Kenai Peninsula lawmakers joined other Alaska House Republicans to kill the latest version of a tax break bill for the Alaska LNG Project.
The bill that lawmakers considered Thursday was the culmination of weeks of work by a bicameral group of lawmakers trying to hash out compromise legislation. That group – called a conference committee – convened after the House and Senate failed to agree on a version of the bill.
Soldotna Republican Rep. Justin Ruffridge was one of the conference committee’s six members. He voted against moving the bill out of committee, and then against passing it on the House floor. He says state lawmakers should take more time and weigh more input before passing a bill.
“This has been billed as the bill that either makes a pipeline be built or does not make a pipeline be built, and that just really is not true,” Ruffridge said. “This is one step in a very lengthy process, and I want to say, from my perspective, there's a lot of issues within this conference committee document.”
Bethel Democrat Lyman Hoffman co-chaired the conference committee. He says the latest iteration of the bill represents extensive work and the best possible product given the Legislature’s time constraints. Those constraints include the special session, which was scheduled to end Sunday, and a looming shakeup of seats after this year’s elections.
“I've worked on numerous pieces of legislation in the past for gaslines, and there always has been high expectations, but I will say that I believe that this particular opportunity that we have before us is the best opportunity that I've seen in many many years,” Hoffman said. “So I'm here to support this particular piece of legislation with the understanding that additional work has to be made.”
As currently proposed, the Alaska LNG Project would take gas from the North Slope, treat it to remove carbon, and then move it to Southcentral through a roughly 800-mile pipeline. The second phase of the project involves liquefying and exporting the gas from a terminal in Nikiski to buyers overseas.
Talk of how – and whether – to make the Alaska LNG Project more economical for Glenfarne Group dominated debate throughout the most recent legislative session.
Glenfarne is the out-of-state, would-be developer that assumed majority ownership of the project from Alaska last year. The company hasn’t actually committed to building the gasline yet. But company executives say tax relief from Alaska would improve their chances of getting financing for the $50-billion-plus project.
Gov. Mike Dunleavy called lawmakers back for a special session – then a second, and now a third – after they failed to pass a tax break bill he and Glenfarne supported.
The big hangup is whether to pass a new corporate income tax alongside a gasline tax break. The so-called s-corp tax would subject oil and gas companies not publicly traded on the stock market to Alaska’s corporate income tax law. Currently, the largest company affected would be oil and gas producer Hilcorp. And it would have applied to Glenfarne, too.
But the version of the bill advanced by the compromise group Thursday would have carved out an exception for the Alaska LNG project at Glenfarne’s request.
After Thursday’s votes, Glenfarne said in a statement that more work is needed on the bill, and that adding the new income tax doesn’t help deliver affordable energy.
“We support the Governor's call for continued work in a new special session and encourage the Legislature to adopt a clean, competitive framework that allows Alaska LNG, and future investment in Alaska, to move forward,” the company said.
The bill passed in the Senate by a vote of 11-8. Nikiski Republican Sen. Jesse Bjorkman was absent, and said on social media he had a prior commercial fishing commitment. If he’d been in Juneau, Bjorkman said he would have voted against the conference committee bill, which he says was rushed to a vote without adequate input on the changes.
“Good legislation requires transparency, careful analysis, and informed debate, not last-minute surprises,” he said on social media.
By the time the House gaveled in Thursday, Dunleavy had already called another special session. Lawmakers still took up the bill and killed it on a tied 19-19 vote.
Homer Republican Rep. Sarah Vance doesn’t support the s-corp tax proposal. She says collecting more taxes from oil and gas producers punishes them at a time when Southcentral Alaska needs their efforts most.
“I want to incentivize their production for Alaskans' energy rather than disincentivize them, and I have concerns about the message that this sends across the nation for business and economic opportunities to Alaska,” she said.
Vance, Ruffridge, Bjorkman and Rep. Bill Elam, who represents the northern Kenai Peninsula, are all vocal supporters of the Alaska LNG Project and have helped rally support for the gasline at events on the Kenai Peninsula. Glenfarne has also flown in potential buyers and investors to scope out the project area in Nikiski.
Elam said Friday he supports the gasline because of its potential to bring jobs and affordable energy to Alaska. But he says the latest version of the bill was the “wrong vehicle.”
“Unfortunately, the final conference committee report became much more than a pipeline bill,” he said via text message. “It added unrelated tax policy and provisions affecting private business disclosures that I believe deserved their own public debate.”
Lawmakers’ fourth special session kicks off July 27.
