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Haines Borough committee continues work on severance tax; returns item to January meeting
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Summary
After lengthy discussion on whether to tax gravel, timber or future mining production, the Commerce Committee agreed Dec. 25 to return the severance-tax item to its January meeting for staff options on measurement, rates and confidentiality protections.
The Haines Borough Commerce Committee spent the bulk of its Dec. 25 meeting discussing a proposed severance tax'a levy on natural resources exported from the borough such as gravel, timber and potential future mineral ore. The committee did not adopt an ordinance; it voted to return the item for further development at the January Commerce Committee meeting.
Chair framed severance tax as a revenue option to diversify borough income and explained prior work, including a 2024 draft ordinance that proposed taxing gross production value. Committee members and industry representatives debated two principal approaches: (1) a value-based tax (a percentage of sale price) and (2) a volume- or weight-based tax (per ton or per cubic yard).
Proponents of a value-based approach said it allows the borough to share in commodity-price upswings and may better reflect industry profitability. Opponents and industry representatives warned that reporting gross production value can reveal proprietary pricing and discourage competitiveness; in some local markets, confidentiality concerns are acute when only a few sellers exist.
Supporters of a unit-based metric argued simplicity and enforcement would favor per-ton or per-cubic-yard taxes, and pointed to existing port fees and wharfage rates that already use per-ton metrics. Industry speakers and staff identified operational hurdles: certified scales are required for weight-based approaches under state law, conversions between volume and weight vary by material and testing can be costly, and many sales are part of larger contracts where value-added work occurs after the material leaves the borough.
Committee members suggested a phased approach: focus initially on current, mature export streams (gravel and timber) where measurement and administration are more tractable, and defer taxing speculative or future-producing mines until production methods and markets are established.
After hearing comments from industry and staff and requesting options with pros and cons, the committee voted to return the severance-tax item to its January meeting for targeted staff analysis of metrics, rates, confidentiality protections and administrative costs.
Next steps: staff will prepare a short menu of approaches (value-based, volume-based, hybrid) with lists of pros, cons and likely administrative needs for committee review in January.
