The Alaska Legislature kicked off a special session Thursday to continue working on a key priority of Gov. Mike Dunleavy that didn’t pass in the 121-day regular session: tax cuts for the Alaska LNG project.
“It’s like we were just here,” joked Senate President Gary Stevens, a Kodiak Republican, as he gaveled in the special session Thursday morning.
Dunleavy called the special session on Tuesday after lawmakers failed to act on the gas pipeline tax cut bill he introduced in late March.
Dunleavy contends tax relief is essential to the project moving forward, and he said Tuesday he’d call lawmakers into special session after special session until they passed a bill acceptable to him.
Whether lawmakers will be able to find a way forward is unclear. Legislators are hesitant to give up billions of dollars in potential property tax revenue for a project they’re not confident will lower energy costs or boost the state treasury.
But lawmakers say they’re going to try.
Sen. Bert Stedman, a Sitka Republican, said the Senate Finance Committee he co-chairs will convene Wednesday to begin considering the tax relief package.
“We're going to try to come up with a compromise bill to move that project forward, something that works for the Legislature, works for the governor and works for the boroughs involved in the rest of the state,” Stedman said.
During the regular session, senators were skeptical of the governor’s proposal, which would replace a property tax estimated to raise close to a billion dollars each year with a volume-based tax on gas throughput that would bring in less than $100 million a year.
“They want a billion dollars a year from the people of Alaska so that they can make a $5 billion a year profit,” said Sen. Bill Wielechowski, an Anchorage Democrat, citing a figure he calculated based on a presentation from the Department of Revenue earlier this year.
The House majority leader, Anchorage Republican Rep. Chuck Kopp, said he sees it differently.
“My starting position isn't that we're giving away a lot,” Kopp said. “My starting position is that right now we're getting no revenue, and we really need natural gas.”
Among the many unknowns surrounding the project is the cost. Though the Department of Revenue estimates that the project will cost $46 billion — a figure a state gasline agency official told lawmakers was “within reason” — Alaska LNG project developer Glenfarne has declined to share a more precise estimate with lawmakers, saying it would hurt their ability to negotiate.
Many legislators say that gives them pause because cost overruns could result in higher energy costs for Alaskans buying gas from the project, and the governor’s office has said it is not open to firm price caps.
“What you need to have come out of the building and signed by the governor is something with some stability and transparency so all parties know what the playing field is,” Stedman said.
The special session comes a day after lawmakers adjourned their regular session.
Lawmakers approved a $1,000 Permanent fund dividend and a $200 energy relief payment in the operating budget, which passed by a caucus-line 21-19 vote in the House on Tuesday and a wider 17-3 margin in the Senate shortly before adjournment on Wednesday.
The budget also sets aside up to $144 million in one-time funding for public schools around the state, most of it dependent on higher-than-expected oil prices. Lawmakers estimate oil prices will need to average $98 a barrel between late May and the end of June for schools to get the full amount. As of Tuesday, a barrel of Alaska North Slope crude fetched nearly $120.
It also sets aside millions to help local governments and low-income families deal with the high cost of energy: $75 million in community assistance, $15 million for loans to help rural villages fill bulk fuel tanks, and $11 million to revive a state-funded heating assistance program.
The budget “considers the needs of all Alaskans,” said Rep. Andy Josephson, an Anchorage Democrat who led the House’s consideration of the operating budget as co-chair of the House Finance Committee.
“From our teachers and students looking for adequate public school funding to those impacted by high fuel costs and disastrous weather events, victims of crime, and citizens who want to be safe, and those who are our most vulnerable, we hear you,” Josephson said.
The budget is built around an oil price forecast of $75 per barrel from July 1 through June 2027 with a more than $40 million cushion for unexpected expenses.
Minority-caucus who voted against the budget argued lawmakers should have directed more of the unexpected windfall from the war in Iran towards Permanent Fund dividends.
“We are absolutely swimming in money,” said Rep. Will Stapp, a Fairbanks Republican.
Legislators also approved a capital budget that directs more than $100 million to maintenance for K-12 schools, more than $20 million toward the construction of two new schools in rural Alaska, more than $30 million for university maintenance and nearly $20 million for training programs aimed at boosting the workforce for a gas pipeline project.
Lawmakers also passed a variety of high-priority bills on the last day of the session, including an education bill creating a pilot student loan repayment program for teachers, a wide-ranging crime bill and a series of bills addressing the requirements of the federal Rural Health Transformation Program.
