Senate Resources, 5/16/26, 3:30pm

I call Senate Resources Committee meeting to order. Today is Saturday. May 16th, 2026, and the time is 3:30 PM. Please turn off your cell phones. Committee members present today: Senator Rauscher, Senator Kawasaki, Senator Dunbar, Senator Clayman, and Vice Chair Senator Wilkowski.

I'm Senator Giesel. Uh, we have a quorum to conduct business, and we've torn ourselves away from watching the beautiful horses at the Preakness. Uh, thank you, Heather and Chloe, for helping us out today. I'm going to start out by making sure people know that tomorrow's meetings of this committee are canceled. The Department of Revenue is not ready until Monday.

So I'll just make sure to announce that right now. So this is the 34th hearing. I feel like it's the 34th running of a race. Anyway, I've been watching the Preakness. Back to this.

Aren't they in the hundreds or the 200s? 151, Now that you ask. All right. If we're in the number 34th hearing of Senate Bill 280, and I would like Senate Majority Legal Counsel Sonja Kawasaki to come forward. The Alaska Municipal League submitted some comments, and we do read these comments.

Thank you very much. I mean, the City Council of Fairbanks submitted a piece supporting the spur line, which is of course in 280, but the AML also submitted some questions believing there were some conflicts. So I'd like our majority counsel to go through responding to those.

And after that, we will be having some public testimony on the bill.

Welcome, Ms. Kawasaki. Thank you, Madam Chair. For the record, Sonya Kawasaki, Senate Majority Legal Counsel. I'm going to try to go through the comments that the Alaska Municipal League sent us today that are pretty helpful and constructive for the committee. I just want to say, I just want to thank them for submitting comments because we do consider them, and in this case, they are the subject matter experts on, you know, this area, these areas of the laws, the municipal property tax and community impact type of our areas of law.

And so when they make comments like this to us, it helps us understand their concerns and the needs for their implementation of these programs that we're trying to put into— that we're trying to enact by the bill. So the first sort of comment that they made, that this— they're just generally speaking that providing an abatement and/or providing a lower tax amount, uh, lower tax method to a project for a specific project kind of sets a bad precedent for future projects. And I think that that is something that's been raised in the past by the mayors, and I— we understand that the sense of that, that would set a bad precedent. And we— I thought about it, and I think, you know, I'm hoping that the 10-year sunset helps mitigate this or, um, provide a higher level of comfort for the municipalities. Um, this— the 10-year sunset that we added to the bill is not something that AML raised, so I'm not sure if they noticed it in the bill and if they'd like to submit additional comments on it.

But as we've been hearing the last couple days, the 10-year sunset will, um, the, uh, time period that that starts is when the LNG facility comes online. And after 10 years, the, uh, the, the municipal property tax law and the state property tax law, uh, petroleum property tax law will revert to what it is in existing law right now. So we do want to be mindful of the financial needs of the project, the gas line projects, but we also want to be cognizant of the community's ability to assess their tax needs and their— and that those needs are also unique to them. And then along the same line of thinking, the Municipal League mentioned that maybe we could add the Department of Revenue's indirect expenditures report, add the losses of revenue to this indirect expenditures report. Um, the indirect expenditures report is a report that's done biannually, um, every other year by the Department of Revenue, and it's a report that details foregone revenue from tax credits, exemptions, discounts, and deductions, and The, um, our own Legislative Finance Division also, um, reviews the Department of Revenue's, uh, indirect expenditures reports and will make recommendations to the legislature on each of the sorts of topics that are raised by the Department of Revenue and what sort of foregone, um, what the foregone revenue that those that result from those policy pieces.

So, um, it's an interesting solution, I would say, that we can consider and take under advisement, but it would be probably a little difficult because under the current property tax, uh, the current property tax regime requires evaluation of property, properties, and the AVT structure— I mean, part of part of the rationale for the AVT is to prevent having to value properties at this point in time, and then we rely on that alternative volumetric tax. And it's just a feature of the tax mechanism that we are pursuing under the bill. And so it might be a little bit different— difficult, but we'll have to take a closer look at whether or not we can add it to the indirect expenditures report because I think they might just be indeterminate values. But again, hopefully the 10-year sunset will help mitigate this concern.

Then another topic that AML raised was confusion whether the new revenue increases to the cap funding, how they would be accounted for and thereby distributed. Um, these funds are generated under the bill by the AVT and then again under the Community Impact Program, um, for the statewide community impacts distributions. And, um, I think that we expected that to be distributed through the per capita, um, formula under the community assistance program, but I did look into the law and I see that there is a community assistance fund that has— when that has a balance of at least $15 million, then the Department of Community Commerce and Economic Development just distributes one-third of that without further appropriation. And so it is possible that this is the fund that AML is requesting to have those funds from in our two pieces of the bill directed toward. And it would, instead of being distributed through the formula, it would— excuse me— go through— it would augment that existing fund.

