Alaska Legislature: House Finance - June 8, 2026 11:00am

Okay, I'm going to go ahead and call this meeting of the House Finance Committee to order. Let the record reflect that the time is currently 11:17 AM on Monday, June 8th, uh, 2026. Before I call roll, I just wanted to give folks a heads up, um, some of the committee members have asked for about 10 minutes to confer, and so I just wanted to give folks a heads up, um, in terms of of the wait time. So I'm going to go back to at ease, but I just want to let folks know that will be about probably another 10 more minutes. So House Finance at ease at 11:17 AM.

Okay, I will call this meeting back to order. We had a couple legislators who were wanting to meet up here. And so we are back on record and we are— it is— the time is currently 11:32 AM on Monday, June 8th. And as I mentioned earlier, I would call roll after the at ease. And so I'm going to do that now.

We've got Representative Allard, Representative Stapp, Representative Moore. Representative Bynum. Co-chair Schragi is, I believe, en route. He was here a moment ago. Online, we should have Representative Co-chair Josephson.

Are you there, Representative Josephson? Can I be heard? Yes, we can hear you. I'm here. Okay, great.

Thank you. Okay, we also have Representative Jimmy online. Representative Jimmy, are you there? Yes, I'm online. Okay, great.

Great, thanks. We also have Representative Galvin, Representative Hannan. I know Representative Tomaszewski was just here. He'll be back in a moment, I think. I've got myself, Co-Chair Foster here.

I know in the audience earlier I saw Representative Himschutz. I think she'll probably be back. Representative Mears is also online. Thanks for joining us, Representative Mears. We also have Representative Coach Ashraghi.

And, um, so with that, just a reminder, folks can mute their cell phones.

And of course, we have before us House Bill 381, that is the Gasoline Bill. We do have 23 amendments before us. Before I make further announcements, I would like to make a— just recognize the LIO staff in Anchorage. I had meant to recognize them at the conclusion of our meeting when we were in Anchorage, and I just wanted to express our appreciation for their helping us out for the, I guess, the 10 or so days that we were there in Anchorage. And that was 3 folks.

I've got a couple names here. I've got Dana Nichols, I've got Cassie Entcher, Tristan Williams, and Mr. Anderson. Did I get all the names? I feel like there's a fourth, but with 3 names, okay. And, um, so let's see here.

It looks like we're also going to take a recess after Amendment Number 4, maybe about 30 minutes or so. And on that note, we don't have a schedule or a plan for when we'll be taking some time to maybe grab a bite later. And in terms of how long we're going to go through today, we do have 23 amendments, so it'd be great if we could get through as many as possible. Overall, we'll go as long as we can, and if we— once we get tired, we can call it good. But we do have at least Monday and Tuesday set aside for amendments.

Wednesday we're intending to push the bill out to the floor, and we can also use that time if we need to also do amendments on Wednesday as well and push the bill out. But it would be great if we could get through the amendments today and tomorrow. So with that, I do also have Representative Tomaszewski, I noted, was here. Here earlier, and he's here. And so with that, before we start with the amendments, do we have any questions of the committee?

I don't see any. So with that, we'll jump right in. And the first amendment I have is Amendment Number 1. Representative Sharkey. I think you could— sure, Foster.

I am not going to offer Amendment 1 at this time. Okay, so Amendment Number 1, not at Time. And that takes us to Amendment Number 2. Representative Sharagi. I move Amendment Number 2.

Okay. And object for purpose of discussion. Okay. Representative Sharagi. Great.

This amendment deletes Sections 6 and 9 of the underlying bill. These sections related to a bill considered last session, session, which would have established the Alaska Education Fund, uh, and directing funding from the AK LNG project toward it. That bill did not pass. So this amendment is a technical cleanup. It reverses a previous amendment which directed portions of the state revenue towards this renewable energy fund and returns it to the Affordable Energy Fund, which would help ensure rural communities which will not benefit directly from the AK LNG project have access to reliable and affordable energy.

Okay, and we have Representative Stap. Yeah, thank you, Chair Foster. I agree with the Co-Chair Schrag, and I'm going to be withdrawing my objection. The amendment simply just deletes some material that's immaterial to the current bill. Okay, real good.

