The major LNG developer’s main policy ask to lawmakers was introduced by the governor Friday, eliminates property taxes during construction and early operation. The senate majority leader has already signaled opposition to it.
JUNEAU, Alaska - The main policy request from the major developer for the proposed liquefied natural gas pipeline was introduced as a bill by the governor Friday , exempting property, sales and income taxes during construction and early operation.
“One of the key issues we have been discussing with state and local leaders is how to minimize energy costs for Alaskans,” Adam Prestidge, president of Glenfarne Alaska LNG, the major pipeline developer, said in a statement Friday.“We’ve been working with municipalities on getting their input as to what this should look like before you put the bill out,” Gov. Mike Dunleavy said beside Interior Secretary Doug Burgum As currently drafted, the bill eliminates state and municipal governments from being able to apply property tax on the proposed gas line during construction and early operation. “The revenue impact of this bill is positive because it assumed that the Alaska LNG project will not proceed without property tax relief,” the fiscal statement There is one caveat for spur lines, or branches of the pipeline which veer off for local community use. These lines are not eligible for this bill’s new abatement and can be taxed under current law. After early operation ends, the tax switches to a new tax system, but early operation — what the bill calls a “ramp-up period” — can be upwards of 10 years. There will be an “alternative volumetric tax,” a tax based on the quantity of every 1,000 cubic feet of gas, after that period ends. For every 1,000 cubic feet of gas, the Department of Revenue administers a six-cent tax which increases by 1% every year, levied by the state if in an unorganized borough or municipalities if within their boundaries. That tax is applied instead of “any municipal sales or use tax ... municipal taxes on or measured by gross or net income, or any municipal license, excise, fee charge, or other tax on or pertaining to the purchase, use, consumption, or ownership of property or services.” “Don’t tax the gas pipeline project as it’s being built, but once gas starts to flow, then you tax it,” Dunleavy said in an interview with Alaska’s News Source. If it doesn’t pass by the end of the session, it dies but can be reintroduced in the next legislative session. That said, Dunleavy, who introduced the bill, will not be the governor by next session, as he’s in his final term of office. Alaska’s News Source reached out to both the Senate Majority and Minority caucuses for comments from members. Spokespeople said lawmakers will have to review the bills. A spokesperson for Mayor Suzanne LaFrance said she did not believe the bill would have any direct impact on Anchorage. Alaska’s News Source also reached out to Fairbanks North-Star Borough Mayor Grier Hopkins and Kenai Peninsula Borough Mayor Peter Micciche. If passed by both the House and Senate, the bill immediately goes into effect and the tax benefits would end Jan. 1, 2040. “State and local policymakers, including members of the legislature, independent analysts, and the legislature’s own oil and gas consultants, have all recognized that reforming Alaska’s current system is a key step in advancing a North Slope natural gas project,” Prestidge said. “Acting swiftly on this measure is the most important step the legislature can take to ensure that Alaskans will finally benefit from bringing Alaska’s North Slope natural gas to market.” The statement leaves out a crucial detail: lawmakers say legislation like the one presented have an uncertain if the developers don’t provide more financial information on the project. Before the bill even made it to the senate floor, lawmakers in the bipartisan Senate Majority said a bill like this wasn’t going to have much room for passage if more financial information wasn’t provided. “We don’t know enough about the fiscal costs for this Glenfarne project,” Sen. Cathy Giessel, R-Anchorage and Senate Majority Leader, told reporters at a Tuesday press conference.“These bills provide the path for the necessary and anticipated agreement between the project and local governments to capture tax revenue for communities while balancing project economics,” he said. “Alaska’s business community, utilities companies, labor groups and industry leaders are standing behind this project and letting the Legislature know that we need to build the pipe!” Now that it’s been introduced, the governor’s message to the legislature is simple: get this passed fast. “Alaska’s poised to really, I think, score a touchdown here,” Dunleavy said. “We just ask that the legislature take a look at it quickly, take some action on it quickly, and then once we check that box off, I think you’re gonna see even more things fall in place here pretty quick over the next couple months.”for the bill reads. “Key details of project agreements remain confidential, including oversight structures, financial terms and potential state revenue.”“Simply having here is going to have a chilling effect on investment,” Sen. Robert Myers, R-North Pole, said at a minority caucus press conference last week. “If the attitudes in this bill that are expressed are what we are projecting out to investors, especially where we’re altering the deal at this stage of the development, who’s going to want to invest with this?”Sled dog dies on Iditarod trail en route to Elim checkpoint, officials sayAn Anchorage woman froze to death. A lawsuit claims a 911 dispatcher failed to get her urgent help.Suicide prevention advocates call for policy change after death of Kwigillingok youth LNG pipeline won’t get critical policy ask until developer shares financial info, Senate Majority Leader says Veto-proof education funding? Bill sees early bipartisan support with hopes to preempt Dunleavy decision
LNG SB 280 Gov. Mike Dunleavy Friday Governor Alaska Governor Glenfarne Adam Prestidge Sen. Cathy Giessel Anchorage
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