Excuse me. So we will take that into advisement as well and take a look at it for AML.

And then AML made a comment that the AVT now seems appropriate and it's just as it's distributed to the communities of impact and that the inflationary adjustments seem appropriate. So we thank them for those comments. And then there was a comment that the community impact program seems that funds will be hard to access based on the appropriations requirement. The intent of the bill is that in the initial community— or, I'm sorry, construction impacts fund, for the pipeline communities along the pipeline would be an initial $50 million that is appropriated through the— from the legislature to DCCED, and those would be then distributed, which we tried to ensure that DCCED would distribute it timely as soon as they receive the funds. And that DCCED would just report back to the legislature.

So we were hoping it would be a faster mechanism than what we have heard for the NPRA grants. But we are open to suggestions on how to flesh that out a little bit better.

But as far as an appropriation, I think there was concern about having to appropriate funds, the appropriations authority is a constitutional requirement. And so the legislature would have to initially appropriate the funds. But the way that we structured the most recent version of the Community Impacts Program would have DC CED rather than seeking the approval of the legislature through appropriations again, that the funding would go to DC CED and then they just distribute it as grants. The legislature just gets a report on it annually.

And then the other impact funds that are the annual $30 million from the developer for 5 years that are distributed statewide through the Community Assistance Program. I think this is a similar concern that was raised about exactly which part of the CAHPP program that we're using to distribute it. And so I'll have to look into that a little bit better. And then also, if AML would not mind reaching out to us and letting us know how exactly they can envision that being structured better, you know, we'd appreciate it.

And their final comment that was helpful Um, is that it was not clear how the 50% that goes from— sorry, that is shared between— there's a revenue sharing provision on our alternative volumetric tax, um, that would be 50% to the borough and 50% to the state. The 50% that would be accepted by the borough Um, uh, I, I understand. I remember there were comments from the city mayors that they would have preferred a more explicit mechanism to allow them to access those funds because it's not very, um, it isn't very— it isn't well described in the bill whether how that those funds would be distributed beyond the borough. And this is a comment that we received in, in the past. We didn't change that distribution mechanism for this version of the bill, but that again is something that I think we should probably consider.

And I would welcome AML to help us figure out how that might be done, if it requires an actual formula or however would be best for to enable those distributions to the cities, you know, contained within a borough who would be receiving those funds.

And that was it for the question or the comments from the Alaska Municipal League, Madam Chair. Thank you, Ms. Kawasaki. Yes, good. We did look at these and they made some very helpful comments. Not only approving of pieces of the bill but suggesting clarification.

It was also helpful in the past when the Alaska Oil and Gas Association came and talked about the difficulty in dividing gas expenditures from oil expenditures. So these kinds of constructive comments are really helpful versus we just don't like the bill. So in any case, we do thank AML and Alaska Oil and Gas Association for for constructive input. Thank you, Ms. Kawasaki. So the remaining item on the agenda is public comment.

First, let me ask, is there anyone in the room? I will open public comment. Is there anyone in the room that wishes to testify on Senate Bill 280? Seeing none, I will go online. The first person signed up is Thomas Mason.

After Mr. Mason will be John Ketchum. Mr. Mason, welcome. What I will ask is that you identify yourself with your name and any affiliation. I am limiting public testimony to 2 minutes, and I do have a timer, so welcome.

Thank you, thank you very much. My name is Thomas Mason, and I'm speaking on behalf of myself as an Alaskan. I do want to say I support more of the House Resources version of this committee or of this bill because it does not provide pricing controls on LNG pricing, which I think is an uneven framework that will discourage investment. I don't feel like the bill, the Senate bill as it stands, will actually result in a pipeline being built and that any potential revenue to the Municipal League, you know, a higher percentage of zero is still zero. So I just wanted to make those two comments and thank you very much for the opportunity to testify.

Thank you very much, Mr. Mason, for your testimony. Next up is John Ketchum. He'll be followed by Reuben McNeil. Mr. Ketchum, welcome.

Can you hear me? Yes, now we can hear you, Mr. Ketchum. Okay. Sorry. Thank you very much for the opportunity.

My name is John Ketchum. I live in Anchorage. Alaska is my adopted home of 43 years now. I got married here and raised a family here, and this is the place I love to live. And I worked in oil and gas for about 40 years and still participate in some of that.

I currently serve on the board of a workforce development and safety nonprofit. And that's an issue that's very important to me. So a little about me. My request is, and the reason I wanted to call in today, is as I listen to the debates and as this gets discussed, my request to the legislature and those involved is that when evaluating this project and how we ensure that we get what is best for Alaska regarding royalties and taxes and other things, that we also consider the benefits that are beyond state revenue. For example, my, my view is that this project will bring years, several years, of billions of dollars of economic activity to the state, which means there will be highly paid workers who will spend money in Alaska at local businesses throughout the state.

