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State tax credits cover most of $1 million gift to UA from Pogo

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Posted: Monday, June 24, 2013 12:04 am

FAIRBANKS — The $1,059,000 donation announced last week by the Japanese owners of the Pogo Mine to the University of Alaska won’t cost the companies anywhere close to that amount.

Thanks to a generous state tax credit program, $850,000 of the total or more could be rebated during the next three years.

This is the second three-year donation of $1,059,000 from Sumitomo Metal Mining and Sumitomo Corporation to the university. The first ran from 2011-2013. The new gift is from 2014-2016.

The exact net cost to the companies is private, but a $350,000 annual donation to the university would qualify for a $275,000 annual state tax credit. This can be applied to corporate income taxes and to the state Mining License Tax, which is close to 7 percent of net income.

Add in the federal tax benefit of the transaction and the next cost drops to something in the range of $50,000 per year.

In effect, the state program allows companies to direct that a portion of their taxes to the university in exchange for valuable publicity. A university website calls the “Ultimate ROI,” meaning “return on investment.”

The Sumitomo contributions are to boost the Mining Engineering Research Endowment Fund.

The Legislature structured the program so that donations of 300,000 per year cost about $32,500 per year for companies that pay the full federal tax rate of 35 percent.

In 2010, the Legislature increased tax credits from a maximum of $150,000 to $5 million.

The actual cost to a donor who gives $300,000 could be the same as for a donor who gives $100,000, depending upon federal tax payments.

The state credit is 50 percent for contributions of up to $100,000; 100 percent for contributions of from $100,000 to $3000,000; and 50 percent for contributions of from $300,000 to $10 million.

The Senate Education Committee introduced the bill in early 2010, saying the old law had a “constraining effect” on corporate donations to higher education. In 2008 there were 15 donors who gave enough to the university to get the previous maximum, a $150,000 credit.

•••

IMPORTED STEEL: The Chinese company that supplied some of the steel for the $188 million Alaska Railroad bridge over the Tanana River in Salcha is working with another firm to supply steel to repair the Verrazano-Narrows Bridge in New York.

The Wall Street Journal reported Thursday on the boom in Chinese steel exports to the U.S., mentioning the work by Anshan Iron & Steel and the China Railway Shanhaiguan Bridge Group on the Alaska project.

The Chinese company supplied 80 girders for the Tanana River bridge that weigh 14.7 million pounds. The cost was $16.2 million.

•••

ROAD WORK: Anyone interested in long-term options for the corridor that includes the Steese Expressway to Chena Hot Springs Road and the Richardson Highway to the Badger Road interchange is invited to attend an open house from 5-7 p.m. today at the Noel Wien Library.

The state is in the early stages of a planning study to consider how to handle future traffic demand on those roads.

•••

SULFOLANE: There will be an open house on sulfolane contamination in North Pole from 11 a.m. to 2 p.m. and from 4-7 p.m. Tuesday at the North Pole City Hall.

Representatives from the Alaska Department of Environmental Conservation and the Department of Health and Social Services will be there to answer questions and provide updates.

Dermot Cole can be reached at cole@newsminer.com or 459-7530.

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