So with that, I don't see any further discussion. And Representative Stepp, you're removing your objection. So I see no further objections. So Amendment Number 2 has been adopted. And just so folks who are watching online and are following this, there are numerous versions of the Gas Line Bill out there.

Chair. We are currently working on version T of the bill. That's House Bill 381, version T. It's the version that came out of the House Resources Committee. So that next takes us to amendment number 3. Representative Schraggi.

Thank you, Co-Chair Foster. I move amendment number 3. Okay. Object for purposes of discussion. Okay.

Thank you, Co-Chair Foster. Amendment number 3 adds explicit intent language to the mandate that this act is not intended to affect the tax treatment, valuation, or taxing authority of any other property under AS 29.45 or AS 43.56. This is a mandate that this piece of legislation be narrowly construed and not serve as precedent for future projects. I'll leave it there and see if there are questions. OK, Representative Step.

Yeah, thank you, Chair Foster. Just have a quick question for Mr. Kocher, Chair Aguiar-Maker, the amendment. All we're doing here is basically clarifying that the tax treatment associated with the natural gas pipeline project is only associated in the changes. And we don't want to say that we're setting some sort of precedent on any other project going forward. So the things that actions that we're taking today are specific to the AK LNG project.

Is that correct? Through the chair, Representative Trogi. Through the chair. Yes, that's correct. This just ensures that future legislation future legislative bodies and local communities have an opportunity to tailor tax treatment on other projects according to their needs, and that this project not be used as precedent to define anything in the future in those regards.

Okay, I find that very reasonable, co-chair. I'm going to withdraw my objection. Okay, the objection has been withdrawn, and seeing no further objection, Amendment Number 3 has also been adopted. And that now takes us to Amendment Number 4. Representative Josephson, Amendment Number 4.

Mr. Chair, I move Amendment 4. Check. Okay, we have an objection. Representative Josephson.

Thank you, Mr. Chairman. Um, the, the issue here is about the tax treatment of property within the confines of the North Slope Borough. This, as everyone knows, has been a sensitive topic. We had the mayor come before us to talk about it for about 90 minutes to 2 hours. What this amendment does is it tries to strike a balance between the interests of the North Slope Borough and the interests of the developer in incentivizing the project.

Here's how it strikes that balance, uh, and please let me know if you can't hear me for any reason. The first, the first thing is, uh, that the North Slope Borough was interested in an equity option where any foregone, um, property tax under the current regime could come back to them as an equity option equity option in the greater, uh, ATLG project. That met with considerable criticism, and that, that, uh, is not part of this amendment. So, uh, the equity option would go away, uh, in House Bill 381. The second thing is that there was an interest in treating this gas line project as if the 730,000 Alaskans are on the same team.

It's a team sport. We're all in this together. And this, this amendment would say that from the time gas flows up to 400 million cubic feet per day, which we all know is substantial, would suggest that there's export happening. Very possibly, not guaranteed, but very possibly that's what would happen, um, that, uh, there would be no tax received by the North Slope Borough. And in fact, they also would not later be able to make a claim about any tax, um, during pre-abatement, except for impact date of course, and during the 5-year abatement window prior to the flowing of gas.

Um, what, what this amendment does, however, is it says that after year 5 or $400 million to be paid, the North Slope Borough could, um, could negotiate its own terms on a property tax. Um, and I can ask Mr. Alper to clarify, but I think notwithstanding the completion of the negotiation successful agreement that the, um, there'd be a reversion back to the current tax. But you, we have to ask Mr. Alper if that part's true. And Mr. Alper, I know that you're an expert on a number of the issues here before us, and just if you could maybe come up and be available for questions. And I think Rep. Josephson was maybe checking in with you to verify that if whether or not he has the information correct.

Also, just for the folks watching, just want to recognize Senator Myers. Thanks for joining us. And with that, Mr. Alper, if you could put yourself on the record. Thank you and good morning. Still good morning, Mr. Chairman, for the record.

Ken Alper, staff to Co-Chair Josephson. Representative Josephson has has introduced Amendment Number 4. It's trying to resolve the issue of— the underlying bill that came to the committee from the Resources Committee left the autonomy to the North Slope Borough to create their own arrangement on the gas treatment plant, which would be located, of course, up on the North Slope Borough. One of the— oh, thank you. One of the concerns with that, and I know there's several, is the uncertainty.

