Rep. Calvin Schrage, I-Anchorage, left, reflects on comments by Rep. Justin Ruffridge, R-Soldotna, right, on the most recent version of a bill that would cut property taxes in an effort to facilitate the construction of the Alaska LNG project. Members of the conference committee met Thursday, July 2, 2026, at the Alaska State Capitol building in Juneau during the second special session on the topic to discuss changes to the bill. (Mari Kanagy / ADN)

A committee tasked with negotiating a tax break for the Alaska LNG megaproject adopted a new draft of the legislation Thursday, even as members said that additional work is needed before the bill can advance to votes by the full House and Senate.

The Legislature is nearing the midway point of a second 30-day special session called by Gov. Mike Dunleavy to consider a new system of taxation on a proposed 800-mile pipeline that would send natural gas from the North Slope down to the Kenai Peninsula.

Dunleavy in March first proposed replacing the state’s property taxes with a lower tax on the volumes of natural gas shipped through the pipeline, a change that would net the state billions of dollars less in revenue if the project is built, compared to the taxes currently in law. Legislators have been debating the proposal ever since, but have yet to reach agreement on a bill that can pass both the House and Senate.

Dunleavy called lawmakers into a special session immediately after the regular legislative session ended in May without agreement on a tax bill. The House passed a version of the legislation in mid-June. But after the Senate amended it to include additional tax burdens and reporting requirements for the private gas line developer, Dunleavy said that he opposed the changes and called lawmakers into another special session.

The version of the bill unveiled on Thursday by the conference committee addresses many of the concerns raised by Glenfarne, the New York City-based developer that owns three-quarters of the project.

The draft includes a provision intended to prevent the developer from counting any tax breaks toward the value of the project if the state seeks a buyback in the future. The language follows the leak of a confidential analysis by the Alaska Gasline Development Corp., the state-owned corporation that holds a 25% stake in the project, which indicated the state could be required to buy back Glenfarne’s stake if the project stalls.

The draft also includes a compromise on the construction deadline, pushing back the date by which the developer must complete the pipeline to retain the tax breaks from 2032 to 2034, and allowing for extensions under some circumstances.

But committee members said their work on the bill is far from finished.

“We have more work to do in front of us, and we didn’t represent in any form or fashion today that we were close to getting this product done. We know we have more work to do,” said House Speaker Bryce Edgmon, a Dillingham independent, who serves on the committee.

Other members include Rep. Calvin Schrage, I-Anchorage; Rep. Justin Ruffridge, R-Soldotna; Sen. Lyman Hoffman, D-Bethel; Sen. Bert Stedman, R-Sitka; and Sen. Mike Cronk, R-Tok.

The new version leaves unresolved questions on whether Glenfarne and other privately held oil and gas companies will be required to pay Alaska’s corporate income tax. That tax, which currently applies only to publicly traded companies, could net the state hundreds of millions of dollars annually if it is extended to so-called S corporations and other private enterprises.

After the hearing concluded, Edgmon called the corporate income tax change the “elephant in the room” and said the conference committee will continue deliberations on the topic later this month, following a break for the Fourth of July holiday.

“The S-corp provision is a priority of a number of legislators. There are other legislators who are concerned that it may actually bog the project down and is extraneous to the whole efforts that the private developer is seeking,” said Edgmon.

A coalition of associations representing private industry, including the Alaska Chamber and the Alaska Oil and Gas Association, sent a letter to lawmakers on Thursday opposing the inclusion of any changes to Alaska’s corporate income taxes in the bill.

“Whether directed at one company, one industry, or one business structure, using project-specific legislation as a vehicle for unrelated tax policy sets a precedent that should concern every employer and potential investor in Alaska,” the groups wrote.

House Speaker Bryce Edgmon at the Alaska State Capitol in Juneau on Monday, May 18, 2026. (Bill Roth / ADN)

The change is favored by a majority in the Senate, but opposed by Dunleavy and members of the all-Republican House minority caucus.

Members of the conference committee are also set to continue conversations on the impact of the bill on public education spending in communities along the route of the gas line. Under the bill as currently written, the Kenai Peninsula Borough, which would be home to the project’s gas liquefaction plant, would receive a large share of the tax revenue and direct millions of those dollars annually to schools.

Conference committee members earlier this week abandoned a previous deadline to forward a bill for final votes in the House and Senate on July 1. The deadline was pushed to July 16, and most members of the Legislature are not expected in Juneau until then.

However, a few House minority members traveled to Juneau on Wednesday to attend a scheduled floor session. They planned to give speeches on the floor in what they described as an effort to exert pressure on the conference committee to finalize the legislation.

“We have a very simple bill in front of us. We have a very simple ask,” said Rep. Rebecca Schwanke, a Glennallen Republican. “The whole goal of this is to enable gas line legislation investment. It’s not complicated. We should have had this done months ago.”

Rep. Rebecca Schwanke, R-Glennallen, speaks during a floor session on the last day of the 34th Legislature at the Alaska State Capitol in Juneau on Wednesday, May 20, 2026. (Bill Roth / ADN)

The bill Dunleavy proposed in March was seven pages long and had nine sections. But the latest version of the legislation unveiled on Thursday is 43 pages long, with 39 sections.

After Republican minority members indicated their plans to deliver lengthy floor speeches, Edgmon canceled Wednesday’s planned floor session, which was intended to be brief. He again canceled a planned technical floor session Thursday.

“As the presiding officer, I’m not going to play games like this,” Edgmon said Thursday, adding that he would delay the technical floor session as needed. “These efforts at political hijinks or theatrics or manufactured drama — whatever you want to call it — I’m not interested.”

Among the Republican minority members who traveled to Juneau are Schwanke, House Minority Leader DeLena Johnson of Palmer, Rep. Jamie Allard of Eagle River, Rep. Garret Nelson of Sutton, Rep. Dan Saddler of Eagle River, Rep. Steve St. Clair of Wasilla, and Rep. Frank Tomaszewski of Fairbanks.

Ruffridge, the minority Republican who serves on the conference committee, raised a series of concerns during the Thursday meeting, after the new version of the bill was introduced.

“I believe that there are some items within this conference committee document that are potentially problematic. I understand that the will of the committee is to adopt it as a work draft and a work draft only,” Ruffridge said. But he said the bill as currently written could potentially impose excessive taxes and regulations on the project developer as it seeks to advance the project.

Though Glenfarne has been promising for months that the project is on track for construction, it has yet to secure a final investment decision that would ensure the estimated $55 billion in project costs is accounted for.

“I worry about a few provisions in this bill right now that maybe go a step too far too far,” Ruffridge said. “I think in here we’ve asked the question, ‘How much can we extract from this project?’ and I think we’ve missed the fact that we are asking potentially to put on the line jobs, cheap energy and potentially a boon to Alaska’s economy in the form of revenue.”

Stedman said the bill as currently written is already “a significant reduction in the tax burden on this gas line, any way you cut it, and some of us are concerned maybe we are a little too aggressive in that direction.”

The Daily News’ Iris Samuels reported from Anchorage and Mari Kanagy reported from Juneau.