AKLNG advances without option for local governments to cut their own deals

It's Thursday, Alaska.

In this edition: The AKLNG subsidy bill cleared what will likely be its easiest hurdle of the special session on Thursday, advancing from the House Finance Committee after approving a slate of amendments that did away with the project developer's biggest sticking points. The big question mark remains in the Senate. Also, the reading list.

Current mood: 🤔

AKLNG advances without option for local governments to cut their own deals

With a little more than a week remaining in Republican Gov. Mike Dunleavy's special session, the gasline subsidy bill is nearing a vote in the House — without one of the big-ticket items advocated for by allies of the North Slope Borough.

The House Finance Committee wrapped up its work on a bill to significantly cut taxes for the 800-mile pipeline project on Wednesday. And in doing so, the North Slope Borough and the Kenai Peninsula Borough — future homes to the most valuable pieces of AKLNG, the multibillion-dollar liquefaction and treatment facilities — saw their ability to directly negotiate with the project erased.

The provisions that allowed the North Slope Borough and the Kenai Peninsula Borough to negotiate alternatives to their property tax systems — such as an ownership stake in place of the 90% tax cut that Dunleavy and developers are seeking — emerged from the House Resources Committee and were among the most contentious provisions of the legislation. While it was seen as a way for the North Slope to secure the same kind of generational benefit that the community did from the oil industry, backers warn that the project is already barely economically viable, even with the 90% cut.

Any higher taxes, they've argued over the last few weeks of hearings, could sink the project.

So, lawmakers looking to advance the project in one way or another — Republicans and moderate independents — removed the provision in a sprawling amendment during the final stage of mark-up on the bill, and they did so with little debate on that particular provision.

"A compromise is difficult, and rarely is everyone happy in a situation like this. I'm doing what I can to try to enable this project and give it a fighting chance, while still protecting the state's interest. I think this amendment moves a significant way in that direction," said Rep. Calvin Schrage, an Anchorage independent who caucuses with the mostly Democratic Majority and is one of the committee's three co-chairs. "I will be supporting this today, as I think it gets us closer to something that is viable and gives this project a fighting chance."

As they did on several other amendments, Schrage and independent Anchorage Rep. Alyse Galvin frequently broke from the Majority to vote along with minority Republicans — who were frequently seen conferring directly with project developers throughout the amendment process — to advance the project on terms favorable to the developers.

As the Alaska House Finance Committee debates a tax break for the proposed gas pipeline, legislators are literally checking with the pipeline developer outside the committee room on each amendment. #akleg #Alaska

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— James Brooks Cascade (@alaska.bsky.social) June 9, 2026 at 11:43 AM

Schrage's fellow co-chairs of the House Finance Committee — Reps. Neal Foster and Andy Josephson, both Democrats — opposed the change.

"It's difficult for me to know whether this much forgone revenue is required to make the project economical," said Josephson, noting that there's been a lot of anxiety from the communities along the project's corridor about whether they're giving up too much for too long. "They talk about municipalities as being creatures of the state; we create them, but we have to nurture them, and I don't know that there's enough nurturing in this bill, in this amendment."

Foster, who represents Nome, echoed many of the concerns shared by fellow rural lawmakers.

"I think it's a good effort to try to come to some kind of resolution with the North Slope, but I am persuaded by their argument that the resource comes from the region," he said, "and they'd like to have more say over what they do within their region."

But for Republicans, the fact that the North Slope community contains the heart of the state's oil and gas industry — feeling both the benefits and the costs of industry — carried little weight in the face of the AKLNG project's grandiose claims about more affordable energy for Southcentral communities or the heady claims about job growth and economic development.

"I just want to reiterate to my district that the resources in the state of Alaska belong to all Alaskans," said Eagle River Republican Rep. Jamie Allard, later adding, "I think what we did today, actually this last few weeks, is good, and it's good for every single child, man and woman, across the state of Alaska."

The legislation is set up to appear on the House floor as early as Friday, where it will face a similar amendment process.

It still needs to clear the Senate, which appears to be a taller task in large part because the Senate Finance Committee has far more rural lawmakers that aren't so easily swayed by the big promises.

The notable changes from the mark-up process

• Approved two measures aimed at protecting Alaskans from escalating costs under the project, essentially enshrining the proposed fixed-price contract between Enstar and the project in state law. As I wrote about previously, those cost protections are better than nothing, but reinforce that the real prize here is the export project, which won't be guaranteed even if they build the pipeline.
• Approved another measure to spread out the tariff for the Fairbanks spur line over all customers, not just in-state users. That means the cost for the spur line would also be borne by international buyers.
• Approved an amendment that would remove the option for local governments, specifically the North Slope Borough and Kenai Peninsula Borough, to negotiate alternatives to collecting property or throughput taxes. Developers worry that giving the local government control exposes the project to uncertainty, while communities see it as giving up too much.
• Removed the option for municipalities to negotiate alternatives to the volumetric taxes, setting the pipeline tariff at 13 cents for the processing facilities and the 6 cent tax for the pipeline.
• Split the difference on the confidentiality provisions, clarifying that the Legislature should at least now the details of a proposal before they pony up additional money into the project.

And some notable rejections:

• Another attempt to extend the state's corporate income taxes to all oil and gas companies failed once again by a slim 5Y-6N margin, with Anchorage independent Rep. Calvin Schrage joining the Republicans to vote against the change.
• The same went for another change that would have imposed a surcharge on the oil and gas industry to fund maintenance of the Dalton Highway. A growing concern for the state budget, it's been bitterly opposed by the oil and gas industry, which argues it already pays plenty of taxes. Rep. Schrage also cast the deciding vote on this one.
• Legislators also narrowly rejected an attempt to put LNG imports under the purview of state utility regulators. Arguing that it'd increase costs, Rep. Alyse Galvin, I-Anchorage, joined the Republicans in defeating the change.

Stay tuned.

More coverage: ADN, Alaska Beacon

The reading list

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