That because that is an unresolved issue and it might take time for them to negotiate whatever that arrangement is, it's harder for the project sponsor to go to FID to make a decision because they don't know what the tax treatment would be. And the mechanism to resolve that was the abatement that Representative Josephson said. That for the first 5 years of the project when the volumes are small and it's primarily primarily going to be for local consumers in the rail belt, that the tax will be zero. And that therefore a clean decision can be made, an FID without the uncertainty. And then what powers are being granted to the borough would not kick in until the end of the abatement period.

The abatement period is either 5 years or when the $400 million threshold is reached if we're fortunate enough to get an LNG facility built in the— in that 5-year window. The other changes that are in the amendment that are a little more— Representative Josephson mentioned the equity option as an explicit compensation for any tax reduction, tax agreement that the borough agrees to must come to them. That is removed. However, the borough retains the right. Any borough does keen eye on the other end to negotiate for, say, equity in exchange for tax.

That those powers remain. However, It's not explicitly part of the bill as a requirement. Two small pieces, relatively small pieces that are also in this amendment I want to make the committee aware of. You will recall, Mr. Chairman, when Mayor Machicki from Kenai was testifying in Anchorage last week, one of the things he asked for is if we're going to leave autonomy to the boroughs to negotiate arrangements and the gas treatment plant and the LNG plant, he would like the option to negotiate an AVT at the municipal level. So you'll see within the language of this amendment that authority is granted to— for municipalities to contemplate an alternative volumetric tax in lieu of a property tax as an alternative way of taxing the property in their jurisdiction.

The way it's written, because that needs to be entirely in their jurisdiction, that would only really apply to the North Slope for the gas treatment plant and Kenai for the LNG plant if they wanted to. That is a municipal option. And the last thing added by this, uh, because, uh, Mr. Chairman, the, the resources bill that came to us, the technical language, what it's really doing is exempting the gas treatment plant from the underlying petroleum property tax, 4356, uh, which is how all the other infrastructure on the North Slope is currently taxed. That, uh, under current law is a $20 mil tax of which the North Slope Borough would credit 18 mils, slightly less than 18 mils, at their municipal tax rate, and the state will get the other 2. Because we are exempting that and thereby deferring the power to the borough, the state would not be receiving anything from the gas treatment plant.

Therefore, Amendment Number 4 also adds a small separate alternative volumetric tax on just the gas treatment plant of 2 cents that would be retained for the state, and that 2 cents roughly, uh, reports with the amount of revenue the state would be getting under a traditional property tax structure had it remained in place. I'm happy to take any more questions. Okay, I've got Representative Galvin.

Thank you, Co-Chair Foster, through the chair, and with great respect to my colleague and leader, Co-Chair Josephson. I I do have a question related to leaving this open, the latter part of this that you described, where in Phase 2, that what will happen then is that the respective communities are going to be working out an agreement based on their desired outcome. And I guess my concern is, especially here hearing what we heard last week from the North Slope, um, that may be difficult to get to. And I'm worried about the uncertainty that that brings then to an investor who's trying to imagine the economics of this project. If we've left a hanging open thread is kind of where what I'm wondering is if there's been much thought to that and concern around creating, I guess what I'll just call uncertainty because of that.

Mr. Alper. Through the Chair to Representative O'Dalvin, that's an important question. Thank you. The main initial concern was the immediacy of it. So by delaying that power to the end of the abatement period, It allows time for that negotiation to go forward and whatever that arrangement is would not impact until the 5-year window was reached.

The premise of this structure is, however, that we're deferring that autonomy to the municipal governments on those two major components of the project. The preference of the administration would be to have a state-managed AVT. At a small level, that would be— and therefore it would be certain. The bill that's currently under consideration in the other body also has a state-controlled structure, but with larger numbers in it, a stack of 3 different AVTs essentially that would add up to currently 40 cents in the bill that's in the other body's Finance Committee right now. If the desire is to delegate that power and leave it in the hands of the municipal governments, inevitably that's going to bring with it a little bit of uncertainty because that simply is not resolved yet.

