(The Fairbanks Daily News-Miner posted the following article by Tom Moran on its website on May 9.)
JUNEAU, Alaska — Alaska’s iron horse shouldn’t be saddled with a tax, Sen. Gary Wilken said Wednesday night.
Wilken, R-Fairbanks, the co-chair of the Senate Finance Committee, said he plans to introduce a revised version of a bill to increase the state fuel tax that will not force the Alaska Railroad to pay the tax.
Under the current draft of the bill, the railroad would have to pay the same 20 cents a gallon tax to fuel its engines that motorists would pay at the pump. Railroad representatives call that an unfair burden since the railroad already pays nearly $25 million a year to maintain its own infrastructure.
“We would be happy to pay 20 cents a gallon if the state could maintain our rail lines, like they maintain the road,” said Johne Binkley, chairman of the railroad’s board of directors.
The fuel tax increase was originally proposed by Gov. Frank Murkowski as a way to fill state coffers and recoup the costs of keeping up roads. The bill would increase the current 8 cents per gallon fuel tax to 20 cents per gallon. All federal, state and local agencies are exempt from state fuel taxes, and under the original draft of the bill all would have also been exempt from the increase.
But a provision was inserted in the bill in the Senate Transportation Committee by committee chairman John Cowdery, R-Anchorage, that would have made the railroad pay the entire 20 cent tax on fuel for its engines. He said he thought the railroad’s exemption gave it an unfair advantage over the trucking industry.
“It seems a matter of fairness,” he said in an April committee meeting. “They’re not paying fuel tax, the trucking industry certainly is, and they’re in competition with it. That’s why I introduced this bill.”
That provision, which would cost the railroad $1.2 million a year, has been roundly denounced by railroad representatives and opposed by the Fairbanks Chamber of Commerce.
In addition to the fact that the railroad pays to maintain its own infrastructure, Binkley also argues that there really isn’t a great deal of crossover business between truckers and the railroad. He said the railroad tends to deliver huge amounts of material like coal or oil that would require hundreds of trucks to carry.
Binkley believes the tax may violate a pair of federal laws. He also noted that the railroad is owned by the state of Alaska.
“It really doesn’t, from a policy standpoint, make sense to tax yourself,” he said.
Binkley said if the bill were to become law, the railroad would have to eat the $1.2 million by spending less on of capital improvements, which is where the railroad sinks its profits.
“That really is the lifeblood of the Alaska Railroad, to spend capital on the rail line,” he said. “And our source of capital is our net earnings.”
The Senate Finance Committee heard the bill Wednesday night, at which time Wilken said he agreed with the railroad and intends to drop Cowdery’s addition to the bill.
“It would be my intent to hold this bill and bring back a version that doesn’t have the railroad provision in it,” he said. The committee agreed to hold the bill. There is also a version of the fuel tax in the House. That version would exempt the Alaska Railroad from the tax.