Alaska House recesses 10 days as gas line conference committee begins

The Alaska House of Representatives sent **HB 381**, the tax framework for the proposed Alaska LNG gas line project, to a conference committee Monday after rejecting Senate amendments **12 to 28**, then voting unanimously to recess until July 1.

Before the concurrence vote, the House passed **HCR 301** by **40 to 0**, a carryover resolution allowing HB 381 and the work done during the second special session to carry forward into the newly convened third special session. The Majority Leader said the resolution allowed the body to "carry the work forward into the next special session that we had done as a complete package rather than starting over from ground zero."

After the House failed to concur, the Speaker appointed a conference committee chaired by Representative Schragg, with Representative Edgeman and Representative Ruffridge, to meet with a like committee from the Senate. The House then passed **HCR 302** by **40 to 0**, authorizing the recess. The body is set to reconvene Wednesday, July 1, at 10:30 a.m.

What Is at Stake

The House rejected concurrence after the Majority Leader walked through major changes the Senate made to HB 381. The Senate version added school funding cushions for districts with sharp enrollment drops, repealed the existing in-state natural gas pipeline fund and replaced it with a single Alaska LNG Project Bond Fund, and required AGDC's board to conduct an annual asset review with an independent audit.

The Senate version also reversed bond approval rules. Where the House version allowed AGDC to issue bonds unless the legislature voted to stop it within 90 days, the Senate version requires the legislature to actively approve any bond issuance within 90 days. A new Alaska Affordable Heating Fuel Fund would set aside 20 percent of the state's royalty gas revenue to help lower heating costs in areas without direct pipeline access.

The alternative volumetric tax was redesigned to a single flat rate starting at 10.6 cents per 1,000 cubic feet when the LNG plant begins operations, doubling to 21.2 cents after ten years and again to 42.4 cents in 2060. The Senate version also removed the House's 2060 sunset on the tax break, making it permanent.

The Majority Leader singled out a pass-through entity income tax provision, inserted on the Senate floor, as particularly problematic. The provision would add a graduated income tax on pass-through entities that produce, transport, treat, store, or process oil or gas in Alaska, ranging from zero on income below $1 million up to 9.4 percent on income over $5 million. He argued it was "economically counterproductive at the moment the state is trying to attract final investment decision on Phase 1 and Phase 2 of the gas pipeline."

Puts Recess Terms on the Record