Legislative Council Recommends
Other Means Than Tax Incentives
To Attract Industry to Alaska
The Alaska Legislative Council1
last week released its final re
port and recommendations to the
122nd Legislature regarding an in
dustrial incentive program. The
full text follows. A bill carrying
out the purposes of this proposal
is being drafted for submission to
the legislature.
INDUSTRIAL INCENTIVES
Pursuant to Council Proposal
No. 5, the Legislative Council has
studied the problem of securing a
more rapid industrial and tourist
development in Alaska. The study
was concerned with the applica
bility in Alaska of methods of in
'dustrial and tourist development
used in the states and other juris
dictions, including tax incentives,
financial aid programs, promo
tion, advertising, and services.
The Council has submitted a
progress report on Industrial In
centives and has reviewed staff
memoranda relating to legal fac
tors affecting use of public auth
orities, and legislation establish
ing development credit corpora
tions.
FINDINGS
The Legislative Council notes
with satisfaction that recent in
vestments in manufacturing plants
have placed Alaska in an im
proved industrial position. How
ever, the development has not
been as broadly based or diversi
fied as might be most desirable.
The vast industrial and tourist
potentials in Alaska show promise
of solid achievement and progress
for many years to come, but the
difficulties facing new industrial
development in Alaska are also
severe and cannot be solved easily.
The solution of such problems will
require effort on the part of all
groups interested in the develop
ment of Alaska.
The last three legislatures, in
1949, 1951 and 1953, have attemp
ted to create a more favorable cli
mate for industrial development
through the adoption of laws
authorizing property tax exemp
tions for new industry and a tax
exemption for mining for the
three and a half years after com
mencement of production.
Many of the states and other
jurisdictions have adopted simi
lar tax exemption provisions of
one sort or another, many of
which are more comprehensive
than the exemption provisions in
Alaska.
During the economic develop
ment of the United States, the
national government, states, and
local communities offered many
types of financial aids to' obtain
industrial, commercial, transpor
[tation, and banking development,
i These aids have been continued
! to the present time and the busi
! ness of attracting industry has
become highly competitive be
tween different states and regions.
Recent sessions of the Alaska
legislature have made provisions
for financial assistance to veter
ans, public housing, and agricul
ture. However, the several pro
grams adopted have not been di
rected to a broad-scale effort to
improve the basic economy of
Alaska.
The devices found to be suc
cessful in varying degrees in in
ducing industrial plant location in
the states, Canada, and Puerto
Rico have included, in addition to
tax incentives, public authorities,
state wide development credit cor
porations, community industrial
foundations, and varying levels of
promotion, advertising, and ser
vies. In many ways the methods
used in the states might prove
helpful in improving the develop
ment of Alaskan industry, but in
other ways the methods are no't
suited to Alaska’s particular sit
uation.
Although there has been wide
spread discussion and interest in
industrial development in Alaska,
the responsibility for action to
secure such development is wide
ly dispersed among territorial and
federal agencies. Thus there is no
single agency with power to pro
vide broadly for the needs of
prospective investors.
Therefore, with regard to the
Council’s findings, and after due
deliberation and consideration:
THE LEGISLATIVE COUNCIL
RECOMMENDS THAT:
1. No further industrial tax ex
emption laws be considered at this
time, because the exemptions now
provided represent tax conces
sions that are as much as Alaska
can reasonably expect to provide
sufficient incentive to induce
plant location in Alaska.
2. Community leaders should
consider the possibility of forma
tion of community development
corporations, and that the Alaska
Development Board be directed
by the legislature to provide in
formation and assistance to com
munities in forming such commu
nity foundations.
3. The legislature establish an
Alaska Industrial Development
Corporation with broad powers to
acquire by gift, lease, rental or
purchase and to construct or
maintain water, electric and pow
er utilities, airports, port facilities,
roads, produce and market facili
ties, structures and equipment for
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industrial, mining, manufacturing
or commercial purposes, tourist
hotels and lodges and other recre
ational facilities for rental, lease
or sale to private individuals or
corporations, private or public.
4. The corporation so estab
lished be a public corporation
authorized to function outside the
regular structure of territorial
government, and that its functions
be supported entirely from the in
come from rentals of such enter
prises.
5. The corporation be author
ized to issue revenue bonds to
finance any and all of its under
takings, provided that such bonds
do not constitute any pledge of
the faith and credit of the terri
torial government but that the
corporation be empowered to
pledge any and all of its property,
and earnings to provide adequate
securities to bond purchasers.
6. The corporation be empow
ered to exercise the right of emi
nent domain, provided that such
power may not be exercised with
in the incorporated limits of any
city without the consent of the
governing body of such city.
6. The corporation be authorized
to accept contributions from the
federal, territorial, or local gov
ernments, or from private persons,
to carry out any of the functions
authorized.
8. The corporation be empow
ered to guarantee loans to private
investors in new commercial or
industrial enterprises, to the ex
tent of not more than 70 percent
of the total amount of such loans,
and that the legislature make a
contribution of $500,000 to be used
exclusively for such guarantees,
provided that the corporation be
empowered to invest such con
tributions and use the interest on
such investments for the purpose
of administering its other func
tions.
9. The corporation be restricted
from fostering those enterprises
deemed to be injuriously competi
tive to established similar enter
prises situate in the geographical
area under consideration at the
time.
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