Training For Mining Equipmment - February 2016

Training for Mining Equipment February 2016 Alaska Mining Tax Fuels Debate From Education Leaders Sometimes the biggest voices in an industry have the most sway. Miners throughout Alaska are hoping that the head of the University of Alaska‐Southeast's mine training program will be the big voice to provide the sway for a new bill on mine taxes and training. Governor Bill Walker has put a new bill through the Alaskan senate that seeks a tax increase on the state's mining industry, which industry experts believe will affect the current investment in training and education. It's proven to be such a big debate throughout the Last Frontier State that Graham Neale, director of the university's Center for Mine Training, has come into the public eye to testify and protest the tax decision.

The Numbers

House Bill 253 contains the crucial language for the tax on Alaska mines. It's meant to be a broad tax for the largest providers working in the state, only affecting the mines with a net income of one hundred thousand dollars or more per year. The increase in the state tax rate from seven percent to nine percent would only apply to fourteen mines in total based on 2014 income, but threatens a large number of jobs. The Donlin mine alone, for instance, employs over three thousand Alaskans. Currently, Alaska offers a 3 year tax exemption for new mines, but HB 253 would eliminate this exemption as well as adding a new fee for mine licensing, which would affect mines of all size and operations

throughout the state. The state's mining tax collected about forty million dollars last year; the

increase would garner about an extra six million dollars.

Public Forum

Neale's opposition to the mining tax took center stage when he spoke to the Alaska House Resources Committee. Neale argued that it was critical for the state's budget offices to re‐evaluate the purpose of the tax in order to determine how Alaska can draw fresh investment for an ailing industry. The director, as well as the university itself, fears that mine developers will be willing to set up shop in other states ‐‐ or even across the border in Canada ‐‐ and leave UAS students without a course for success after graduation. Neale claimed the tax, which appears on House Bill 253, puts students on a "pathway to careers that no longer exist."

Reactions

Despite Neale's criticism of the tax increase, the House Resources Committee pointed out that the tax would be more beneficial to Neale and his students than appears on the surface. Democrat Andy Josephson noted that as Alaska‐Southeastern is a public school, it would stand to gain a portion of the six million dollars per year boost from the tax increase. While the increased revenue would be a boost for the school overall, Josephson's point didn't apply as persuasively as he had hoped. Neale noted that the Center for Mine Training relies primarily on federal grants and industry donations, making it almost independent of the state's budget. Not only would the students at the Center see little benefit from the tax increase, but they would suffer from the lack of job opportunities if businesses decided to choose another location with more appealing tax rates.

Alternatives

In a state that has fifty billion dollars in oil revenue but managed to run a

four‐billion dollar deficit during 2015, it's not clear how the state could develop an alternative to the mining tax in order to maintain revenue while also keeping

mining industries happy. Neale expressed the desire to keep the Center for Mining Training functional for graduates, but did not come up with solutions for the Resources Committee, claiming it was his job to put other people to work, not his job to balance the budget. Even without a suitable alternative, Neale's experience as both an educator and a miner makes him an authority on the subject. His resume includes time working as a project manager at the Niblack mine on Prince Edwards Island, and serving as the chairman for the Prince Edwards Islands chapter of the Alaska Miners Association.

Outside Opinions

Neale and the Center for Mining Training aren't the only voices arguing against the new mining tax. Donald Stevens, an Anchorage‐based geologists, claimed that this was the worst time within the past forty‐five years for a mining tax given the collapse of the metals market. Jason Brune, a former spokesman at the Pebble Mine complex who was laid off due to decreased revenue, claimed that his story would become typical if the state put additional pressure on miners. The opposition to the bill was so fierce, in fact, that the Committee had to announce that anyone who did not get a chance to testify would be able to do so when the hearing re‐opened the next week.