Alaska Legislature: House Floor Session, 7/16/26, 1030am

Will the House please come to order?

Will members please indicate their presence by voting?

Has any member failed to vote?

Representative Schraggy, Board Clerk, please tally the board. 38 Members present. With 38 members present, we have a quorum to conduct business. Mr. Majority Leader.

Mr. Speaker, I have no previous excused absences today, and I move and ask unanimous consent that Representative Burke— Freer and David Nelson be excused from the call of the House today. Hearing no objection, the members are excused. Leading the invocation today, this afternoon, is our very own Representative Galvin. Will members please rise.

Thank you. With the deepest respect for the religious beliefs and traditions of all Alaskans, I offer the following prayer.

As we begin this time together in our House floor session, may we have humble hearts, grateful spirits, and a shared commitment to serve the people of Alaska with honor, and integrity. We give thanks for this extraordinary place we call home, for its majestic mountains and rivers, its abundance— abundant lands and waters, its rich cultures, and the remarkable people who make Alaska strong. May we never lose sight of the privilege and responsibility entrusted to us by those we represent. Grant us wisdom to seek what is right patience to truly listen, courage to make difficult decisions, and grace to treat with one another with respect, even in times of disagreement. May we choose understanding over division, cooperation over conflict, and hope over fear.

May our work today reflect compassion for those who are struggling, opportunity for those who are striving, and a steadfast commitment to the well-being of every Alaskan. Today and for generations to come. May this house be a place where good faith prevails, where service is greater than self, and where our efforts leave Alaska stronger than we found it. Amen.

Representative Allard, will you please lead us in the Pledge of Allegiance? I pledge allegiance to the flag of the United States of America And to the Republic for which it stands, one nation under God, indivisible, with liberty and justice for all.

Representative Story. Thank you, Mr. Speaker. I move and ask unanimous consent that the prayer be spread across the journal. Hearing no objection, the prayer will be spread across the journal. Will the clerk please certify the journal for the previous legislative days?

I certify as to the correctness of the journal for the 1st through the 26th legislative days of the 3rd special session. Mr. Majority Leader. Mr. Speaker, I move and ask unanimous consent that the journal of the previous days be approved as certified by the Chief Clerk. Hearing no objection, the journal stands approved.

Are there guests for introduction this afternoon? Not—. Representative Gray. Thank you, Mr. Speaker. I would ask my constituent Waylon Gray to stand in the Peratrovich Gallery.

Today I have the privilege of introducing my son Waylon Gray to the Chambers. He is going into 7th grade at Rilke Schule. He likes piano lessons, swimming, downhill skiing, and he just returned from Sitka Fine Arts Camp where he specialized in clown theater. Will you please help me welcome him to the Chambers?

Welcome, Waylon. Not seeing any additional guests to be introduced this afternoon.

Madam Clerk, are there any messages from the governor? A message dated July 9th stating the governor has vetoed the following bill: Committee Substitute for House Bill Number 16, State Affairs. Amended Senate, effective date failed House, campaign finance contribution limits, APOC. Message dated July 13 stating the governor has allowed the following bill to become law without signature: House Bill Number 14, amended Senate, effective date added Senate, medical assistance insurance disability workers' compensation, Chapter Number 57, Session Laws of Alaska 2026. And I have no further messages from the governor.

Are there any messages from the other body?

A message dated July 16 stating the President has granted limited powers of free conference to the Senate conferees in the conference committee considering the House and Senate versions of House Bill number 381. A message dated July 16 stating the Senate has adopted the report of the conference committee with limited powers of free conference Considering Senate Committee Substitute for Committee Substitute for House Bill Number 381 Finance, amended Senate, and Committee Substitute for House Bill Number 381 Finance, amended, thus adopting Conference Committee Substitute for House Bill Number 381. And I have no further messages from the Senate.

Madam Clerk, are there any communications? Alaska Seafood Marketing Institute Annual Report. Fiscal year 2025, as required by Alaska Statute 1651-100.

And I have no further communications this morning, Mr. Speaker. Are there any reports of standing committees? There are no reports of standing committees this morning.

Any reports of special committees?

The conference committee considering committee substitute for House Bill number 381 Finance amended and Senate committee substitute for committee substitute for House Bill number 381 Finance amended Senate, uh, respectfully requests limited powers of free conference on the language that is not identical in the House and Senate versions of House Bill number 381. Before I turn to the majority leader to bring the bill before the body, a couple of informational items Number 1, reconsideration is not available on a conference committee report. That's just a for your awareness item. Number 2, to finish our work from when we begin this process in the conference committee debate, under Uniform Rule 42A, I'm granting limited powers of pre-conference for House Bill 381 as requested. And certainly the conference committee worked under that auspices, that understanding.

So with those two ministerial items aside, Mr. Majority Leader. Mr. Speaker, I move and ask you now— I'm sorry, I'm sorry, Mr. Majority Leader, I got ahead of you. My apologies.

We need to read the report.

And Madam Clerk, please. A report dated July 16th stating the Conference Committee with Limited Powers of Free Conference considering committee substitute for House Bill number 381 Finance amended and Senate committee substitute for committee substitute for House Bill number 381 Finance amended Senate recommends Conference Committee substitute for House Bill number 381 be adopted. Attaches 3 previous fiscal notes. The report was signed by Representative Sharagi, Chair, Representative Edgeman, And Senator Hoffman, Chair, Senators Steadman and Cronk.

Mr. Majority Leader, Mr. Speaker, I move and ask unanimous consent that the House take up the Conference Committee report for House Bill 381, which is on the members' desks. Hearing no objection, that brings the Conference Committee report before the body. Mr. Majority Leader, from District 12 will explain the report.

Representative Schraggy.

Thank you, Speaker Edgeman. It's been my honor to chair the conference committee and to provide this report to you all today. The conference committee made several— and permission to read, if I may? Permission granted. Thank you.

We've been working on a shoestring trying to get this all together, and I need my notes. Thank you. The conference committee made several changes between the last version of HB 381 voted on this body. Version S.A. and the conference committee substitute before members today, version E. I'll start by emphasizing that this bill reflects compromise and extensive negotiations with AGDC, Glenfarm, the administration, the Senate, and numerous stakeholders. Many of the changes are technical and at the request of stakeholders, clarifying provisions to provide certainty to the departments, developers, and the investors.

In terms of changes that were made, the first that I'll highlight is related to required local contribution. The committee removed the Senate floor amendment exempting required local contributions, which per legislative finance would have inadvertently exempted the RLC indefinitely. Second, in terms of prudent investor information, the bill updates the information available to the state and municipalities as prudent investors when considering whether to exercise an option in the revenue-generating project. It ensures that the Department of Revenue receives full and unredacted prudent investor information while allowing AGDC to reasonably redact commercially or financially sensitive information. This strikes a balance between transparency for legislative decision-making and protection of confidential project information.

In terms of notice requirements, those are strengthened. Copies of filings or notices to CFIUS, the U.S. Treasury, FERC, and the Department of Energy must be provided to the legislature, with AGDC being allowed to redact financially or commercially sensitive content. This bill excludes financing from notice requirements but includes risk mitigation actions, procurement status, FID status, major project phase decisions, and any decommissioning planning. For those concerned about foreign ownership and changes in ownership, foreign ownership reporting is improved. A significant change in ownership structure is defined as any change of 5% or more of the pipeline or 10% or more of other project components.

Such changes must be reported to the legislature along with the name of the new owner and description of the ownership adjustment. The full legal name of any foreign entity involved must also be provided.

In terms of protecting the state from costs if the project does not move forward, the bill protects the state if the project does not move forward and the state elects to buy out project assets, ensuring any tax abatement or relief provided under this legislation cannot be counted as project value. This avoids a major payout to the developer for any tax abatement provided by the legislature.

In terms of gas supply contracts to Alaskan users, The gas supply contract inflation adjustment is refined. Previous language required at least a 1% adjustment and no more than 3%, guarantee— guaranteeing that costs to Alaskan ratepayers would climb at least 1%. That floor has been removed should we enter a period with low or no inflation.

To protect against cost overruns, the definition of cost overrun, a top concern of the developer, is updated. The cost overrun determinations will now be based on the construction budget established at the initial closing of construction financing instead of at FID, giving the RCA the most accurate basis for evaluating project costs and striking a balance between cost overrun protection for the state and for the developer. In terms of the construction deadline, the deadline for the Phase 1 pipeline is extended to 2034 based on developer concerns. The 3 key project dates may also be extended in the event of force majeure, which we now define, providing protection to the developer if events outside of their control transpire that prevent this project or delay this project— I should say delays this project from moving forward in the— according to the deadline set forth. For workforce development, an additional $10 million is added to the Phase 1 Community Impact Fund fund with intent language directing the funds towards the AK LNG Workforce Development Project.

This includes but is not limited to the Alaska Teamsters Training Center in the Matsu, the Fairbanks Pipeline Training Center, and the Instructional Service Center and Avtec in the Kenai Peninsula. This investment helps ensure Alaskans are prepared to fill jobs created by this project, and the developer, I should note, is fine with this change.

In terms of project labor agreements, the Senate floor PLA language is amended to add apprenticeship utilization provisions and clarify that PLAs occur between contractors and appropriate labor representatives. It requires binding commitments that the project developer ensure contractors enter into PLAs. This version also removes the requirement that all pipeline components be built under prevailing wage, which would have applied to offshore work and and removes the 15% apprenticeship requirement due to developer concerns tied to the conditional structure of the abatement.

Regarding the S-Corp pass-through entity tax, the committee exempts the Alaska Liquified Natural Gas Project to avoid, avoid further burdening an already marginal project and delays the effective date by one additional year, now 3 years, and it requires an informational tax return for year 2027. Ensuring the next legislature and the administration have real data, which has been lacking, to make needed adjustments in the future. I recognize the current language is not perfect, and we will likely need to reduce the tax rate to achieve parity. And go ahead and clip this: I am committed to doing exactly that and ready to work with members to get it across the finish line in the next legislature.

That concludes my overview of the substantive changes.

And I will save further remarks for debate. Thank you, Mr. Speaker. Brief it is.

Will the House please come back to order before we undertake debate on the Conference Committee report on House Bill 381.

