Anchorage's cash-strapped local government, the state and a handful of other Alaska communities got multimillion-dollar windfalls in December -- additional 2006 property tax payments from owners of the trans-Alaska oil pipeline as the result of a state Superior Court decision upping the assessed value of the pipeline.
The total payout to the government treasuries: about $153 million, including interest, said Robin Brena, lead counsel for three municipalities party to the lawsuit.
The question is: Will the cities and boroughs get to keep the cash?
The court case is being appealed to the Alaska Supreme Court, and the ultimate outcome could be different.
Anchorage got a tax payment of $4.6 million it didn't expect to receive in December. But the administration of Mayor Dan Sullivan warned in a memo prepared by the city treasurer: "This recently received payment from Alyeska Pipeline should not be considered spendable until final resolution ... which could take up to two years or possibly longer."
Anchorage was one of the smaller beneficiaries of the payout because the pipeline owners don't have a lot of buildings, machinery and equipment here.
Alyeska Pipeline Service Co. runs the pipeline for the oil company owners, and on their behalf it sent nearly $35 million in a back tax payment to the North Slope Borough in December. Valdez, where the pipeline terminal is, received about $32 million. The Fairbanks North Star Borough got about $9 million. Whittier and Cordova were due less than $1 million each, said Brena.
The state got $73.6 million for its share of oil property taxes, said Department of Revenue special assistant Lacy Wilcox. That money went into the Constitutional Budget Reserve Fund on Dec. 29 to be saved, she said.
Valdez and the North Slope Borough are looking to put their funds in escrow to make sure it's available -- with interest -- in case it has to be paid back later, said city and borough officials.
The money is big for those two local governments.
Pipeline and tanker port taxes are the main revenue for Valdez city government. They are expected to account for about 80 percent of the city's property tax income in 2011, said John Hozey, city manager.
But that means the city's revenue goes up and down depending on the assessed value of the pipeline property.
Superior Court Judge Sharon Gleason ruled last May that the pipeline's value in 2006 was $9.98 billion. That's more than double the value as had been set prior to that by the state's Assessment Review Board.
"The decision was tremendous for the municipalities," said Brena, who represents the Fairbanks North Star Borough in the case.
Gleason rejected the pipeline owners' argument that the line and tanker port's value was $850 million in 2006, a number derived mainly from the fees they collect from oil shippers.
Gleason said the pipeline has a larger purpose: It enables production from the vast network of North Slope oil fields. She started with an $18.7 billion estimated cost for replacing the pipeline and port, then subtracted depreciation and other factors to arrive at a value of $9.98 billion.
While that ruling about 2006 taxes heads under appeal to the state Supreme Court, pipeline property tax disputes for 2007, 2008 and 2009 are pending before Gleason, he said.
The 800-mile trans-Alaska pipeline and Valdez tanker port are owned by BP (46.9 percent), Conoco Phillips (28.3 percent), Exxon Mobil (20.3 percent), Koch Industries (3.1 percent) and Chevron (1.4 percent).
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