improper or otherwise contrary to the standards set out in state statutes."
The tax is due the state by June 30, 2005. If they choose, the affected municipalities and TAPS owners can appeal this review board decision to the state Superior Court.