News to pass on to all of you, which you may already be aware of, but the governor has already issued an executive proclamation to call the legislature back in session effective July 27th, 2026 at 10:00 AM. And this, I presume to be no matter what happens with the vote on this bill, that the executive proclamation has been issued. So if this body were to concur with the changes, just as the other body did, the governor— the executive proclamation would still be in effect. So that for your edification. And also, once the debate has run its course and at the appropriate time, I'm going to ask the majority leader to sign edict, which will then end this 30-day session and allow members to certainly set the stage to return on the 27th of July.

So just a couple of pieces of information. Thank you, Representative Sharagi, for those opening comments. So under debate, Representative Ruffridge.

How did I know? Well, thank you, Mr. Speaker. I will just reiterate my comments from earlier this morning. What we have in front of us certainly represents a lot of work, and there's a lot of good work in this bill. I'm actually somewhat encouraged to hear that there's an intention, no matter what happens here today, to continue this work either in the next legislative session or certainly on the 27th of July.

Mr. Speaker, there's a lot of work that still needs to be done in this bill. We got far apace from, uh, I think the initial intent of the legislation, which was to offer a tax relief for a large infrastructure liquid natural gas project. And some of the areas of the bill that I certainly have concerns with are Section 2, which deals with required local contribution, the aforementioned income tax on certain entities. We're not even certain which entities those are. As we heard in conference committee this morning, it's actually a large unknown what Section 24 of this bill does.

In addition to that, we're asking actually, in order to implement Section 24, for certain companies—we're still not sure which companies those are—to offer to the Department of Revenue essentially a look-in to their company so that we can decide then, or the Department of Revenue can decide, how much we would like to take. I think most of us here, if we had the ownership of a company that the government wanted to come look inside of and say, "How much money are we going to take from you?" we would probably be in opposition to that. And so I am concerned about that language. And finally, uh, Mr. Speaker, I, I am concerned about the language that exists, uh, in the ABT structure as a whole, not in the initial phase. This bill, uh, actually coming out of the other body instituted two increases to the, uh, ABT structure.

That's not something that we looked at, uh, at the conference committee level, but certainly it's different than what the House had passed initially. And what we're doing in essence with those two increases is dictating where this money goes that we are paying in lieu of property taxes. So an ABT is saying to municipality, you cannot charge property tax on this, and instead you can have this alternative volumetric tax. Well, as soon as that amount goes up, we now, the state, are going to say in this bill, if this ends up being what we do, you can now demand that that alternative volumetric tax go to community assistance and then on the second time to the state alone. And Mr. Speaker, I think that sets a strange precedent that we the state can override property taxes and then direct it back to the state from a municipality.

I think that is maybe going in the wrong direction. I think it's something that we should take a look at. For those reasons and frankly a whole host of other things that I probably don't need to get into today, I think they've been well discussed both in public and in private. You know, there's some concerns with this bill that we really need to take a harder look at. And for those reasons, I will not be supporting the conference committee report today.

Thank you.

Representative McCabe. Thank you, Mr. Speaker. Good afternoon. You know, Mr. Speaker, every member of this body wants to support a North Slope gas line. We want Alaskan gas for Alaskan people instead of Canadian gas for Alaskan people instead of imports.

It means the world to our families, Mr. Speaker, lower heating bills Strong economy. I drove up to Fairbanks the other day. I stopped in Healy, I stopped in Anderson, I stopped a couple of different places. Every single person I saw, in fact, people that I didn't know, weren't even constituents, they stopped me in a restaurant and said, "Aren't you a legislator? We've seen your picture before." Go figure.

"And I need you to pass the gas line bill. We're gonna have to move out of state if you don't get this bill passed." gas line bill pass. My electric rates are too high. I'm too old to chop wood anymore. Various, various reasons, Mr. Speaker.

But let me tell you, supporting a gas line bill or supporting a gas line does not mean we should support every bill that claims to be a gas line bill. HB 381 is not a gas line bill. Let me say that again. HB 381 is not a gas line bill. It's a tax restructuring bill.

Let's be very clear about that. It's a sweeping tax restructuring bill that reaches far beyond the Alaska LNG pipeline. It rewrites tax law, Mr. Speaker, completely rewrites tax law. It changes utility regulation, creates new government funds, restructures property taxes, as the member from, uh, from Soldotna said. It creates an entirely new income tax on certain oil and pass-through entities owners.

Let me say that again. We are going to tax the owners of some of the most endearing, nimble companies that have supported Alaska for decades in our oil and gas industries. Now all of a sudden we're going to tax them.

Once the legislature decides to cross this Rubicon, this line, Mr. Speaker, there is no going back.

The member from, uh, Saldana mentioned that this morning in the conference committee. There's no going back. We are not going to be able to undo this. So we need to be very, very clear what we're doing. If our tax code needs reform, then let's do it in its own bill with its own committee hearings Let's not try to bolt it on to attack a gas tax relief bill or restructuring bill that is just the beginning of what we need for gas.

We're— Alaskans want this, they need this, and some legislators understand that and they've created this as a lever point. We're going to bolt something that we really want, which is an income tax. Let's be very clear about that. This is an income tax. Some Legislators have decided that they are going to bolt this on to this gas tax relief bill, to the start of the gas line process, so that they can get this income tax through.

Mr. Speaker, I want to talk a little bit about S corporations. There's no such thing as an S corporation. Subchapter S of the IRS Code is simply a manner of filing your income taxes. Congress created this 70 years ago to encourage small businesses. They recognized that small businesses also needed the protection of being a corporation, but they could not afford to pay corporate taxes, the double taxation thing.

A corporate tax— the corporation gets taxed and then the owner gets taxed on his dividend, or the owners. They created Subchapter S specifically so that we could have small businesses and nimble business is to do exactly what companies like Hilcorp, companies like Hex, companies like Armstrong are doing in Alaska. And those have been great companies. They've been great for us. And now all of a sudden, because we are— feel like we're in a fiscal pinch, we're going to bolt this S corp tax— it's not really a loophole— into a gas line tax relief bill, property tax relief bill.

That we really want, Mr. Speaker. This bill has become a Christmas tree. For Alaskans that wonder what a Christmas tree is, we have put a whole bunch of things in here that we think we want— different legislators, different committees— because they know that you want a gas line bill, Alaskans. They know that you want this gas line. They know that, that you want a very first start down here to have Glenfarn the producer that's going to do this, build a gas line, and he has said to us, "I can do it, but I need the tax restructuring.

I can do it, but you can't charge me 20 mils of property tax upfront before I even start building." That's what they said to us when we asked. Let's keep this in mind. Glenfarm is the 16th company that has looked at this, and they might be the last ones. So are we going to drive them out by bolting a bunch of stuff on there that is going to create this issue? I don't know, Mr. Speaker.

These should not all be bundled together. They just shouldn't. This bill asks us to accept too much. It has little to do with putting gas in the pipe. It does not guarantee a gas line, Mr. Speaker.

So if we pass this today, all this is is the first step. If ultimately the producer cannot get, or the builder cannot get to final investment decision, what we call FEED, then we are left with an income tax bill. So we have passed this bill to allow the, the company to go get financing, and if he can't get financing, we're still stuck with the rest of what's in this bill, which is an income tax. Let me be very clear about that. This is why I'm not going to support this.

This is an income tax. It's crossing a line that we should not be crossing in this particular bill. Thank you, Mr. Speaker. Representative Carrick.

Thank you, Mr. Speaker. I just want to start by thanking the conference committee and the member to my right for explaining the changes, which are complex. And one thing I'm really grateful for in this whole process is that all the entities affected were intimately involved in this conference committee process. And that includes the developer, it includes the labor stakeholders, it includes others who weighed in thoroughly throughout this whole process. Mr. Speaker, I remember about 2 months ago now I stood before the body and I said I was concerned about a rushed process.

I was concerned about pushing something through for the sake of just building the line and not looking at our rearview mirrors and seeing what was around us. And Mr. Speaker, I'm proud because this bill today I think represents the best compromise solution. I've often said I feel that the best policy happens when everyone walks away a little bit unhappy. I certainly have constituents today who would prefer me to vote no on this legislation, but this is legislation and a solution which makes every entity involved give and take. It makes labor give and take by whose efforts this line will actually be built.

It makes the developer give and take by whose investment this whole project materializes or does not. And it makes our communities give and take as well by whose grace we are all able to serve and for whom we are all working for. That is the ultimate goal, right? If we do not pass enabling legislation, we may not get a gas line. Line.

That's what we've been told. If we do not get a gas line, our communities will continue to suffer from all of the costs associated with having the highest energy burdens in the nation. And Mr. Speaker, if we do not pass this line today, we might still get a gas line regardless, but we will not get a gas line which includes a spur line to the Fairbanks community, which is so essential and which I'm so grateful to the members of this body for working on and standing by. We might still get a gas line, but we will not necessarily get the project labor agreement language which is in this legislation. We might get a gas line, but the developer won't get the tax breaks that they so desperately desire.

And Mr. Speaker, ultimately we as a body, in conjunction with the other body, set the narrative for this project. I am grateful that this bill, before us, this work product sets a narrative that we will demand accountability, which does not mean that we are anti-development. It means we want accountability. We set the narrative that we want transparency, which does not equal intransigence towards the project. We set the narrative that we want benefits.

That does not mean that we are bullying the developer. We want benefits for Alaskans which is our constitutional obligation here as this body. There is a singular provision in this bill which has been mentioned already in debate. I'm sure it will be mentioned further. A singular provision in a 45-page bill on a project as consequential as this should not be the reason today that we say no.

Are we really going to let one singular provision make us say no. It won't make me say no, Mr. Speaker. I was in the original 34 votes for the House version of this bill. I was in the 8 concurrence votes for this bill when it came back from the other body, and I will be a yes vote today because I want to build the line. It can happen without us, or it can happen with us.

I would rather the state of Alaska be a partner. I want to guarantee the protections that are in this legislation I want to reduce the potential harm that many in my district are concerned about with additional carbon output and other issues. I want to be a part of the solution to Alaska's highest in the nation energy costs. I want to be a solution to Fairbanks' highest in the nation particulate matter pollution. And I want to be a part of the solution to spurring— pardon the pun— economic development in the state of Alaska.