There will be more indirect jobs such as, you know, food and clothing and coffee shops and restaurants and bars and shops and hotels and builders and cars and all that.

All of those jobs and all of those things will be— will bring enhancements in revenue and a better way of life in Alaska and will reverse— will help reverse the longtime trend of population decline. There will be new permanent residents like myself. I thought I would be here for a year. I fell in love with the state and raised a family family here and own a business here. Um, there will be more kids for the schools, more working young people where we're struggling.

All of my friends that own businesses are struggling to find people who want to work and know how to work. This will help with that. It will bring non-working spouses who will be assisting in the community with new ideas and energy in schools and in clubs and in supporting kids and PTAs. The many will do as I did and they'll stay here. They'll fall in love and stay here and raise families here and enhance the state.

The other thing is this will keep some of our young people here. I have 3 daughters. All of them think they have to leave Alaska to have a successful career in life. And this will help offer those opportunities that this will bring, will help keep young people here and then lure back some of our best and brightest who have gone away for college and don't plan to come back. Mr. Ketchum, another huge— Mr. Ketchum, Mr. Ketchum, your 2 minutes is up.

Um, we would welcome your written testimony. You can send it to [email protected].

So that's the word Senate and Resources, no dots between them, uh, and then followed by @akleg.gov. So thank you very much for calling in to testify today. Uh, next up is Reuben McNeil in Fairbanks. Mr. McNeil, welcome.

Yeah, hello guys, my name is Reuben McNeil from Fairbanks. Taking some time out of my day today, my Saturday, to voice my support for an LNG gas line. Now I don't know what version of the— what version of a bill will make that happen. I'm hearing that there's— that the House version may be a little bit better than the Senate version. In regards to taxes and things like that.

But that's what we hired you guys for, is to spend 117 days, which I believe it is today, working out the details to get this thing across the finish line because Alaskans are counting on it. The prior— the previous caller hit some highlights that I want to echo. You know, this is going to bring jobs to Alaska, high-paying jobs. This is going to bring wealth to Alaska. This is going to bring cheaper energy to Alaska.

This may actually slow down the migration out of the state. Nobody's expecting a quick fix from this gas line because there's time involved here and money. But I just implore people, you know, the regular Alaskans, regular Jack and Jill out there, You know, we're dealing with $5.19 a gallon gas here in Fairbanks. I just opened up my electric bill. I'm paying 28 cents per kilowatt hour, which is absolutely insane and it's unsustainable.

And to what extent the gas line is going to help with that, nobody really knows, but it's a direction that we need to head into. So, The only hope that a lot of us have is that it's an election year and things tend to happen during election years. But I will leave you guys with this. Do not—. The people, the legislators who are up for reelection this year and who are running for reelection, don't come back here with excuses about a gas line that didn't get passed.

It's not going to fly well with Alaska. A lot of us are hanging on by a thread. I limped a fuel— a heating oil tank across the finish line in spring this year, and I'm choosing not to fill it up until things change. Now, is the gas line going to fix that? Probably not.

But the point is, is that we need to move in directions for Alaskans, and this is the direction that we need to move into. Thank you, Mr. McNeil. Your time time limit is over. You also can send in your written testimony. We would welcome it.

Thank you very much. Next up, Dixie Banner has signed up. Ms. Banner, welcome. Yes.

Ms. Banner, Ms. Banner, Ms. Banner, before you begin, you probably already know, give your name and your affiliation, and the time limit is 2 minutes. So welcome.

Thank you. Thank you for giving me your time. I'm Dixie Banner from Wasilla. I've watched Alaska over the years with no— we had gainful employment for a while. 2013, When we did the map, the route of the LNG project, which in 2014 was canceled.

Since then, we haven't had any gainful employment. And you— we cannot afford another 10 more years. Most everybody of our age, as it was noted, most of our grandkids are gone. While you guys, yes, you have grandchildren, but you have gainful employment, whereas we have not. We're— like we said, as noted, we're running on thin air.

And if you choose to not bring on this gas pipeline, I think you're going to have something very similar to, like, Seattle. They're all going to leave and they're not looking back. So you're gonna, if you're going to do this, you're gonna be running a show without any people. Bottom line is we also need term limits because there's a number of you guys have said in Juneau, looking back saying, oh well, everything will be great and grand. Well, you know, we still need to move the capital.

And that's one of the reasons why we don't have a gas line. You guys are not being held accountable or transparent. Thank you very much. Have a great day. Thank you, Ms.

Banner, for your testimony. And that is the end of people signed up to testify today.

So I will close public testimony for today. We will certainly have hearings going forward where people can testify. So this concludes our meeting of the second— the 62nd hearing of this bill. Our next meeting will be on Monday; that's May 13th at 9:00 a.m., at which time the Department of Revenue will be speaking to us. They've got some modeling that they'll be doing.

So at this time we'll stand adjourned. Let the record reflect the time is 3:53 p.m. I am.