Members of the Alaska Senate’s bipartisan majority caucus spent Thursday in another round of closed-door talks discussing a bill that passed the state House offering tax breaks for the Alaska LNG project.
It was the penultimate day of a special session Gov. Mike Dunleavy called to consider the bill. Dunleavy reiterated Thursday afternoon that he’d call lawmakers right back into another special session if they failed to pass the tax bill before the current session expires.
“My hope is we can get the work done and a bill passed that works to help move this large gas line project forward before midnight Friday,” he said on social media. “If not, we will begin the process again Saturday with another special session.”
Dunleavy and pipeline developer Glenfarne say the bill replacing a 2% property tax with a much smaller tax on gas throughput is essential for the multibillion-dollar project to receive financing. They applauded the bill the House passed by a 34-5 margin on June 12.
But some state senators want major changes. Sen. Bill Wielechowski, an Anchorage Democrat, said he’d like to see the bill include a long-sought change that would subject large oil and gas businesses structured as pass-through entities — including Glenfarne and oil and gas giant Hilcorp — to state corporate income taxes.
“It's a sausage-making process,” Wielechowski said. “Various legislators want to see various things in the bill, and (we’re) trying to figure out how we can get to some consensus so that we can get something pushed across the finish line.”
Lawmakers are also considering how long the tax break Dunleavy proposed should last. The House’s version offers three decades of preferential tax treatment. Some majority caucus senators say they would like that to be closer to one or two decades. Glenfarne told legislators it would prefer the longer term.
The closed-door negotiations have frustrated the Senate’s minority Republican caucus, members said at a news conference Wednesday. The six-member caucus urged the bipartisan majority to bring the House’s version of the bill to a vote.
Passing the tax cut doesn’t guarantee a gas pipeline will be built, said Republican Sen. Robb Myers of Fairbanks. But failing to pass one means it definitely won’t be built, he said.
“Fairbanks is already living Southcentral's future,” Myers said. “We're paying almost 40 cents a kilowatt hour for electricity. Gas to my house is 25 bucks (per 1,000 cubic feet).”
Importing natural gas is “the only viable alternative out there right now” to a gas pipeline, he said. Importing gas “locks us into high prices without a path to lower prices, and it locks us into the variability of the world market,” Myers continued.
Around the Capitol, many legislators on Thursday said they were optimistic they’d find a way to pass the bill before the special session expires at 11:59 p.m. Friday.
But Wielechowski, a member of the Senate’s leadership team, said it could be difficult.
“Tomorrow is going to be tough,” he said Thursday. “Not impossible.”
That depends in part on other legislative business, Wielechowski said, including attempts to override Gov. Dunleavy’s vetoes.
Dunleavy vetoed nine bills Thursday evening, many of which passed in wide, bipartisan votes.
The vetoed bills would:
- Strengthen oversight of minors in psychiatric hospitals.
- Create an opt-in retirement savings program for Alaska businesses.
- Rename the state Human Rights Commission.
- Allow pharmacists to directly treat minor or chronic conditions.
- Extend several boards and commissions.
- Tax nicotine vapes and pouches.
- Update state software contracting requirements.
- Require the state education department to develop mental health instruction guidelines.
- Update the state’s corporate tax code to capture more revenue from out-of-state businesses.
Senate President Gary Stevens said Thursday afternoon he expected the Senate Finance Committee to pass a revised version of the gas pipeline tax bill out of committee, clearing the way for a floor vote, at a meeting scheduled for 9 a.m. Friday.
Senators would then move to a joint session to consider veto override votes and return for amendments and a vote on the gas pipeline tax bill, Stevens said.
If the Senate makes any changes to the House’s version of the natural gas pipeline bill, it would head back to the House for an up-or-down vote.