Is this product perfect? I think not one person here today will say it is perfect. But if you want to build the line, this is the best opportunity, the best work product that can come out of this body and the other body. And I would encourage members to vote yes.

Representative Sadler. Thank you, Mr. Speaker. I would request the body's indulgence to refer to and maybe read a little bit of my notes, please. Mr. Speaker, it's no secret to the body or the public that I will be voting no on the version of HB 381 that is back before us, the product of the conference committee. My remarks are going to focus somewhat on the process and leave it to others with more detailed knowledge of the legislation to comment on those.

Mr. Speaker, I've been working on gas line issues for well on 20 years in various situations in the legislative and executive branches. That's a issue I've had a lot of interest in and dedication to. So please indulge me, just a little bit of review as to how we got here. The benefits of bringing Alaska's North Slope natural gas, 35 trillion cubic feet of known reserves and 200+ inferred reserves, has long been apparent to Alaskans. Jobs for Alaskans to build and operate the gas pipeline infrastructure, royalties and production taxes for the general fund to fund our public services, private sector economic investment around the state, you including Fairbanks, focally, development of our natural resources for the public good in accordance with our constitutional obligation.

And most importantly, with cooking oil supplies running out for my constituents and many of yours, the opportunity to bring Alaska's gas to Alaska's homes and businesses so they can be kept warm and operating and functional and not have to go through rolling brownouts. Now it's true that previous efforts for this gas line project have not been successful, but at each step of the process, there have been many, referenced, we saw what worked and we saw what didn't and we made changes. That's how we got to where we are now. We're making progress. We are achieving success.

The new process that we established, developed, and implemented about a decade ago created Alaska Gas Development Corporation and empowered it to take up our existing gas line assets, the permits, the rights of way, the engineering work, the cost estimates, the relationships with vendors, and go shake the trees to find a private entity that could help make this happen. Again, AGDC succeeded. They found Glenfarm, and together with Glenfarm, they established 8Star, a structure that, uh, they sharpened their pencil, came up with a plan that gave us a chance, admittedly a narrow window, but a chance to make an AK LNG project pencil out, attract investment, and reach final investment decision. Now, in their analysis, they identified Alaska's high property tax burden as the biggest financial burden, the biggest barrier to getting the investment necessary to make this happen. So HB 381 before us emerged as the vehicle to replace that high property tax with an alternative volumetric tax, the ABT.

That's what the House passed overwhelmingly, thank you, at the end of the regular session. Seems like a long time ago, doesn't it? And at the end of that session, we were assured we would adjourn, go home, explain the bill to our constituents, and that a conference committee would produce a bill without the S corp tax, and that we could build on that success, get a bill that would pass both bodies. That didn't happen. We perhaps may still have that chance.

Troublingly, I watched the conference committee this morning, the opportunity to improve the process was kind of stymied. When a minority member of the conference committee asked to get the State Department of Revenue to come before the conference committee to answer questions about how the complicated new income tax structure would be implemented, he was told, "We'd have to take an at ease for that. There's no time. I'm glad to hear that the governor may give us the opportunity to take the necessary time." Mr. Speaker, I and others have been clear, I hope, all the way along that this bill, HB 381, does not guarantee a gas line. I don't think anyone's made that claim.

And if we were to try and guarantee a gas line, that would mean the state of Alaska would have to pass laws to make us invest our billions from the permanent fund or the CBR to take on the investment risk, the overrun risk, the contract risk, the force majeure, and absorb the local impacts, build a Fairbanks Spur line, do all those things. But that's not how we operate. Government contracts to have private industry, which operates aggressively, efficiently, and profitably, to do that for us on behalf of our constituents. We cannot guarantee a gas line. All we can do is pass laws to keep the narrow window of financial opportunity open for this progress to get to FID or not.

What this bill does guarantee is a significant new income tax in Alaska, which we haven't had since 1980. Well, we had corporate income tax then. It adds cost and complexity and uncertainty to the decision process. And these are burdens that would likely kill the project. We've heard testimony to that effect from project developers, from the industry, from informed Alaskans around the state.

Back home during district, during the little interim at Bear Paw, I heard from small business owners, tax accountants, orthodontists who have passed through entities that say the bill as currently drafted would kill their businesses. I cannot vote for that. Mr. Speaker, there's a common practice on this floor. We all know it. When there's a bill that's likely to pass, it attracts, um, riders.

It gets amendments that would make significant policy changes that ride along to an important bill. In these situations, we often hear words to the effect of, "That's an important issue. It deserves to be considered on its own merits in a separate bill and go through the committee process." We've all heard that. Many of us have said it. Nowhere is that more true than in the case of the S corp tax that has been jammed into this bill.

This massive income tax legislation is a huge policy issue. It deserves to be considered on its own merits in a separate bill and go through the committee process and get judged on its own merits, up or down. Unfortunately, that is not its own bill. What it really is, frankly, is a parasite on the gas line bill. It's a tick that would suck blood from its host, the AK LNG project, without caring that it may end up killing that host.

Mr. Speaker, I heard multiple members of the conference committee admit this version of HB 301 is imperfect. They don't really know how it will be implemented. Essentially, They're going to have to pass this tax bill to see what's in it. They said we should defer the polishing off to the next legislature. At the same time, however, I hear we have to hurry.

Time's of the essence. We must hurry. We don't have time to do amendments. We don't have time to do analysis. We must pass that bill now.

I'm not quite sure, Mr. Speaker, how to reconcile that hurry up with the willingness to put off polishing this to future legislators. To that, I'll say we can meet the urgency of this moment by passing a clean version of HB 381 without the escort corp tax. That way we can allow it to— the gas line to advance to FID and ultimately to a gas line and the many benefits to our constituents. Again, reliable energy, good-paying jobs, private sector investment, renewed optimism, and responsible resource development. I'm going to wind up here soon, Mr. Speaker.

That would free the next legislature, if it wanted to, to take up that income tax bill and give it consideration. And with the governor's recent news, it looks like we'll have that opportunity this year. To sum up and to wrap up, We need to vote no on what's before us here and then use a fair, open, transparent legislative process to get a bill that will incentivize the AKLNG project without gumming it up with the S corp tax. And I guess I'd like to make one other little short codicil for the folks back home. There are those who may seek to characterize a vote against this bill as being anti-gas line.

That accusation would be false, Mr. Speaker. I have been a strong, consistent supporter of developing North Slope gas for decades, and I support it again today. But a no vote today on this bill is no on a bill with a last-minute policy change added hastily in an unconsidered fashion that significantly harms a gas line project and other private businesses in our state. I will look forward to voting yes on a better bill that truly improves our chances for this critical energy project. Thank you for your time and consideration, Mr. Speaker.

Representative Patz.

Thank you, Mr. Speaker. Permission to refer to my itty-bitty notes so that I can— itty-bitty permission granted. Thank you. I was taking notes during conference committee listening to some of the changes so that I could really understand, you know, the nuances without having to read through the 45 pages, because what we heard was that this was complicated, but they were minor changes.

And the original intent of this bill was to provide property tax relief to create opportunity for reliable and affordable energy to Alaskans. But instead, what this bill does is it actually increases taxes on local oil and gas entities that are already producing in the state. If you've read the headlines, Enstar has said, hey, we have concerns about enough energy being produced for this winter. And what this bill does is it says, you know what, we get that, but we're going to put a tax on top of these companies that are already working hard to produce local energy for Alaskans. And that's highly concerning to me.

Because I want to incentivize their production for Alaskans' energy rather than disincentivize them. And I have concerns about the message that this sends across the nation for business and economic opportunities to Alaska. It guarantees that if this bill were to pass, it would guarantee that, that, that this income tax would be in place. But what it does not guarantee is that a gas line would be built. I think that also needs to be communicated to Alaskans, because if we were to increase taxes on the gas producers and those who transport, that would be felt on the consumers.

And I don't know about you, but the price of energy is only— seems to be getting more and more challenging for Alaskans to bear with the high cost of utilities. I've mentioned it before when we were discussing an income tax in committee. We, we wanted to compare how that would be felt. In Alaska, we pay 57% higher utility costs than the lower 48. We are indeed feeling a significant squeeze.

We need reliable and affordable energy, but this bill doesn't do that. It was supposed to create an opportunity to change the property tax structure that would work to make it viable so that the Alaska LNG gas line could be built. Since we know that the governor has called— already called another special session, I want to express some of my concerns with what the conference committee discussed so that everyone can have an opportunity that maybe we can resolve some of those concerns as we work through another rendition of this bill. I think there are significant legal concerns that we would be ripe for litigation. When anytime I pass a bill, I ask myself, where, where are the faults in this that is going to open up the state of Alaska to liability?

And I think there's significant issues with this. And the first one is that when the representative from Soldotna asked about the definition of income, the conference committee said that the Department of Revenue would determine that definition. That is highly concerning to me because right now we are— we don't know who next year's Department of Rev— who is going to be running the Department of Revenue next year. And if it is the department by regulation who is going to define the term of income, then that means that every 4 years they could change it by regulation. And that does not create stability.

Second concern that I have is that they— that these S corps would be treated as a C corp and that they would be essentially holding two separate sets of books. I don't know about you, but that just sounds ripe for fraud. Two separate sets of books that the state of Alaska would be telling these entities that we want them to keep so that they could do reporting the way that we see fit, not as a corporation that they're already registered under, but that they would be treated as a different corporation under this bill. That to me does not create transparency and help our businesses thrive. The other concern, the last concern, is that they must submit a hypothetical tax return so that we can determine their tax rate.

I just couldn't believe that I was hearing that. I, I respect the work of the conference committee committee and the members who have been here working on these tax issues for a very long time.

But as the member from Soldotna said, if we were asked to submit a hypothetical tax return so that, say, our boroughs could tell us how much they thought we should pay in property taxes or our small businesses, we would definitely be protesting and probably throwing a lot more than just tea in the harbor. The last concern is that we were encouraged to pass it so that we could fix it later. That is not what our constituents sent here to do. My constituents have said, man, we need a gas— we need a gas line, we need affordable energy for Alaskans, but don't swallow a bad bill. And I think we need to do better on this and make sure that we're not creating even more loopholes and legal uncertainty.

