The state House and Senate and the governor could not agree on legislation to provide a multibillion-dollar property tax break for the proposed Alaska North Slope natural gas pipeline project, so the governor called lawmakers into a second special session to keep working.
The first 30-day special session ended Friday night, June 19.
On the first day of the second 30-day special session on Saturday, the House rejected the Senate version of the bill on a 12-28 vote. The Senate, without opposition, declined to accept the House plan.
House and Senate leaders on Saturday appointed three members from each body to serve on a conference committee in an attempt to negotiate a compromise acceptable to a majority of members in both chambers.
The full Legislature is not scheduled to meet until July 1, at which time the conference committee could present a proposal — if committee members are able to agree on a bill.
House Speaker Bryce Edgmon, an independent from Dillingham, said the conference committee needs time to evaluate the differences between the House and Senate versions.
While conference committees typically negotiate behind closed doors, Edgmon said there will be public meetings on the legislation.
House members on the committee are Edgmon, Rep. Calvin Schrage, an Anchorage independent who caucuses with the House bipartisan majority coalition, and Rep. Justin Ruffridge, a Soldotna Republican.
Senate members are majority coalition members Sens. Lyman Hoffman, D-Bethel, and Bert Stedman, R-Sitka, and minority caucus member Mike Cronk, R-Tok.
In dispute between legislators and the governor are the size and terms of a property tax break for the proposed gas pipeline and liquefaction project, known as Alaska LNG, for liquefied natural gas.
The private developer leading the venture has said tax relief is needed to make the project economically viable.
The House passed the bill with a large tax break on June 12. The Senate revised the bill a week later, reducing the size of the tax break and adding multiple other provisions. In lieu of taxes based on the assessed value of the property, both the House and Senate versions would collect taxes based on the volume of gas moving through the pipeline.
The project developer has said the full development could cost as much as $54 billion.
The proposed property tax break would save the owners several hundred millions of dollars a year in payments to the state and municipalities along the project route.
Senators also included multiple provisions not included in the House bill, including a previously contentious provision voted down by the House this spring to levy corporate income taxes on privately owned oil and gas companies that currently do not pay income taxes. That would apply to Hilcorp, the state’s second-largest oil producer, and Glenfarne, the company developing the LNG project.
The Senate also included a requirement that the pipeline builders pay prevailing wages in the state and employ Alaskans and apprentices.
Another Senate amendment declared that if the lead pipeline developer abandons its efforts, the project would return to full state ownership at no cost.
Glenfarne owns 75% of the project, with 25% held by the state-owned Alaska Gasline Development Corp., which gave a 75% stake to Glenfarne last year at no charge with the promise that the company would pay the necessary engineering costs to reach a final investment decision on the project.
Glenfarne had said it planned to make a final investment decision by the end of last year but has postponed that timeline to late this year.
The Senate version of the bill also imposed deadlines on the project, mandating construction of the pipeline to be completed no later than 2032, and the gas liquefaction plant required to load the fuel aboard tankers for export to Asia to be done no later than 2036.
Gov. Mike Dunleavy objected to the Senate version of the bill, saying there were “serious questions about all the amendments.”
The governor and many members of the House were particularly opposed to the corporate income tax provision.
“It is considered economically counterproductive at the moment the state is trying to attract final investment decisions,” House Majority Leader Rep. Chuck Kopp, an Anchorage Republican, said on the House floor on Saturday.
Sen. Stedman, who co-chairs the Senate Finance Committee, said lawmakers still need more financial information from Glenfarne to determine the project’s economic viability.
“They still haven’t clearly delineated how much benefit or burden” property taxes would place on the project, Stedman said on Saturday. “Even if we made no property tax on the gas line, it does not make it economic. It helps economics, it does not get it over the hurdle. … If you’re going to give concessions, they need to show us why they need them and the impact.”
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