Nenana Borough and Taxes

Photo Credit: peptic_ulcer

There is a study being done to provide information about options for a borough in the unincorporated area encompassing Nenana and many villages in the interior. There are four borough options that have been set out as talking points.

The two of them that would involve being annexed into other large boroughs could probably be dismissed because of the lack of services that would be provided, especially the Fairbanks North Star Borough option which would implement a sizable property tax burden on the residents.

The other two options on the table are the “Greater” Nenana Area Borough, which would basically be Nenana, the portion of the Parks Highway that isn’t already in a borough, and the immediately surrounding areas, and the Middle Tanana-Yukon Borough which would be the “Greater” Nenana Area and also a large section of rural Alaska which would include Tanana, Rampart, Minto, and other villages.

Note that it includes the Livengood area north of Fairbanks that is outside the current FNSB boundary. Of those two options, the Middle Tanana-Yukon Borough seems to have the most traction with supporters of a borough forming, because of the possibility of taxing the portion of the Trans-Alaska Pipeline that runs through it. I wanted to point out some items that the proponents of the Borough might want to consider:

You cannot just do a property tax for a specific segment, like industrial uses.

If you implement a property tax, you have to apply it to all residential, commercial and industrial property. There are exemptions that can be applied, up to $50,000 in valuation for residential, a senior exemption, and some others, but you will still have the tax, and you will be taxed on all the non-exempted property.

You will then always face the possibility of having your land taken from you if you can’t pay the tax, as happens every year to property owners in the Fairbanks North Star Borough. There are no exemptions allowed for commercial use, so businesses will be hit hard, and have to pass those taxes onto the consumers if they can (mostly local residents). The only tax allowed on the pipeline is a property tax, so to tax the pipeline, you will have to tax the residents.

The owners of the Trans-Alaska Pipeline have been in court with the taxing boroughs since 2006 on the valuation of the pipeline, disputing that it is worth as much as the State says it is. All the money that has been collected since then is still encumbered, and some portion may need to be paid back when the final court decision has been rendered. To date, the Fairbanks North Star Borough has put out approximately $6 million fighting the legal battle in court.

One other point that applies to both the large and small borough concepts is that a borough has to pay a minimum amount of the funding for their schools. If you have the right industries you may be able to come up with an alternate form of taxation like the Denali Borough did to avoid having property taxes, but you will have to have some kind of tax to pay that minimum amount. This in turn will lower the amount of money that the School District receives from the State, as the current school funding formula penalizes the organized boroughs.

This article has been written to specifically discuss funding issues, but there is also plenty to talk about in regards to planning, land use regulation and the cost of the bureaucracy that will be required. Borough formation is a major decision that should not be taken lightly; hopefully everyone involved will do the necessary research to make good decisions.

The website for the Nenana Borough Study is:


Lance Roberts is a Fairbanks North Star Borough Assembly member who is also the Alaska Republican Party District 5 Chair.