This is something that I feel like is being intentionally delayed at the expense of Alaskans, and I really hope that over this next week that we can figure this out and put our best foot forward for Alaskans and for an economic future. Thank you, Mr. Speaker.

Thank you, Mr. Speaker. Mr. Speaker, I'm going to be happily voting for this bill. There's some terms in it relating to the project labor agreement that I think are inadequate, but as the member from West Fairbanks said, she's championed a gas line bill throughout. I can't make that same claim. I voted for for, or rather, uh, I voted against the House Finance version of the bill on June 12th, but on June 20th I supported the bill with all, all its massive tax cuts which were sought by the developer.

That concurrence vote failed, and here we are. I, I'm perplexed and take note of the dialogue about the gas line bill. I mean, a month ago, supporters of the gas line bill said this is great, this will solve all problems, we'll have mining development, we'll have cheap gas, we'll make money, it's all, it's all going to come up roses, it's just great. And now two members have said, well, The public should not be misunderstood. This is not a gas line bill.

Well, okay, I, I knew it was not a gas line bill. It's a tax cut to incentivize a gas line. The member from Big Lake said in a sort of, I think, negative tone that this bill had become a tax restructuring bill. Well, that's absolutely true. That's what the plan developer wanted.

Tax restructuring. And as I understand it, the plan developer— now, I wouldn't go so far as to say, you go write the bill, we'll buy you a meal down at Salt, we'll leave you alone with a memo pad, you write the bill unencumbered. I don't think it would be this bill, okay? But as I understand it, the plan developer is just peachy, just fine with this bill. And in fact, Some of the terms that the other body sent to us, which I supported on the 20th of June, have been tempered.

They've been rolled back a bit. So the bill has been moderated. And as I understand it, and I take on good information, the plan developer and the administration, every— and AGDC, every step of the way was an active participant saying this won't work, this will, we need more of this and less of that. So I'm a little confused by that. You know, there's been some discussion about how, well, this, this was a simple bill when the administration delivered it on March 20th, halfway through the session.

But, you know, when you do due diligence on a bill, you discover unanswered questions, and bills tend to grow. I mean, take for example, no one had thought, no one had thought that we may actually be in a position where we would give a gift of a tax cut, and then if it all fell apart and we divorced the plan or the pipeline developer, that we would have to pay that sum again because we enhanced the value of the project. I mean, think about that. That's like saying I want the gift you're giving me for my birthday. Thank you.

I wanted that book. I wanted that table. And now I want you to give me the cash you spent on it separately so I get it twice. Okay, so that caught our attention. We said, no, no, we're not going to do that.

So those are the kinds of things that come from due diligence. And we said, no, we're not going to permit that. That's obviously sort of insulting. We're not going to do that. But I'm just surprised at some of the rhetoric.

We heard that there's a feature in the bill that resembles a tick or a parasite. Not my words. Those are supercharged words. Super, supercharged words. Fundamentally, this is absolutely a developer— The developer was there every step of the way.

This will give them what they seek largely. Remember, we had battles with the North Slope. We didn't know how to compensate the North Slope. Those have been abandoned basically. And so the developer is in the driver's seat on these basic terms.

And we've heard that, oh, well, the ticker parasite is that— we heard it from the member from Homer that this is going to impact the, the, uh, development of AK LNG altogether. No, no, there's a carve-out for them, so they got that benefit too. So let's be a little bit more realistic about what this project does or doesn't do. This bill, this issue with the S corp, it does not complicate the gas line. They have a carve-out It's express.

It's unambiguous. I'm going to vote for the gas line bill, and I'm going to call it a gas line bill. Now, I might— the public, I may want to explain to them this doesn't guarantee a gas line, but everyone in the press and the public calling it's the gas line bill, right? Yeah, I'm sure it's the gas line bill, and I'm going to vote for it. And I thank you for your time.

Representative Nelson.

Yes, thank you, Mr. Speaker. Um, I'm going to be referring to my notes, with your indulgence. Permission granted. Thank you. First, I would like to, uh, recognize that, um, today is my 21st anniversary with my wife, and she's not here, and I'm here.

So these are sacrifices that we make Thank you, Mr. Chair. I appreciate following the member from District 13. I do not appreciate the convenient mocking that was thrown out. Shade was thrown at members who have spoken previously, and I was trying to keep notes on what was said to respond specifically, but I couldn't write fast enough.

I'll just skip that. The details of this debate will be lost with the passing of time, but this bill before us today does not reflect, or is not even close to the bill that was passed out of this body 34 to 5.

I was talking with a man who's a mentor, his name's Jeremy Faison. I think it's pronounced Faison, but I think Faison sounds fancier. So that's what I call him. He's a representative from the state of Tennessee, and I was talking with him this morning. He said come with 3 points, and I only have 2.

So the bill before us adds a new tax for sure, even if the gas line is not built.

If we concur, if we pass this, it will pass a tax. It does not guarantee that the gas line is built. And then once again, this is not the same bill that we passed overwhelmingly in this body. It's not even close.

Things have been talked about— the collaborative process. Collaborative means to work jointly with others or together, especially in an intellectual endeavor. That has not happened. This was dropped today.

We haven't had time to digest it. I'm going to be a no vote, Mr. Speaker, and I do not appreciate the shade that was thrown on previous speakers. Thank you. Representative Schwanke. Thank you, Mr. Speaker.

I rise in opposition to the committee report that came out of the conference committee this morning. I would I would be lying if I said I wasn't extremely disappointed with this process. We waited 2 weeks, um, and we got a bill this morning that was very similar to what we left it at a couple weeks ago. Mr. Speaker, I want a gas line just as much as anybody else. I want a strong Alaskan economy.

I would love to create 12,000 new jobs in the state. I would love the revenue that would come from putting gas through a gas pipeline.

Unfortunately, the bill that we got handed to us this morning has with it a little minor little problem. It's a completely unrelated tax. This bill is supposed to be a property tax bill that allowed us to enable a developer to bring in necessary investment to build a gas line. We've actually moved beyond the debate of the details of that property tax adjustment. I think everybody is somewhat in agreement.

It's not perfect, but somewhat agreement that that part of the bill is actually decent and workable. The addition of the pass-through entity tax is really unfortunate. I had hoped that the conference committee would have brought some softer language pertaining to that tax, but the language didn't change much in the current version except that it actually added a line that conflicts with its own section of statute to sue, which is— I don't even know how that happens. There's a lot of smart people I know that were working on this, and yet we have a piece of legislation in front of us that I'm sure would get litigated very quickly if passed.

We already have the third highest corporate income tax in the country. That is not inviting investment in our country or in our state. If this passes as is, this would be the single highest pass-through entity tax in the country. That does not bode well for inviting investment now or in the future to our state.

I actually heard in the conference committee something that was extremely disturbing to me. I heard members say that the tax rate is too high. We know the tax rate's too high. This bill has serious problems, but this is the best that we can do, so we should just pass it right now. Mr. Speaker, I have an analogy that I think is worthy of noting.

Say your best friend found a woman who was beautiful and smart and funny and wanted to marry her, except you knew something about her. You knew that she was a chronic liar.

You would tell him, "You should probably not marry that woman." Instead, the woman promised, "If we get married, I will never lie again. Please marry me." I'm hoping that your friend would not marry her. That's what I see in this bill. Let's pass a bill that is completely unworkable, that will turn investment away from our state. It will end up in court, and yet members of this legislature say, let's pass it because we will fix it later, we promise.

That is an awful way to go about legislating. I'm appalled at the process. I'm appalled at this bill. And if you couldn't tell, I'm a no today. Thank you.

Representative St. Clair.

Thank you, Mr. Speaker. Request permission to refer to my notes. Permission granted. I'm going to try and do it briefly. As was said by several others, I'd like to start off with talking about the process, the process that we went through.

We're in our second and soon to be— well, actually, just for this, we're in our technically in our third special session, and we've already got another one lined up. That's roughly 60 days going into 90 days. That is an entire session. We spent two-thirds of a session on one bill, this bill, and it has gone from extremes.

As one of the other members stated, we were assured 1 July we would have a product. We came down here ready to vote on it, didn't have a product, told to come back on the 19th. Today or this week.

The process hasn't been transparent. It really hasn't. And I'm going to get into a couple— I'm going to get into the bill, the committee report itself, and then I will specifically talk about a few things that I've heard on the floor that I just— I have difficulty understanding because I must have missed that part.

Uniform rules state that the conference committee was given the powers to take House version or Senate version. That's it. Not make up their own, not interpret something else. Yet there are several provisions within this piece of legislation that were not in the House, not in the Senate, and just, oh, it's a GFI.

It's a good idea.

One of the things that we're talking about that was not in the House or Senate version is the CPI. First it was Alaska, then it was Anchorage, now it's US. That is in neither House version or Senate version.

Why do we have rules if we're not gonna follow them? I know when we were younger you say rules are just they're to be broken. Well, we've more than broken them. Now let's talk about another thing— S corp tax. I know a lot of people have already talked about it.

Y'all know that I'm into numbers, so I'm going to give you some numbers here just for quantification so we can understand exactly what we're dealing with here.

The S corp tax— and I'm going to use pass-through just because S-corp pass-through tax organizations, or organizations, LLC, sole proprietor, etc., are more than just an S-corp. I already asked for permission to read. I'm gonna just do a brief little note here. I looked up the definition of pass-through entities when it came to Alaska. Pass-through entities include sole proprietorships, partnerships, LLC, and corporations.

They're the backbone— say again— the backbone of Alaska's private sector.

Let that sink in for just a minute.

Private sector. Alaskans that own business in not just S-corps, sole proprietors, partners, LLCs, etc.

They're the backbone of the private sector. We're going to tax them. We're going to hit them with an income tax.

Why? Are we trying to stymie investment and growth and opportunities and employment in the state? I don't think that's the intent. If it is the intent, can someone just please let me know? Additional changes.

There are about 60,000 of these type of sole proprietors in the state of Alaska. I've heard that there are 11,000 S corps, but this was kind of inclusive. And then I look into my area where I live and where I represent in the Mat-Su. There are about 9,000 sole proprietorships, LLC, S corps type organizations.

