A key senator warned Wednesday the Alaska’s share of the pipeline could be worth “virtually nothing” in the first special session hearing on the governor’s newly proposed liquified natural gas pipeline legislation, where lawmakers consider giving up billions in future tax revenue to make the project happen.
JUNEAU , Alaska - A key senator warned Wednesday the Alaska ’s share of the pipeline could be worth “virtually nothing” in the first special session hearing on theSenate Finance Co-Chair Bert Stedman , R-Sitka, raised a fundamental concern about the state’s return on the project.
As it stands, Alaska holds a 25% share of the gas line — but Stedman noted that’s before additional investors can choose to buy into the project.
“My concern is have no value or virtually no value,” Stedman told the committee. “When they go out to bring in other investors, we’ll suffer a dilution issue and the question is, how big is the dilution issue? We have no idea. ”the senior director and global head of gas & LNG for GaffneyCline, the state’s energy consultant on the gas line, said once a final investment decision is made, the state’s share “may or may not have significant value.
” Fulford deferred comment on Alaska’s share to Glenfarne or AGDC, the state’s entity in the project. Alaska’s News Source reached out to both Glenfarne and AGDC for comment Wednesday morning. As of publication, neither have responded.
After being left out of the conversation for months, the Senate Finance Committee’s Wednesday hearing took up the tax exemption issue“We have one item today for consideration of the committee for the rest of the week or the rest of the month, whichever may happen,” said Sen. Lyman Hoffman, D-Bethel and Senate Finance Co-Chair, while opening Wednesday’s hearing.
According to the major developer Glenfarne, the project will meet “Alaska’s domestic energy needs” with goals to later expand to Nikiski and begin to export LNG. The project has been frequently compared to the Trans-Alaska Pipeline System, which transports crude oil from Prudhoe Bay to Valdez, by the governor and members of the congressional delegation. But in order for the pipeline to be more than a pipedream, Gov.
Mike Dunleavy, R-Alaska, and Glenfarne say the project needs deep property tax exemptions. : SB 2001 in the Senate and HB 2001 in the House, where were both referred directly to their respective Finance committees. The new measures address the Alaska Gasline Development Corporation, community impact grants, LNG import facility regulation, and a new LNG project mitigation fund. Four gas line bills are now before the special session.
In addition to the two new measures, HB 381 and SB 280, the governor’s original property tax bills from the regular session, were kept alive after a vote from the legislature.
“It’s worth remembering that this is an extremely ambitious project, but nevertheless one with huge benefits if it were to go forward,” GaffneyCline’s Fulford said. Hoffman said Wednesday’s hearing was designed to give the committee a basic understanding of the project.
The governor introduced property tax exemption legislation mid-session, where the Senate version stalled in the Senate Resources Committee until the last days of the regular session, as committee members and the administration clashed over how deep the exemptions should cut. The Senate Finance Committee was the only committee SB 2001 was referred to and the bill heads back to the Senate floor once it is discharged.
While Wednesday was the Senate Finance Committee’s first hearing on the governor’s new bill, the House Finance Committee has been scrutinizing HB 381, the House version of the governor’s original property tax legislation from the regular session in Anchorage. HB 381 was substantially changed by lawmakers in the House Resources committee and is one of four gas line bills now before the special session.
With little path forward in the waning days of the regular session, House lawmakers scrambled to add last-minute property tax exemptions into an unrelated bill, but House Majority Leader Chuck Kopp, R-Anchorage, said the exemptions did not become viable after further changes were made. During the regular session, the state’s original property tax proposal would have significantly reduced what Alaska and local governments stood to collect.
Under current law, the state was projected to receive $8.4 billion in taxes from the pipeline by 2042, according to the Department of Revenue. Under the governor’s proposal, that figure fell to $829 million. Local governments would have seen their share drop from $5.7 billion to $728 million over the same period. The process during those final days would have largely bypassed committee scrutiny in favor of quick passage.
Stedman was blunt about his concerns on the “What was going on in the building in the last few days would not lead to ,” he told reporters after the regular session ended.
“My recommendation to them is they play a square game, because the Finance Committee in the Senate is not going to mess around. ”“Alaska still has a historic opportunity in front of it — but realizing that opportunity will require urgency, alignment, and a competitive framework that allows projects like Alaska LNG to move forward,” the company said in a statement.
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LNG Dunleavy Hoffman Stedman Juneau Glenfarne AGDC Alaska Gasline Development Caucus
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