Alaska Senate Majority says gasline tax break waits on Glenfarne financial numbers

The Alaska Senate Majority will not commit Alaska to a gas pipeline deal it cannot fully see, and says the responsibility now rests with Glenfarne and the Dunleavy administration to bring the Legislature detailed financial numbers this year, senators said in a position paper released Monday in Anchorage.

The majority said it supports building a pipeline while protecting Alaska's long-term fiscal future, using the Alaska workforce through project labor agreements and apprenticeship training, and prioritizing the delivery of gas to Alaskans first. It also said it stands ready to act once that data is in hand.

The Senate passed two versions of the governor's gasline legislation during the regular session and the special sessions that followed. Both granted the roughly $1 billion-a-year property tax break that Glenfarne and the governor said was critical to the project, and both added state protections such as timeline assurances, liability safeguards, a closed tax loophole, and Alaska project labor guarantees. A Senate Finance draft had also tied the tax break to Glenfarne paying $80 million and building a spur line to Fairbanks. The governor declined to support either version and has called a third gasline special session without producing a bill.

Sen. Gary Stevens, R-Kodiak, the Senate president, tied the delay to the size of the commitment. "A decision of this scale will outlast all of us, and it deserves to be made with care rather than in haste," Stevens said. "We are ready to evaluate the project further once the producer, Glenfarne, and the Administration bring us the numbers this year."

The project's estimated cost has climbed from $45 billion three months ago to between $65 billion and $70 billion, the majority said. Glenfarne already holds the permits to break ground and has repeatedly said it can build without legislation. The paper also said new information indicates the state could be left on the financial hook if the developer misses project deadlines.

Sen. Bill Wielechowski, D-Anchorage, said the modeling has not arrived. "We are being asked to commit Alaska to one of the largest financial decisions in our history without the numbers to know what it will cost the people we represent," Wielechowski said. "Before the Legislature locks in a billion-dollar-a-year tax break, Alaskans deserve a full and honest accounting."

Separately, the majority said Alaska does not need to wait on the larger pipeline to address near-term energy supply. Sen. Cathy Giessel, R-Anchorage, called for production from Cook Inlet's proven gas reserves, which the paper said should be developed either by the current leaseholders or by an operator ready to develop them, and for the Regulatory Commission of Alaska to move promptly on Enstar's proposed gas storage expansion. "We do not have to wait on the larger project to act now on Alaska's energy security. There is proven gas in Cook Inlet that should be in production, and the Regulatory Commission should move promptly on added storage so utilities can keep the Railbelt supplied through the winter," Giessel said.

Gov. Mike Dunleavy and Glenfarne have argued the lower tax burden is what makes the project financeable for lenders and investors. In the March statement announcing his alternative tax structure, the governor said the legislation "is necessary to attract private investment and allow the project to move forward." Monday's release included no new response from the governor's office or from Glenfarne, and reflects only the Senate Majority's account.

The fight over the tax break has run all session. Earlier Alaska News coverage detailed Dunleavy's push for a payment-in-lieu-of-taxes bill, a veto of a transit planning bill, a Department of Revenue analysis showing an $18 billion combined revenue reduction over the life of the project, and five borough mayors testifying against the tax structure over lost local revenue.