My district does not want an income tax. They don't even care if it's on businesses because a lot of them have done innovation. They built businesses, they built things, they've created jobs. Now we're gonna say, nope, don't do that. I can't, I can't say that.

Almost finished here, sir. Then we start looking at equal protection under the law, 14th Amendment. This thing is going to go to court. If this passes, this is going to go to court. One of the sole proprietors is going to say, eh, no, you did away with S corp taxes back in the '80s at the same time you did away with income tax.

So it's not— this is policy. This S corp tax or income tax needs to stand on its own merit and be bifurcated. Someone used that term today. And I appreciate that— bifurcated from this piece of legislation. If we want to do two separate things, got it.

S corp or income tax on companies has never really had the support. People have been trying it for as long as I've been down here, even as staff. Sorry, I had to quantify that. One of the other things that was not in either version is the $10 million going to to training. I did not see that anywhere.

While it's not a bad idea, it's not within the scope.

That needs to be acknowledged, and that's another one of the big reasons I can't vote for this. My constituents, they want to trust their legislators.

I told my constituents and Alaskans that I was going to be transparent and accountable. That's what I'm doing.

Forcing an S corp or a pass-through entity to act like they're a regular corporation that's taxed is just— again, you've got 14th Amendment separation. I'm not— sorry, equal protection under the law. Many constituents that I've spoken to, just like have been in contact with the member from Big Lake, constituents and Alaskans. If the gas line bill— if the gas line doesn't go forward, they're leaving.

Can't afford it.

This project will create jobs. It doesn't go forward, 12,000 jobs not here. Granted, some are going to be out of state because we don't have the workforce, to make this happen.

And another thing that I had, what, what needs to happen is the 7-page, um, bill that initially came out dealing with a gas line. We need to go back to that, take all this other stuff out, um, the school, uh, uh, uh, local contribution. That's just greed. I, I, money Money is green regardless if it's yours or someone else's. It's still green.

And in closing— excuse me— in closing, there's talk of compromise. They talked about the governor compromising, the developer compromising, AGDC, the other body. One entity that I did not hear within any of that the minority. We were left out. When we were here on 1 July, sitting in the hallway, one of the members from the other body said, yep, we just got a copy of the, uh, the, the draft from legal.

Um, we're kind of going over it. And the minority member, uh, from that, from the House said, hey, can I get a copy of that? Flat out no. Compromise means everybody gives a little. Everyone walks away a little unhappy.

Well, the minority is extremely unhappy because we had zero say in it. There was no compromise. We were told what was going to happen. And as to the, uh, Glen Farm— or I'm sorry, the developer saying that they're, they're okay with this legislation— had a conversation with a member of theirs and Reading his facial expressions and body language, it's a no-go. And I think the governor has spoken loudly that he doesn't like this by the fact that we'll be back here on the 27th.

So with that, I will be a no on this.

Representative Mears.

Thank you, Mr. Speaker. I'd like to start off reiterating a couple of points. Points from the finance co-chair from Midtown Anchorage. However, I will do it in far fewer words. The legislature was tasked with developing an entirely new tax structure in order to improve the financial viability of a gas line project.

I believe in the collaboration with the project developer, the bill before us does that. That accomplishes the goal of the bill.

I'd like to also talk a little bit more broadly about the implications of energy development and our needs on the rail belt and throughout the state.

There are some that are saying that the gas line forecloses our need for importing liquefied natural gas, or LNG. I don't believe that will happen. We are looking at some sort of shortfall, at least in December of 2029, that we were brought to by the industry of the gas development in Cook Inlet earlier this session. And just this week got news that we might even face some shortfalls this coming winter. It was cold this winter and our supplies are depleted and We need to make that up.

We have a cushion and we've used a lot of it.

As we move forward with our discussions on what we're going to do for energy for the state, I'm concerned about the attention that we spend on big shiny projects like this. Yes, there's absolutely the opportunity for utilization of stranded natural gas up on the North Slope to solve a lot of concerns. Those solutions are not imminent. We've talked a lot in the process for House Bill 381 for what things look like once the project is fully developed in Phase 2. That is wonderful.

We also need to be looking at what happens in the short term. So as we move forward with our discussions on what we're going to do about energy, please, everyone, I'm imploring you, imploring you to look at what our other opportunities are for reducing both the quantity and time we will need to be importing LNG. But we all need to understand that that is coming. It is not if, it is when. So yes, we pursue projects like this that have got implications that are helpful for energy development.

In 5, 10, 15 years, we have to pursue those because we are stuck right now having looked not far enough into the future and foreclosing our options in the short term. So I just wanted to make that clear that when we're talking about the promise of a project like the gas line in front of us, we also need to be thoughtful about are other opportunities that we need in the short term. We need everything that's going to displace our utilization of natural gas in the short term so that we reduce the time and the quantity of LNG that will be needed. Thank you. Representative Galvin.

Oh, thanks, Mr. Speaker. I have a feeling we may be getting to the vote pretty soon here, and I wanted to ask, please, for permission to be excused from voting because I do have a potential conflict. Should the gas line be built, it's possible that the company that my husband is employed in may be providing the gas. There's an objection. Representative Gelvin, you'll be required to vote.

Minority Leader Johnson.

Thank you, Mr. Speaker.

Well, we've been here, we've been here quite a while. We all know that. It looks like we're going to be here a little while longer. We'll have a little more time to collaborate and work hard and, you know, all the things that we talked about how wonderful we've been doing so far. But I do want to say that this morning I saw the conference committee.

I saw our member, our member who I would not, you know, I would say is one of our most knowledgeable people. In the room on this and has put a tremendous amount of work in it, not even allowed to offer an amendment. Mr. Speaker, is that collaborative? Didn't look like it, not completely to me.

Yeah, I was disappointed in that, that we were not so collaborative that we didn't even allow the minority to have their moment. I heard some other things here, Mr. Speaker. I heard this is such a good bill, it's such a great bill, it's a wonderful bill going to do all of these great things, and this is a confusion of being perplexed, Mr. Speaker, that everyone wouldn't just line up to vote for it. Well, I'll, I'll just say one thing. You can have an Olympic swimmer and they can look great and they can win every time trial there is out there, and if you hang enough weight around their neck, they can't win.

They will sink. They will go down, Mr. Speaker. That's what we've done here is we've hung a weight around the neck of this gas line bill. And anyone with the eyes to see, just like you can look at any— anybody that— a reasonable person could look at someone and say, if you hang that much weight on someone, they cannot swim. You can look at this bill and say, You can't hang that weight on this gas line and expect it to be carried, Mr. Speaker.

That's what we've done is we just keep— we've added on to it to the point where it will go— it's going to go down. And I don't know entirely if it's because of political motives. I don't know if it's because we just want more money for the state to spend. And I— or I don't know if it's extreme environmentalism, Mr. Speaker, that we actually don't want to have people heat their homes with carbon products.

Think all of those things have been said on this floor as a reason at one time or another to vote against this bill, to vote against the gas line. So what we've done is we've taken the S-Corp pass-through entity tax and added it on, saying we have to have that if we're gonna have gas line bill. They really aren't. They don't— one does not need to be there to have the other. And now we're going to end up killing our gas line with this because we can't separate out these two, these two subjects.

I think that if we had these two subjects before us, it would be a whole lot easier. I think we would have a gas line vote that would pass, no problem. But instead of having the conversation about parity, which is really what people are saying, that we can't have the LLC and the C-Corp, that those are, the C-Corp pays nearly the highest tax in the country and the LLC is not paying enough. Instead of saying, well hey, maybe we should bring our corporate income tax down to where it actually is low enough that it comes into parity with our LLC. Instead, we've got to raise that LLC tax rate or others up to where it's in parity.

Mr. Speaker, we don't talk about maybe reducing the tax. So we just— so everybody that ever thinks about this, we're never going to get manufacturing in Alaska. We're not going to be able to attract companies. Just a side note, because our corporate income tax, as stated before, is one of the highest in the country. And we continue to make justification for that.

And not only that, now we're going to try to kill the gas— we're killing the gas line as we speak by just adding a little more tax to it. So, Mr. Speaker, I'm not perplexed and I'm not confused.

I think the people that stood up and said that they were voting for this because they were going to make this happen If they don't have eyes to see that when you hang enough weight around some— someone's neck that it can't go forward, well, then I wonder what they're looking at. This bill was never designed. It was not designed to be successful. It was not designed to build a line. This was designed to fail.

Mr. Speaker, that's what I see going to happen.

Representative Prox.

Thank you, Mr. Speaker. Um, I had to kind of develop this as we go along here because we only received the bill— what was it— 8:30 this morning. We waited around for a couple of years or a couple of weeks. We get the bill at 8:30 this morning.

We still have 4 days in the session. And yet, boom, we got to vote on it now. We could have maybe evaluated this at least for overnight, maybe 2 or 3 days, and then had some more transparency and collaboration with the— with those of us who haven't seen the bill. The changes to the bill.

There hasn't been collaboration. That is factually incorrect. I've called around to people that will be potentially affected by this bill that might not even have any specific direct interest in this project, although everybody does, and they said, well, no. We haven't heard about that.

And I think it's— I heard the comment from a previous speaker that we gave them a gift. And I think a lot of people in federal legislators think of us as giving out gifts, which is what we do a lot of. We give a grant to this person and a grant to that person. And that is a gift. But this is not a gift.

This is a commercial negotiation, and the only folks that can provide the value to this are the people that would go out and build it, the producers. This is in no way a gift to anyone. This is a negotiation trying to make the— to enable development of our resources in the best interest of the people. Now that's kind of vague, that's difficult, but that's negotiation. It is not a gift.

We shouldn't be thinking of it that way.

And we actually, you know, it's interesting, I voted for the bill when it came out of the House and Resource Committee did a lot of work and we did collaborate with those who were the stakeholders at the time because there was no S corp tax in it. Then that was added on the other side.

It's amazing.

And then we turned down, we didn't concur with the bill that came out of the other body, the changes that came out of the other body several weeks ago.

