Commerce Committee directs staff to draft severance tax using Yakutat model

The Commerce Committee of Haines Borough voted in committee to direct staff to revise the draft severance-tax ordinance to more closely follow Yakutat’s approach, a mix of percent-of-value for minerals and unit rates for timber and gravel, and designated the committee chair to work with staff on the changes.

Chair (speaker S1) opened the discussion by summarizing pros and cons of a value-based tax (the draft currently proposes 4% of gross production value) versus unit-based taxes such as per-ton or per-MBF rates. The chair said the research included conversations with the CFO and planner and “I did a little research, talked to chat GPT, and then had a conversation with the CFO and the planner about the differences… and I created something.”

Committee members raised enforceability concerns. One member noted that unit measures can be easier to administer where buyers purchase by weight, but that weight can vary with moisture and certified scales are not universally available. The chair and others discussed using conversion factors that favor certified-scale reporting to encourage accurate measurement.

Committee member (speaker S2, Assembly member Cheryl Stickler) said examples from nearby boroughs make a mixed model sensible: “The Yakutat rates seem to make sense to me… $5 per 1,000 board feet and 20¢ a ton for gravel.” The chair added that, for minerals and some mining scenarios, a percent-of-gross‑production approach could be more appropriate because minerals differ greatly in per‑unit value.

Members also discussed the difference between severance taxes and payments in lieu of taxes (PILTs) or road maintenance contributions, emphasizing that PILTs compensate for tax‑exempt property while severance tax compensates for a permanent resource loss. A committee member (speaker S9) proposed directing severance-revenue into the borough’s permanent fund to convert one‑time receipts into long‑term income and reduce pressure on property-tax rates.

The committee adopted a motion (moved by the chair, seconded by a committee member) to designate the chair to work with staff to update the taxable basis to a Yakutat-style mix and asked staff to prepare a draft ordinance and obtain legal review about whether certain state timber sales would be taxable under the proposed language. The motion carried on the committee voice vote with recorded “Aye” responses and no recorded opposition. The chair said staff will post supporting documents and bring an updated draft back for committee or assembly consideration.

Next steps: staff will produce a revised draft ordinance modeled on Yakutat rates, seek legal clarification regarding state timber-sale structures, and post the draft for public review prior to formal assembly consideration.