When Mr. Stickel is presenting, what he does in those circumstances, to be clear, is assumes the status quo. So when you see the modeling coming out of the Department of Revenue in response to a structure like this, they are assuming that something akin to the $20 mil rate of current statute, because they don't know what that negotiation might result in. Thank you. We've got, uh, Representative Josephson, did you also have a comment? Yes, I think part of what really sticks with me, Mr. Chairman, in response to Representative Galvin's question, is the testimony of the mayor.

So, you know, we have to recall that direct impact aid is a culture of the NPRA, and they do husband— they have the resources. Now that is an act of God, and that's why we have— under ANCSA, there's revenue sharing because some people have the gold and some don't. But nonetheless, they have the resources, and Mayor Pottetuck made a strong case that it's challenging for him to go to his constituents and say, "Ladies and gentlemen, this is what I secured. I secured a 90% tax cut, and I secured no spur lines." And I think his argument has some credibility to it. I mean, this, this would give the negotiators 5 years to reach some sort of agreement.

And frankly, frankly, it's going to be more— it could very well be more than 5 years because, you know, you've got the construction phase, and theoretically that's years more. So I don't think this creates any immediacy in terms of a threat. And so I'm offering this amendment. And again, it was designed, you know, I conferred with the mayor, and it was designed to strike a middle ground. There are very few ways to do that.

Again, this is probably not deemed by, if it's adopted, it won't be deemed by the North Slope throw some huge victory. They want much more than this, and they're not going to get it under this amendment. Okay, I've got Representative Stapp, then Galvin. Representative Stapp? Yeah, I think, Co-Chair Foster, I'm just going to be very quick here.

So I'm going to oppose this amendment very strongly. Basically, the way I look at this process, Co-Chair, is we are either talking about helping the developer be able to have a framework that they can finance and construct this project, or we are doing the opposite of that, which is hurting the developer's ability to finance and structure this project. Mr. Alper actually gave you the best reason to vote no when he talked about how this amendment actually creates uncertainty in the project, um, and that's because of the nature of the 5-year abatement and open negotiations with municipality. So like, I'm going to oppose the amendment. There are lots of other reasons.

I do appreciate Coacher Justice's attempt to thread it, uh, through the eye of the needle here, um, but ultimately You know, the developer is sitting in the room, has testified many times on these types of framework and this arrangement, and it's unworkable. And if it were to be adopted, it would almost certainly mean a no project. That's why I oppose it. Okay, I've got Representative Galvin, um, Allard, I think maybe, and then we'll come back to Mr. Alper. Actually, we'll just stick with the key.

I think that Representative Stapp covered my concerns. It's really about the longer term certainty that— or rather uncertainty that we might be leaving. And I do appreciate that difficulty in finding the middle ground. This is one of those really hot spots. Thank you.

Representative Ballard. Thank you. Mr. Elper. Mr. Chairman, I just wanted to address the uncertainty and clarify something that Representative Stapp said. The part of the reason Representative Josephson put together this amendment was because There's substantial uncertainty in the underlying bill that came to us from the Resources Committee with that autonomy in the North Slope happening immediately without an abatement period, putting an uncertainty on the tax structure on day one.

By adding the abatement period and making it clear that the tax will be zero for the first 5 years, the intent was to greatly reduce that uncertainty so that the developer could more comfortably go forward with a decision to build phase 1 of the project.

I think maybe I'm just going to add my two cents real quick, and that is I'll probably— I'm going to support the amendment. I think Representative Josephson's done a good job of trying to thread the needle, as was mentioned. I know that the North Slope had really had a lot of hopes for where this would go, and I feel like they've really compromised in this respect. And so I'll be supporting this. Representative Froggy.

Thank you, Co-Chair Foster. I agree that I would like to echo your appreciation to Representative Josephson, Co-Chair Josephson, for his work that he's put into this amendment, as has his staff. I can see that a lot of work has gone into trying to find a thoughtful middle ground on this issue. My concern is going to be the same as those that have been echoed so far, which is that this leaves a significant amount of uncertainty. Uncertainty out there.