But we did pass something that came out of the House fairly, substantial margin. But it changed.

And then those changes, we just have not had time to develop them. We want transparency, that we never had enough information from the project developer.

But we have no information on this. No chance to collaborate. And I arguably, yes, there were some changes that maybe make it a little more possible for the developer to move forward. But you know, this S corp tax is a big deal, not just for this immediate project. There's another company that's operating in Cook Inlet that we want them to be successful because we have a a shortage.

We just heard a couple days ago an immediate shortage, probably, of natural gas. And this— one of the companies, two of the companies, I guess, that are— one of them is the target of the tax. They both are, effectively. They might not be as incented to address that shortage because of the additional risk and uncertainty that what came out of the S-Corp provisions. And we didn't fix it, we didn't fix it at all.

We made it even worse by a delayed effective date. Why did that make it worse? You would think, well, that's a good deal. No, it makes it worse. Because that uncertainty of what is going to happen at some point in the future also makes it impossible, it seems to me, for them to challenge what we're proposing to do to them, because we haven't done it yet.

And the courts always wait until you've done it before— you can't, as far as I know, you can't initiate a lawsuit against something potential. So there's no way for them to even, if they think that's gonna affect them, there's no way for them to challenge that for a couple years. That could very well affect their decisions to develop in the Cook Inlet and perhaps help us to, uh, address what apparently is NSTAR's concern about a shortage. It's huge. This is a big deal.

And what we haven't done is made it any easier. The bill has not improved and made it more certain for the potential developers of the gas line But it has increased much more uncertainty for the immediate problem. And it has also created a tremendous amount of uncertainty for this project and other projects. This is a new tax. And I cannot begin to believe that we would— that the Alaska Legislature would make such a major change in the tax structure on such short notice.

That's just impossible for me to believe.

And we don't have other options. We don't have other options on— in the foreseeable— even for the short term to go to alternative energy. There's no alternative energy project that's far enough advanced that it would do any good for this short, short term. We have increased the risk of running out of gas. We don't have any options available to address that risk.

This is— yeah, this is substantially worse for Alaskans, the risk that is that we're imposing on Alaskans than the even the bill that we talked about and turned down a couple of years ago. We have 3 or 4 days. We could take the time at least to analyze some of this and call up some, some of the people that will be affected and have a better idea. No, we're not going to do that. We're proposing to adjourn.

This is a very bad process that all Alaskans should be concerned about.

We are not doing our best work, Mr. Speaker. Unfortunately, I cannot support this Representative Gray. Thank you, Mr. Speaker. Um, like the representative from House District 35, I have voted consistently yes for all the gas line legislation. We're a small minority.

I am not a gas line expert, so I'm very grateful to folks who have more expertise than me. I'm especially grateful to folks in this body and the other body who've been here for a long time, and this isn't their first rodeo. People like yourself, Mr. Speaker, who have worked on previous gas line legislation. I'm extremely thankful for their input, um, in this series of bills that we've been looking at. I do want to talk about the S-Corp since it's been brought up a lot and just remind people that in 1980, when the legislature voted to get rid of the personal income tax It was an accident that that S corp loophole opened up.

If you go back and read the minutes from the time, they— we had so much money flowing in from TAP, so much money coming from oil and gas that we didn't need a personal income tax on the Alaskan people. And so when they did that, they didn't realize that it was going to create this big loophole because there were no pass-through entities making millions and millions and millions of in profit. They didn't foresee this moment decades later where we would have an entity making millions and millions and millions of dollars in profit and not paying, uh, corporate income tax, not paying what the C-corps pay. So I just wanted to point it out that it was an accident that we're correcting in this small portion of the bill. Um, and I want to focus in on the millions of dollars of profit Mr. Speaker, permission to read?

Permission granted. If you turn to page 27 of the bill and look at line 10, I'd like to focus on some words in the legislation before us today. Tax on income of certain oil and gas pass-through entities. I'd like to just point out that some folks have talked about a dentist office. A dentist office would not be a certain oil and gas pass-through entity, so they do not need to worry.

I would also point to line 14, less than $1 million, zero. If your profit is less than $1 million, then you would have zero tax to pay on that income. So I think that's important. We're talking about millions and millions of dollars of certain oil and gas pass-through entities. And so that's really what it comes down to.

What we're doing is making it fair. C-corps have always paid this tax, we would like other entities that make millions and millions of dollars of profit in Alaska to also be treated fairly. Um, I also want to point out on page 28, if you'll turn to page 28 and look at line 3, the tax imposed under this section does not apply to— go to line 7— income of an Alaska liquefied natural gas project. So we heard earlier about a parasite being added to this bill that would kill this gas line project. Well, it wouldn't, because this gas line project is immune from the, quote, parasite, because it doesn't apply.

It's in the bill. The gas line that we're talking about today, they don't care about this issue because this issue doesn't apply to them. So I just want everyone to understand that that's what's in the legislation. So, um, Mr. Speaker, I'm going to continue to vote yes for the gas line. I've heard it from many constituents a lot across Alaska.

They really want a gas line. We've been working hard, we've been compromising. We've become— you know what, people keep getting upset because they're not getting exactly what they want. And unfortunately, when we work on bills and legislation, we don't always get exactly what we want. What do we want?

We want a gas line. I am going to vote yes for a gas line because it's what my constituents want. It's what Alaska wants. I'm voting yes because I want to build the line. Thank you, Mr. Speaker.

Representative Klum. Thank you, Mr. Speaker. Uh, so I'd like to remind the body of something that happened a couple weeks ago. We got a letter from our private private sector partners in regards to this bill and this Corp Bill. Permission to read?

Permission granted. That letter was signed by the Alaska Chamber, the Alaska Miners Association, the Alaska Oil and Gas Association, Alaska Support Industry Alliance, Alaska Trucking Association, Association Builders and Contractors, Association General Contractors, RDC, and the Pacific Seafood Processors Association. I thought that letter was pretty impactful. Earlier in the session, we had a letter signed with just about the same number of entities for Meet the Match, and that was really impactful. We all had to meet the match because we got this letter and all these people signed it.

It's super important to listen to our partners, right? So I— my career has been in private sector, but it has not been in oil and gas. You know what I do? When I don't know how legislation impacts the oil and gas industry, I go to my partners and say, how do you think your company would react to this kind of legislation? Would this help your business?

Would this increase exploration? What kind of reaction would you do if we had an S corp tax? And I talk to a lot of people because I really, really want the pipeline. I really want the pipeline. But there's obviously a major gap in understanding between this body and private industry.

This is like, this is a small section of the bill. It's just a teeny little section of the bill. Why wouldn't I get the pipeline without all, all we have to do is just put the SESCORP tax. And then this morning I find out that the developer is exempt. So why is it even in the bill?

They're not even affected by it. Instead, we're taxing all the other oil and gas people, uh, under, uh, down to $1 million of taxable income. That is not that big. In past proposals that I've seen with S corp tax, started at $5 million, but now we're going down to $1 million. And so I'm thinking, doesn't government tax things we don't want more of?

Now, why do we tax alcohol and cigarettes and all these sin taxes? Because it suppresses sales. So the one thing I need in Anchorage is gas. So this proposal is ask— saying we have this shiny new object, which is called pipeline. It could get you gas.

It could potentially give you cheaper gas. But on the other hand, the existing companies, you guys are gonna have to pay more tax. And you know what happens? That tax either takes from their development and exploration, or they pass it on to us. I have no idea why this is in this bill.

It boggles the mind. The whole point of the bill is for the state to get gas abundantly and in phase 2, cheaper. We've already had a red flag 1,000 times from Enstar. I don't— if you live in Anchorage, I don't understand why you're not worried about it. I'm very worried about brownouts this winter.

I was worried about it last winter. Uh, the CEO of Enstar has been very clear and very direct. They need the pipeline. And so the people that don't like the pipeline or they want to vote for this with S-Corp tax, um, and not realizing what our industry partners are saying— this is not going to be good for oil and gas exploration— we're going to ignore that and we're going to just pass it anyway. And not realize the consequences could be the pipeline's not built, we're killing gas exploration in Cook Inlet and other places, and what is my constituent supposed to do?

Oh, imported gas. That's great. Imported gas, no royalties, no money to the state, super expensive for the rail belt. I don't see that as an option. If you have a criticism about the pipeline, or you want the S corp tax, they have to know that's the only option.

NSTAR has been very clear, so is True Gas Electric. That's what they're going to do. They have to have gas, and that's the other option. I thought it was interesting that on the House side, when we passed our bill, there was no S corp tax. You know why?

Because we knew it was a poison pill. We knew it would hook it up. We knew it wasn't related to the legislation, and we passed it to the other body. And sure enough, the poison pill got in. And so I want the pipeline because my constituents need it.

Anchorage really, really needs it. But this is not— not helpful to build the pipeline. It's not helpful for my constituents to have cheaper, abundant energy. And it goes directly against the word of our private industries. They have told us, they have warned us, this is not good for their industry.

And so I would just, I would ask people to heed their warning, especially, you know, I'm, it's easy for me to know what I don't know and just admit it. I'm not an oil and gas expert, but these people are, and they've given us a warning that this is a poison pill. So I urge the body to vote no. Mr. Majority Leader.

Thank you, Mr. Speaker. I want to rise and begin by complementing the many improvements that the members from District 7, 12, and 37, yourself, Mr. Speaker, did in this conference committee. I think it moved the needle a long ways in the direction towards consensus. And Mr. Speaker, as there are many words already said on the floor, I will try not to repeat one thing that any other speaker has said. So there's only a few hundred words left in the English language, and I'll get right to the point.

Mr. Speaker, there's many assets that belong to the people of Alaska. We have oil, we have gas, we have fisheries, we have minerals. In fact, we have extraordinarily extraordinary resources in many places not available anywhere else in the world. But today I'd like to talk about one of Alaska's most valuable assets, an asset that I don't think that can be measured on a balance sheet, Mr. Speaker, and that is the credibility of the state of Alaska.

That credibility isn't owned by one governor. It's not owned by one legislature. It's owned by, by all of us. And each legislature inherits it from the legislature that came before it. And we have a responsibility to leave it stronger than we found it.

