Matanuska-Susitna manager proposes 7¢ per-gallon fuel excise tax to fund roads; public review set before July introduction
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Summary
Borough Manager Mike Brown introduced an ordinance to add a local fuel excise tax of 7 cents per gallon to generate an estimated $5 million annually for road maintenance and larger collector/arterial projects. The measure was placed on the agenda for formal introduction on July 15 and will be subject to public comment and advisory-board review.
Matanuska-Susitna Borough Manager Mike Brown on Tuesday outlined a proposed local fuel excise tax that he said is intended to provide a steady "pay-as-you-go" revenue stream to finance road projects without further expanding long-term bond debt.
Brown told the Assembly that the ordinance, which staff plans to introduce formally on July 15, would exclude aviation, marine and home-heating fuel and would be levied at the wholesaler level rather than at the pump. He said the proposal would set the tax at 7 cents per gallon — lower than Anchorage's 10-cent levy — and that, if set at that level, it "could generate up to or approximately $5,000,000 annually." Brown said the tax would give the borough a revenue source outside property taxes to help fund collectors and arterials while leaving ballot propositions in place for voter approval of specific construction projects.
"I think we have agreement in the community that we have a roads problem, and that roads are a priority," Brown said, noting voters had approved several recent bond propositions for roads and schools. Brown also told the Assembly the borough typically sells 20-year bonds and that layering more debt risks long-term crowding of property-tax revenue for debt service.
Assembly members questioned exemptions and administration. Mike Brown said wholesalers — about 14 providers in the valley — would most likely collect the tax so the borough would not need to create a large new finance operation. He said the borough would still have to work through off‑highway diesel and other potential exemptions and would return with more detailed administrative plans.
Assembly members and the public pressed on distribution and mill-rate effects. Brown said dedicating the excise revenue to a project account in the borough budget would be the administration’s intent but emphasized that legal dedication and any property-tax reductions would depend on future Assembly choices.
The manager described the proposal as a means of sharing the cost of road use with nonresidents who buy fuel and use borough roads, and as a tool that could reduce pressure to sell additional long-term bonds. He stressed the proposal is a revenue source, not a final project list, and that voters would still approve projects where required.
The measure will be on the public record for about six weeks before a decision on timing; Brown said advisory boards and the public would have time to offer feedback before the introduction on July 15.