Alaska LNG Tax Relief: Legislature Seeks Compromise in Special Session

The Alaska Legislature began its second consecutive special session Saturday to resolve a deadlock over tax relief for the Alaska LNG project. Leaders from the House and Senate formed a six-member conference committee to reconcile a Senate bill that Gov. Mike Dunleavy and House leadership described as unworkable.

Gov. Mike Dunleavy and House majority leader, Anchorage Republican Rep. Chuck Kopp, stated Friday night that Senate floor changes resulted in a bill that is “not going to work,” according to Dunleavy. The conflict centers on a decades-old goal to establish a North Slope gas pipeline.

Shortly after convening Saturday, the House and Senate appointed a conference committee to produce a final draft. House Speaker Bryce Edgmon, a Dillingham independent, said he hopes for a working agreement by the return date of July 1.

Why is the Alaska LNG tax bill contested?

The disagreement stems from amendments made by the Senate that altered the House’s version of the bill. The House previously passed its version in a 34-5 bipartisan vote on June 12, which Dunleavy and Glenfarne called a “clean bill” intended to reduce the project’s financial burden.

Sen. Bert Stedman, a Sitka Republican, disputed the “clean bill” description. Stedman noted that the administration provided the Senate with “four pages of cleanup” and modifications to the House version, according to the senator.

Did You Know? The House of Representatives passed its initial version of the Alaska LNG tax relief bill on June 12 with a bipartisan 34-5 vote.

What are the specific points of disagreement?

Senate changes included an amendment regarding the use of union labor for the project. Additionally, the Senate proposed a change to Alaska’s corporate tax code that would require oil and gas pass-through entities, such as LLCs and S corporations, to pay income taxes.

Sen. Bert Stedman stated that significant questions remain regarding the project’s economics. Stedman argued that the legislature needs to know if the issues are truly economic and “how big is the impact,” rather than accepting general statements that the economics are bad.

Rep. Will Stapp, a Fairbanks Republican, characterized the Senate’s actions as having “intentionally murdered the bill,” though he expressed optimism that a resolution is possible.

Expert Insight: Samantha Carter suggests the tension reflects a broader struggle to balance corporate incentives with public benefit. The use of a volumetric tax mechanism, as mentioned by the governor’s office, represents a trade-off intended to provide predictable revenue for corridor communities while keeping the project financially viable.

What happens next for the pipeline project?

The newly formed conference committee will attempt to negotiate a compromise. The House is represented by Speaker Bryce Edgmon, Anchorage independent Rep. Calvin Schrage, and Soldotna Republican Rep. Justin Ruffridge, with Schrage serving as chair.

No tax relief, no pipeline? Dunleavy argues bill could make or break Alaska’s LNG future

The Senate is represented by Sen. Bert Stedman, Bethel Democratic Sen. Lyman Hoffman, and Tok Republican Sen. Mike Cronk. The committee’s meetings have not yet been scheduled.

If a compromise is reached, the legislature may hold a one-day session to ratify the agreement before July 1. Gov. Dunleavy’s spokesperson, Jeff Turner, said the governor is “encouraged” by the effort to find a version that incentivizes the project while ensuring community revenue.

Frequently Asked Questions

Who is serving on the conference committee?

The House is represented by Rep. Bryce Edgmon, Rep. Calvin Schrage, and Rep. Justin Ruffridge. The Senate is represented by Sen. Bert Stedman, Sen. Lyman Hoffman, and Sen. Mike Cronk.

What specific tax changes did the Senate propose?

The Senate proposed changes to the corporate tax code that would subject oil and gas pass-through entities, including LLCs and S corporations, to income taxes.

What is the goal of the volumetric tax mechanism?

According to spokesperson Jeff Turner, the mechanism is intended to provide steady, predictable revenue to communities located along the pipeline corridor.

Do you believe tax incentives are the most effective way to jumpstart large-scale infrastructure projects like the North Slope pipeline?