But it's the credibility we have as a state that convinces investment to come into our state by the billions of dollars to bring things to life that don't exist right now. It's what gets projects financed even if they're not going to be paid off for 20 or 30 years. It's what turns Alaska in from a place with natural resources to a place with pipelines and power plants and schools and businesses and thriving communities. And so, Mr. Speaker, that is what I believe is what's at stake today. And of course, I'm more narrowly speaking, Mr. Speaker, to the S corp action in this bill.

Some people say, hey, we're just talking about one company. I respectfully disagree. I think it's about much more than one company. It's about what every future investor will believe or conclude about the state of Alaska. 6 Years ago, Alaska faced a significant decision.

British Petroleum announced that it was selling out. It had decided Alaska's mature North Slope oil fields were no longer worth its investment portfolio. And the state, very concerned, conducted an exhaustive review through the Department of Natural Resources, the Department of Environmental Conservation, the Department of Law, the governor's strategic oversight community, the Department of Revenue. The state concluded, here is a buyer, Hilcorp, they want to assume these assets. The state knew who Hilcorp was.

They knew its corporate tax structure. The state knew its tax status. There was no misunderstanding and no surprise, and Alaska knowingly approved the transaction and the structure because we believe the benefits outweighed the risks. And boy, Mr. Speaker, did that bet ever come to life. Today we have more than 40,000 barrels a day more oil flowing through taps, which DNR tells us is a result of Hilcorp's work successfully reworking old oil wells and mature fields.

And we have billions of dollars more in revenue. Because Hilcorp turned it around and they brought to life these old fields that BP was walking away from. They were a C-corp. BP was a C-corp. Were they making enough money to stay here? No.

We needed a more nimble agent entity that could come in and deploy capital in a way that this giant C-corp could not do. They came and they did it, and we are much better off today. And there's No dispute about that. So, Mr. Speaker, this is not about whether a private company should make a product, uh, a profit. Companies exist to make a return on investment.

The question is whether our state government should change the economic framework that a company has now spent billions of dollars assuming the foundation they're standing on wouldn't move. Are we going to move it? They invested under rules that we approved for them to invest under. And if we as members believe that Alaska should comprehensively revise our tax statutes, then we should bring forward a bill. We should hear from the economists.

We should hear from the tax experts, the producers, miners, our labor community. But we should not attach a controversial tax provision to one of the most consequential energy bills in a generation in front of this body. We are simultaneously asking investors to spend tens of billions of dollars here in Alaska while signaling the rules that govern those investments will probably change after the fact. So that is a contradiction I don't think we can ignore. Investors don't always seek just the lowest taxes.

They seek stability. They need confidence that today's rules will mean something tomorrow. Governments spend decades earning that credibility, but they can lose it in one afternoon. So every investment decision becomes down to one question: Can I trust this person? Can I trust this entity?

Can I trust this government? Everything else is secondary to that. Alaska has never competed because development here is easy. We've competed because people believed Alaska is worth the risk, and they believed Alaska would be an honorable partner. So the revenue collected today, it'll be eventually spent, and the headlines from what we're talking about, that'll fade, but our reputation as a state will endure.

Every generation of legislators borrows the credibility we have from those who came before us, and I don't believe we have a right to diminish it, but we have a duty to preserve it. Because when government keeps its word, opportunity follows, investment follows, jobs follow, prosperity follows. Mr. Speaker, our credibility is every bit as valuable as the oil flowing through taps. It's every bit as valuable, and if we lose it, that oil will stop flowing too. I choose to protect one of our greatest assets.

It's not a pipeline. It's not a company. It's not a tax. It's the integrity of our state. For that reason, Mr. Speaker, I respectfully vote no on the conference committee report.

Thank you. Representative Tomaszewski.

Thank you, Mr. Speaker. In my opinion, Mr. Speaker, this process was neither transparent or collaborative.

When watching the committee, conference committee this morning, and listening to the member from District 7 ask the chair about having Department of Revenue come and give us a report on what exactly this income tax will do, he was denied.

And it reminded me of a famous former Speaker of the House, Nancy Pelosi, when she told Congress that they needed to pass the bill so they could know what was in the bill. Well, this isn't the way to do legislation in Alaska or in anywhere else.

We didn't even have a report from the Department of Revenue.

Mr. Speaker, in my opinion, what this conference committee— it does two things. One, it guarantees a tax on Alaskans. And number two, It guarantees a more difficult path for a gas pipeline, and that's unacceptable. We should be here as a body to do the work of Alaskans, to make the best effort to decrease their cost of energy, to make it more affordable to live in this great state. That is why I am here.

I am fighting for Alaskans. I am fighting for my constituents in my district, but also all of Alaska. And a gas line will create the abundant energy Alaskans need at a much more affordable price. And this conference committee report does the opposite of that, in my opinion. I'm very disheartened by this process.

We've been here now, our third special session, second special session on this gas line. And here we sit with something that is not going to work. And it's very disheartening. It's very disheartening to Alaskans. It's very disheartening to me.

But you know what, Mr. Speaker? I am looking forward to doing this all over again because I know that I am here fighting for the Alaskan residents. I am here fighting for the people of Alaska. And I will do my best to make this project go forward because we need it. We need it for Alaska.

We need it for our country. We need it for energy security and the revenue we need also, Mr. Speaker, the revenue that comes off of this gas line that we've seen the numbers for. We've seen those numbers.

That is going to go a long way to help with our infrastructure, with our deferred maintenance, with our education. But you know what, Mr. Speaker, there are some, there are some in this state that say we need to transition away from fossil fuels. Well, uh, ask my constituents in Fairbanks if they're going to be able to heat their homes with something other than fossil fuels. They're going to tell you no.

There are those in this state that say we need to increase the price of fossil fuels. Well, I say no, Mr. Speaker. I do not want the prices increased on the people of Alaska. What does that do? It drives people out of Alaska because we cannot afford to stay here.

We cannot live here. So, Mr. Speaker, I'm looking forward to doing this again. I hope we can collaboratively come together as a body and say we are going to do what's right for the people of Alaska. And that is why, Mr. Speaker, I will be voting no on this conference committee. But I look forward to doing this all again because that is my job.

To fight for the people of Alaska. Thank you. Representative Underwood.

Thank you, Mr. Speaker. Um, you know, my private sector job, I work with investments, I work with contracts, and I work with negotiating day in and day out for the last decade, a little bit more than that. And it's on a way smaller scale than what we're looking at today with millions and millions of dollars. Sometimes it is millions $100 million of contracts that we are negotiating, or I'm negotiating with my clients. And that process starts out with— I do real estate, and a buyer, they have to start out, they have to get pre-qualified, they have to talk to a lender, they have to show their tax returns.

They can't make up their tax returns or put hypotheticals in there, has to be the real tax returns. But they get a solid price that they can work with, and then we can go shopping, and then they can buy a home that is within that range that they can afford. And then through that process, there's a lot of other negotiations that take place. You got your inspections, your appraisals, and then we get to the end of it. And at the end of it, if a lender was to say, oh, by the way, we're going to jack up your interest rate about 1%, that buyer would potentially— more than likely, almost every time with the clients that I'm working with— not qualify for that loan anymore.

And then they would not be able to buy the house. And then what happens in that situation is everyone loses. It's not that the buyer didn't want to buy the house. They wanted to buy the house. They just can't afford it now.

The seller doesn't get to sell their house anymore. Puts everybody in distress. The real estate agents that have worked months, sometimes multiple months, they also lose out in time and money. It just makes it an unstable environment. Or if the lender was to say something like, get into this contract, go to the end, let's close on it, but potentially we think your job's going to be paying you more and more money in the next 2 years, maybe 2 years after that.

So we're going to reserve the right to change your interest rates in the future. And that buyer is going to say, oh, I don't know if I'm going to be able to make that payment 2 years from now. And 2 years from now, they're going to cancel with that lender and potentially talk to their friends and tell their friends, don't use that lender, it's unstable. Um, they're going to hit you with prices that you don't know. And then that lender is not going to be used.

It's— they're not gonna have a good reputation. And I know that that is like a small scale, but on the bigger, um, you know, world of looking at Alaska investment, I don't want to be seen— I don't want Alaska to be seen as that lender, that we are creating unstable environments, that people can't invest, that we're getting a bad rap for, well, if you're going to come here, you're going to invest millions and millions of dollars then they're going to reserve the right to just continually take and take and take from you. They're going to go find a different lender, go find a different state, go find a different country to spend their money in. And I don't want that. I don't want that for Alaskans.

I don't want that for my constituents. I don't want that for my children, the generations to come. I want Alaska to be the most popular lender where people can say, you're going to know what you're going to get. You're going to go in there, you're going to have a great process. There might be bumps along the way, but they're not going to change it.

The goalpost is not going to keep moving by the end of the deal. You can trust them, and you're gonna get a product that you can actually afford. And, you know, a couple years ago, when interest rates were lower, business was booming. People could afford to buy. Now interest rates are higher, business is not booming, people can't afford to buy.

People are going to choose to go rent because they don't know what's going to happen with interest rates. It's— to me, I'm just looking at it my little simplistic mind on how I work on the day-to-day and how I look at Alaska. I just, I do not want to be looked at as a place that is constantly changing because we think that we can just constantly get more money. I want people to want to invest here because when people want to invest here, it'll grow. The end product is that we will get more revenue coming into the state because there will be more investors that trust us that want to invest their millions and millions of dollars here.

And so it's for that reason that I will be a no vote today, but I wanted to convey that to my constituents on that is the reason why, and my hope is that we can come back here and get a product that makes us a trusted partner, that investors want to come and partner with us, and they want to tell their friends and have their friends partner with us, and that we grow, and that we just literally become the best place to do business at. Thank you. Is there additional debate?

We still have 22 members who haven't spoken.

Closing comments, Representative Schwonke— Representative Schraggy. Thank you, Mr. Speaker. I wasn't going to speak for a few reasons. One, because I'm pretty tired and ragged. We've been working our butts off for quite a while.

