JUNEAU, Alaska (KTUU) – As they race the clock toward May 20, Alaska lawmakers are dedicating the legislative session’s final weeks to scrutinizing a proposal proponents, including Gov. Mike Dunleavy, R-Alaska, say could lead to creating a once-in-a-lifetime liquefied natural gas pipeline.
With just a third of the session remaining, lawmakers say they need time to get the bill right. That includes the governor’s proposed property tax bill.
Glenfarne, the project’s major developer, and the Dunleavy administration argue it will clear the way for the gas line — but some lawmakers and local mayors argue it does not adequately protect local tax revenue.
“We want to be at a finished product with a majority of our questions answered and sufficient protection for Alaskans in terms of the revenue that we’re giving up [and] the expenditures that we’re making into this project itself,” said Sen. Cathy Giessel, R-Anchorage, last week on the three-week push for the legislation.
Ever since the bill was presented, the governor’s office has given the legislature what amounts to an ultimatum: pass the legislation and get a gas line or don’t pass it and kill the project.
The Department of Revenue said in the bill’s fiscal statement that the “Alaska LNG project will not proceed without property tax relief,” a position the department has repeated in committee hearings.
“The Legislature understands the generational impacts of this project,” Giessel said in a Tuesday statement to Alaska’s News Source. “We are striving to ‘get it right.’”
What’s at stake
Under current law, the Department of Revenue says the state would receive $8.4 billion in taxes from the pipeline by 2042 — but under the governor’s proposed bill, that figure shrinks to $829 million. Local governments are set to receive about $5.7 billion under current law; the new bill would bring that total down to $728 million, the department projects.
Glenfarne owns 75% of the project. The Alaska Gasline Development Corporation, a state agency representing Alaska’s interest in the pipeline, owns the remaining 25%, according to Sean Maguire from the Alaska Beacon.
What the bills do
The bills in question, HB 381 or SB 280, exempt property tax on the proposed gas line for up to ten years or when the gas line produces one billion cubic feet of natural gas a day. It also eventually replaces state and local sales and income taxes on the gas line with an “alternative volumetric tax,” a six-cent tax which increases by 1% every year.
“Don’t tax the gas pipeline project as it’s being built, but once gas starts to flow, then you tax it,” Dunleavy said in an interview with Alaska’s News Source.
Gov. Mike Dunleavy talks with Alaska’s News Source’s John Thompson in studio about the latest plans for liquefied natural gas in Alaska.
Glenfarne has backed the governor’s bill, arguing that property taxes would slow momentum to get the gas line built. However, the company has repeatedly declined lawmakers’ requests to share detailed financial data about the project, citing confidentiality concerns.
Currently, the company plans to lay down pipe by the end of the year, but there is doubt whether that will ultimately arrive on time. A final investment decision (FID) — the last step in determining whether the gas line will move forward — has not been reached, despite a series of missed self-imposed deadlines.
“They told us last year that they were going to be at FID by the end of last year, end of December. That didn’t happen,” Sen. Bill Wielechowski, D-Anchorage, said in March. “They told us then it would be by the beginning of session. That didn’t happen. Then they filed with FERC and said it would be by February 6th. That didn’t happen.”
Alaska’s lone congressman called on lawmakers not to become a ‘roadblock’ to the proposed LNG lineSenate scrutiny
The Senate Resources Committee has led much of the debate on the proposed gas line and leaders say they will continue to do so over the next several weeks.
When asked why the committee committed to that timeline Tuesday, Giessel gave two reasons: it’s a “massive project” and there’s “serious financial impact on local communities.”
“I’m happy that we’re spending a lot of time on it. We’re doing our due diligence,” Sen. Robert Myers, R-North Pole, told Alaska’s News Source Tuesday. “I am concerned that it’s getting pretty late into session. The property tax issue has been floating around as an issue in the back of everybody’s minds for the gas line since the 90s. So, it’s not a new issue.”
Giessel did not directly explain the 15-day push but cited concerns including how sales tax would be applied and whether the six-cent tax was adequate.
“While we’re being encouraged to move quickly on this, we are moving quickly with all due diligence,” she said. “We’re asking a lot of questions, and we’ll continue to do that.”
Pressure has been mounting within the state capitol, the private sector, the Dunleavy administration and the congressional delegation to move on passing LNG-enabling legislation.
Touting an Alaska comeback, Sen. Dan Sullivan, R, leaned on his record to the Alaska State Legislature during his annual speech Wednesday.
GCI CEO Ron Duncan and Lynden Inc. Chairman Jim Jansen — two Alaska business leaders — wrote in an Anchorage Daily News op-ed that the state should act now to support the project.
“Whether we are skeptical or optimistic, we should all work to make the Alaska LNG pipeline a reality in light of the substantial benefits that this project could bring to Alaska,” they wrote. “In that light, Alaska should take all reasonable and financially prudent actions to support it.”
Giessel addressed those comments head-on last week, saying they are working towards a gas line.
“There’s a lot of media saying and letters to the editor, saying that we should be enthusiastically supporting the gas pipeline,” Giessel said. “And we are. We have [a joint resolution supporting the gas line] before the Senate Resources Committee and … it’ll move to the Senate floor through the Rules Committee.”
Sen. Lisa Murkowski, R-Alaska, broke from other members of the congressional delegation — who largely urged lawmakers to move quickly — in her March 31 address to the legislature, telling lawmakers that scrutiny was warranted.
“My encouragement to you is to do the homework that you need to do as representatives for people around the state to make sure that this is going to be right. Not for one project developer. Not just for one administration, but this is going to be right for the people of Alaska going forward,” she said. “And you’ve got a right to demand information, because this impacts all of us.”
The message from Sen. Lisa Murkowski, R-Alaska, to the inundated Alaska State Legislature deep into their session was multifold.
Myers, meanwhile, signaled concern that the debate over tax revenue could overshadow the project’s larger potential.
“I don’t want the discussion of how much property tax revenue is the state going to get to get in the way of a project that could set the course for Alaska’s future for the next 50 years,” he said.
Glenfarne did not directly respond to questions about the Senate’s timeline. In a statement, a company spokesperson said: “We continue to engage with state and local policymakers as we advance Alaska LNG.”
In the House
The House is also debating the bill, but at a slower pace than the Senate.
Rep. Robyn Frier, D-Utqiaġvik, co-chair of the House Resources Committee, set an amendment deadline for the bill last Friday. That deadline was extended to this Friday due to lengthy debates on the operating budget.
Frier says the committee is drafting a substitute bill shaped by negotiations with boroughs and unions.
The committee is also awaiting presentations from the Department of Revenue and the Institute of Social and Economic Research (ISER), a University of Alaska Anchorage institute that has studied Alaska’s economy and public policy for more than 60 years.
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