House panel advances gas pipeline bill with new tax structure

The Alaska House Finance Committee voted 11-0 Wednesday to advance House Bill 381 after adopting amendments that restructure how municipalities would tax the Alaska LNG project and establish an $80 million community impact aid fund split into two tranches.

The committee adopted Amendment 5 by a 7-4 vote, creating a volumetric tax structure of 13 cents per thousand cubic feet on gas treatment plants, 6 cents on the pipeline, and 13 cents on LNG facilities. The weighted average works out to roughly 10.5 to 11 cents per molecule, according to Ken Alper, staff to Representative Andy Josephson.

It changes the numbers slightly from a 12, 6, and 12, and that means 12 cents on the gas treatment plant, 6 on the pipeline, 12 on the LNG facility, into a 13, 6, 13.

The tax revenue would be split among municipalities and the state. Ninety-three percent of revenue from gas treatment plants would go to the North Slope Borough, with 7 percent retained by the state. The same split would apply to LNG facilities in the Kenai Peninsula Borough. Pipeline revenue would be divided in half: one portion allocated by mileage among boroughs the pipeline crosses, the other distributed statewide by population.

The committee also adopted Amendment 22, which raised community impact aid from $40 million to $80 million and transferred administration of the program to the Department of Commerce, Community and Economic Development. Representative Calvin Schrage's conceptual amendment split the $80 million into two tranches. The first $40 million would be deposited upfront into state accounts. The second $40 million would be available only after municipalities submit proof of verified actual or reasonably expected impacts from the project. The fund is limited to six municipalities: the five boroughs the pipeline crosses plus Anchorage.

Co-Chair Neal Foster and Representative Andy Josephson voted against Amendment 5, citing concerns about reduced local control for the North Slope Borough. Foster said he was persuaded by the borough's argument that the resource comes from the region and they would like to have more say over what they do within their region.

The bill advanced from the Alaska House Finance Committee with individual recommendations and attached fiscal notes.