2, Because I thought we were going to sign it 2 hours ago, but here we are. And 3, because I don't think it really changed the result of anything we're doing here. But I do remember myself as a young 26-year-old watching gavel to gavel in our deliberations here and in committee and on the floor and not knowing what to make of everything that gets discussed here. And so I just wanted to provide a little bit of a counter perspective, especially as the chair of the conference committee. There's been a lot that's been been said today, some of it wildly untrue or inaccurate, misunderstanding of the process, some of it true and just of a different position than I have, and I wanted to provide my perspective on things.

I don't have prepared remarks, so it probably won't be my best speech. I apologize for that. I'll try not to be repetitive and do the best I can, but here we are. So in terms of the process, I want to point out We've been granted limited powers of free conference. We have a legal memo from Ledge Legal that everything that was done in the conference committee was by the book.

So to the extent that there's concerns that in the bill that's before folks now that there's new provisions that folks haven't seen before, that's the process. We followed the rules. This is how we tried to get to a place of compromise, something that would work for everyone. Obviously, from the messaging here today, we didn't quite strike that. That's disappointing to myself and many others, I'm sure,, but we followed the process.

For those that were concerned that DOR wasn't provided the opportunity to testify this morning, I can understand why that's been disappointing to folks, but we've had multiple conference committee meetings. We've had the bill go through an iterative process, be put out there, and we've invited Department of Revenue to come and provide input on the pass-through entity tax provision that's in the bill now. We took that input and we incorporated some of it. I think that also kind of speaks to the collaborative process. Some folks have said this hasn't been a collaborative process.

I've got pages and pages and pages of requests from Glenfarm, from AGDC, from the administration, and from others, and you know what, most of those changes were adopted in some form or fashion. Not because I'm happy with all those changes, but because I recognize that compromise requires everyone to give a little bit. That's a hard thing to do. It's something I was willing to do because I wanted to get to a place where we could support this gas line bill, this enabling legislation that, yes, doesn't guarantee a gas line, but sure as heck gives it a way better chance than we have today. And so I was willing to make many of those compromises.

I'd also note that the bill— there's been complaints that we didn't just adopt what we passed out of the body last time. You know, there were problems with that bill that we passed out of this body. That's part of why we went through that collaborative iterative process and taking that feedback and incorporating it. We were basing CPI growth off of Alaska CPI. Many of the developers' business investment decisions aren't based on Alaska CPI, they're based on U.S. CPI.

There was inadequate force majeure language that wouldn't have provided adequate protections to the project developer if things outside of their control went awry. Well, we improved that to make sure that if this bill passed, that the developer would have the best chance possible of being able to meet the deadlines in this bill before having the new AVT tax structure ripped out from underneath them. There was concern from the developer that the construction deadlines were too prompt, too quick, too immediate. So we extended that. We pushed it back to ensure once again that the project developer would have the best chance possible of moving this forward.

And there's many more examples I can give, but one more— cost overruns. We were using the $46 million or so as the basis of the project cost, and anything above that, guess what, their customers, their export customers would have to pay for. Well, we modified that language to provide additional protections to the project developer to make sure that they would be in as best of a financial position as possible to get financing for this project. So for the folks that wanted us to just accept the House bill that we had before us, before, guess what? The project developer would have been back before us in no time asking for further changes, because it wouldn't have worked, and they wouldn't have got FID.

I can pretty much guarantee you that. Of course, there was also major problems with that bill in terms of protections for Alaskans and for our state. There was no requirement that there was disclosures of foreign investments. If China wanted to buy 50% of the pipeline or more going through our state, we might not even know about it. They wouldn't have to be— they wouldn't have to disclose that information.

If it was covered by a confidentiality agreement, we would have just had to accept that. We wouldn't have found out. There were no protections from a major payout to the developer if we provided them a tax break and then they went and we forced them out of the project and they said, oh, well, we delivered that value, we delivered the value of the tax breaks. No, the Senate made modifications to that to make sure— made modifications to the bill to make sure that we were protected from a massive payout to the developer if this project doesn't move forward and they're forced out. And we further refined that based on input from the developer to make sure that it was a protection for Alaska that also worked for the developer.

And in terms of protections for Alaskans, there was no requirement explicitly in the bill that there be a project labor agreement for Phase 2 of the project. I think we should be protecting Alaskans and their access to good-paying jobs as as part of this possible development.

Glenfarm got just about everything they wanted in some form or fashion. And that's a result of the collaborative process that we had from the input that we received. I'm sorry if not every member of the process, every stakeholder got the same level of input or the level of input that they felt was right to them. But I will tell you, from the hours that I put in, that you put in, Mr. Speaker, that all the other conference committee members and their staff put in, that there were a lot of discussions that took place, a lot of collaboration, and a lot of compromise that took place to try and give this bill the best chance possible. Now, I heard some concerns on the floor to get a little nitpicky here on some items about the informational return and how wrong it is that we would ask for these, for entities, oil and gas entities in the state of Alaska, to file an informational return.

Sadly, we as a state don't know how much people are profiting off of our non-renewable resources in Alaska. You know, if I had a non-renewable resource that was wasting away in my backyard, I'd probably want to get that to market. I might partner— I don't have the ability to get it to market. I might want to partner with someone that can help me get that non-renewable resource out to a place where it does some good. So what's the proper way to handle that?

Should I give it away for free, allow the person I partner with to take that resource in my backyard and put it out to market and take all the profit for for that, and that doesn't seem right. Well, should I take all the profit? No, that doesn't seem right either. I'm working with someone else to bring it to market. Should we split it 50/50?

That might seem fair. Except we find out that maybe that's not the proper take, that they, you know, should get some other value comparable with other industries. Well, we don't know what those other industries— we don't know what that profit level is. How do we get information on what that right profit sharing agreement should be? We don't have any way to do that today.

We hear, we listen to testimony from Department of Revenue and they say, "We don't know. You pass this provision, we don't know how much revenue it'll generate. We don't know how much money people are making off of our gas in Alaska, these limited liability partnerships or other pass-through entities." So this informational return that's in the bill simply says, we as partners, as the resource owners, deserve to know what kind of profits you're making by taking our resources and delivering them to market. I feel like that's a reasonable thing to do. Maybe that's— it's a reasonable thing to do.

And for those that are concerned about the fact that we are addressing the pass-through entity loophole, some say it's not a loophole, I will say it is. More than 80% of Alaskans support us closing that loophole.

Why would we not? Why would we not address that issue before readjusting Major tax structures in Alaska. Why would we not first close a hole in our tax structure before moving on to the next thing and building a new tax structure for a new project with new potential vulnerabilities for pass-through entities to come through, profit off our state, tell us nothing, and share none of that with us?

I don't know, seems like a reasonable thing to me to do. So Look, there's been a lot that's been said.

I stand by the product of the conference committee. I appreciate you, Mr. Speaker, and those others who have been involved in this process. It's been a long process, a difficult process. Obviously, it's apparently going to continue on. I don't know that we're going to get a better deal.

I don't know that another iteration of this is going to be productive. I do know that I want to deliver our natural gas resources to Alaskans, to meet that demand in Southcentral, to bring hundreds of millions of dollars potentially in revenue to our state, to provide good jobs to Alaskans. I want to make sure that we have energy security.

I also want to close a major loophole in our tax structure. I want to have a fair system. This bill does all of that. I want to build the line. I'm going to vote yes on this.

It's the right thing to do for Alaskans. It's the the right thing to do for South Central. It's the right thing to do for rural Alaska. Wherever you are in the state, you benefit from this project. You benefit from this loophole being closed.

And so I'm going to be a strong yes, despite the fact that this bill has some of the things— some things that I don't like, and it's missing other things that I wish were in there. But I'm going to vote yes because it's the right thing to do, because it's the product of compromise, because it's followed the process, and because I don't frankly think that we're going to get a better shot at We're going to come back on July 27th, less than a month away from the primary election, and we're going to have 60 members of the legislature giving this their full attention to get it right? I don't think so. And notwithstanding those concerns, I talk to a lot of legislators. I don't think that you're going to get closer alignment between the different factions on this issue than you're going to get here today.

So, you know, I can read the tea leaves, I listen to the speeches, I can pretty well tell what the outcome is going to be today, and I'm saddened because this— failing this vote, if we take it, is likely going to kill the gas line, at least for this year. And we'll be back here in January, maybe with a developer that's still pursuing this, maybe they pull out by then, and we're going to go through all this time and effort once again. That's a shame. It's a waste of time, energy, money.

You know, we— yeah, I think I've covered it pretty well here. So with that, Mr. Speaker, I'm gonna be a proud yes vote. I want to thank everyone that put a lot of hard work and energy into this project. I want to— I want to thank my— I want to thank my wife.

I've missed a lot of days. A lot of time with my kids. She struggled alone. She's not the only one. I have to put that out there, that there's a lot of sacrifice that goes into this.

I had hoped we'd have a successful outcome. I had hoped that that work wouldn't be for naught. I had hoped that we would deliver a gas line for Alaskans, or at least give the developers a fighting chance. In my conversations with them, this bill would have given them a fighting chance. It would have shown progress to the financiers, the investors.

It would have shown that the state of Alaska supports their efforts, that we were willing to put in place a radically new tax structure to enable this project. It would have been a good thing, but I think I'm going to leave today pretty darn disappointed, Mr. Speaker. So with that, thank you. Thank you very much, Mr. Majority Leader.

Mr. Speaker, I move that the House adopt the conference committee with limited powers of free conference report, thus adopting conference committee substitute for House Bill 381. Are you ready for the question?

The question being, shall the House adopt conference committee with limited powers of free conference report for House Bill 381, thus adopting conference committee substitute for House Bill 381? Members may proceed to vote.

Will the clerk please lock the roll? Does any member wish to change his or her vote?

The clerk please announce the vote. 19 Yeas, 19 nays. By a vote of 19 yeas to 19 nays, the committee report for House Bill 381 has failed to be adopted. Brief at ease.

Will the House please come back to order? Mr. Majority Leader.

Yes, Mr. Speaker, before I read the motion, I want to recognize several members wanted excused absences read, and my office will reach out directly to them and take care of that. Um, Mr. Speaker, under, uh, Uniform Rule 52. I move that the 3rd special session of the 34th Alaska State Legislature adjourn sine die. There being no objection, the House will adjourn sine die. We are adjourned.