793 P.2d 532 | Alaska | 1990
This appeal presents the question whether the City of Valdez may impose a higher property tax mill rate on oil and gas property than on other property in the city to pay the cost of providing oil spill prevention and response services. The State Department of Community and Regional Affairs (DCRA) and the superior court both concluded that such a tax violates AS 43.-56.010(b). We affirm.
I. FACTUAL AND PROCEDURAL BACKGROUND
On May 22, 1986, the City of Valdez enacted a property tax ordinance which created three service areas: (1) residential property, (2) commercial property, and (3) oil and gas property.
DCRA informed the city that the imposition of a higher tax rate on oil and gas property violates AS 43.56.010(b). The superior court affirmed, and this appeal followed.
II. STATUTORY FRAMEWORK
With the exception of statutorily exempted property,
The state, on the other hand, levies a property tax only on property used for oil and gas exploration, production, and pipeline transportation. AS 43.56.010(a).
III. LEGALITY OF THE CITY TAX ON OIL AND GAS PROPERTY
DCRA argues that the city violated AS 43.56.010(b) by establishing a service area which included only oil and gas property, and then imposing a tax on that service area which is higher than the tax imposed on any other taxable property in the city. The city argues that AS 29.45.580 permits such disparate taxation, so long as the oil and gas property receives a higher level of city services.
At first glance, the statutes relied on by each party would seem to support their contrary positions. On the one hand, AS 43.56.010(b) requires. that Valdez tax oil and gas property “at a rate no higher than the rate applicable to other property taxable by the [city].” On the other hand, AS 29.45.580 allows Valdez to “establish ... differential tax zones to provide and levy property taxes for services not provided generally in the city.”
When it is impossible to give effect to two statutes, we apply a rule of statutory construction that the more specific statute governs even though the general provision standing alone encompasses the same subject. Sprague v. State, 590 P.2d 410, 415 n. 14 (Alaska 1979); State, Dep’t of Highways v. Green, 586 P.2d 595, 602 (Alaska 1978). Here, AS 43.56.010(b) deals with the subject of municipal property tax rates on oil and gas property in specific terms. It specifically prohibits a municipal tax rate higher than that which applies to “other property taxable by the municipality.” Contrarily, AS 29.45.580 does not make specific reference to tax rates on oil and gas property. It makes no distinctions based on the uses to which property within a service area is put, and thus does not specifically address the subject of municipal property tax rates on oil and gas property. Therefore, unless the two statutes can be reconciled, AS 43.56.010(b) governs.
The city argues that the statutes can be harmonized by interpreting AS 43.56.010(b) as a prohibition against taxation of oil and
[sjpecial service areas may be set up for oil and gas property and taxes may be imposed in that area to pay for extra services so long as the special tax does not exceed the tax imposed on any other municipal property receiving similar services. If there is no such other property receiving similar services, the imposition of the tax on oil and gas property is nonetheless consistent with AS 43.56.010 because the oil and gas property is not being taxed at a rate higher than other property similarly situated.
The city contends that if we do not imply this “similarly situated” language, the statute would be irrational, and therefore unconstitutional. That is, according to the city, it would be irrational to include in the same service area with oil and gas property other property not directly benefited by oil pollution control services.
While it would seem that a municipality should be able to fund oil pollution control services with a special tax levied only against oil and gas property, such a tax runs afoul of the plain dictate of AS 43.56.-010(b). The statute states that a municipal property tax on oil and gas property “shall be levied at a rate no higher than the rate applicable to other property taxable by the municipality.” (Emphasis added.) When read in the context of a statute which specifically recognizes the power of a municipality to tax oil and gas property,
In addition to violating the letter of AS 43.56.010(b), a special municipal tax levied against a service area comprised only of oil and gas property undermines the purpose of the statute. In Kenai Peninsula Borough v. State, Dep’t of Community & Regional Affairs, 751 P.2d 14 (Alaska 1988), we observed that the statute
was apparently intended to prevent a borough from shifting its fiscal responsibilities away from its general property owners and onto the shoulders of the oil and gas industry, and ultimately, due to the credit against state taxes, onto the state government. In other words, local residents should pay their fair share of the cost of local government rather than casting the burden disproportionately onto the people of the state.
Id. at 16. As well intentioned as a municipality may be in its attempt to provide services tailored to the needs of oil and gas property, the potential for a spillover of benefits to those who do not own oil and gas property, and thus a disproportionate tax burden on the oil and gas taxpayer, is great.
The Valdez tax illustrates this potentiality. The principal service which Valdez has provided to oil and gas property is priority berthing for disabled tankers at the city’s public dock.
For the reasons expressed above we hold that the tax is invalid.
AFFIRMED.
. Specifically, service area three consists of the last 18 miles of the trans-Alaska pipeline system, the Alyeska terminal facility, and the city-owned Valdez container terminal. (At. Br. 3) Service area three thus includes only oil and gas property, with Alyeska the sole taxpayer.
. The city also proposed plans for other services, such as oil spill preparedness teams and equipment. However, these plans have not yet been implemented.
. See AS 29.45.030 and AS 29.45.050.
. Under AS 43.56.010(a), the state taxes oil and gas property at a rate of 20 mills.
. Under AS 43.56.010(d), this credit only applies up to the 20 mills levied by the state pursuant to AS 43.56.010(a).
.The parties' arguments present questions of statutory interpretation which do not implicate DCRA’s special expertise or determination of fundamental policies. We therefore apply our independent judgment to the issues raised by this appeal. See Kenai Peninsula Borough v. State, Dep’t of Community & Regional Affairs, 751 P.2d 14, 16 n. 8 (Alaska 1988).
.AS 43.56.010(b) recognizes that "[a] municipality may levy and collect a tax under AS 29.45.080.” As 29.45.080 permits municipal property taxation of “AS 43.56” property. AS 43.56 deals only with "Oil and Gas Exploration, Production and Pipeline Transportation Property-”
. The city concedes that various oil spill contingency services have yet to be implemented.
. The dock was originally financed with general obligation bonds approved of by a majority of Valdez voters.