And it's not just the uncertainty of, you know, the tax regime may change some number of years out. It's that we know there will be some change and we don't know what that change will be because it still needs to be negotiated just 5 years after this gets started. So I have some of that same concern that this leaves a significant amount of uncertainty out there. And part of my goal through this process is to make sure we protect our state's interests, gives this project a chance moving forward. But in order to do those things, to give this project a chance, I think we do need to, where possible, eliminate as much uncertainty as possible.

And so while the underlying bill might not have the solution, I'm not sure this amendment solves this issue either. And I think I'm going to be opposed at this time. Thank you. Okay, further discussion? Seeing none.

Representative Stapp, do you maintain your objection? Objection is maintained. Okay, the objection is maintained. Oh, I'm sorry, Representative Josephson, first of all, did you want to wrap up?

No, I, uh, I mean, I think it's interesting that we, we can now see why the, the House struggled as it did on May 18th. Um, uh, we're back in a sense at square one. And I do think that this reaches a sort of middle ground. And I'm just not— I'm not interested in dictating to a borough which has given us such great wealth the terms of the deal. And, and I, I just don't want to be in that position, so that's why I'm offering the amendment.

Okay, thank you. And the objection is maintained. So, Madam Clerk, we are currently voting on Amendment Number 4 to House Bill 381, Version T. If you could please call the roll. Representative Hannan? Yes.

Representative Tomaszewski? No. Representative Moore? No. Representative Allard?

No. Representative Stapp? No. Representative Galvin?

No. Representative Jimmy?

Yes. Representative Bynum? No. Representative Josephson? Yes.

Representative Schraggy? No. Representative Foster? Yes. 4 Yay, 7 nay.

And so on a vote of 4 ye to 7 nay, Amendment Number 4 has not been adopted. And so with that, there's been a request to take an at ease possibly for as long as 30 minutes, and I think folks are going to do a little bit of talking. So with that, House Finance will be at ease at 11:57 AM.

Okay, House Finance, um, back on record at 1:53 PM on Monday, June 8th, and I just wanted to gavel us in at tends to encourage folks to come back to the room here. And so I intend to gavel back out at ease here in a moment. But I just wanted to let the folks who are watching know that we have currently rolled Amendment Number 1. We adopted Amendment Number 2 and 3. Amendment Number 4 failed to be adopted.

And so the next amendment we we will be on when we come back on record is Amendment Number 5. Um, actually, I think we might have everyone. Um, just want to do a check-in here. Representative Josephson, are you there? I am.

Okay. And Representative Jimmy, are you there? Yes, co-chair Foster, I'm here. Okay. Okay, well, in that case, we, uh, have everyone here, so With that, we're going to jump right into Amendment Number 5.

Representative, um, step. Thank you, Co-Chair Foster. I will not offer Amendment 5 at this time. Okay, so not at this time. Uh, Representative Step, Amendment Number 6.

Thank you, Co-Chair Foster. I will not offer Amendment 6 at this time. This time. Okay, same with Amendment Number 6. And that takes us to Amendment Number 7.

Representative Stepp? I'm sorry, is it Representative Stepp or is it—. No. Representative Josephson. Okay, Representative Josephson.

I'll move Amendment 7. Okay, Amendment Number 7 has been moved. Do we have an objection?

No objection. Okay, I'm just going to object just so we can get it on the record as to what the amendment is. Representative Josephson, if you can explain the amendments.

Yes, um, what Amendment 7 does— first of all, let me say that, um, this amendment, and I, I stand to be corrected, but I think it was essentially adopted unanimously on the floor on May 18th, although there's a slight tweak to it. Um, but what the amendment does is it says, uh, because it was unclear, at least in the version of the bill that was on the floor, and so this clarifies that, that we need to talk about what we mean when we say, uh, that we're starting construction. Um, and so this clarifies that with a definition relative to that, um, that was fashioned in connection with actually member from the other body as well. And then it also says— what it says is you have to start construction by 2032 or you revert to the traditional tax, and that you need to finish construction by 2037. The part that, as I understand it, was— is additional in this amendment to what was on the floor on May 18th is the part that says you've got to finish construction by 2037.

So, um, that's what the amendment does. Okay. And if I could also just have, uh, Reps— or Mr. Alper, uh, come up to the table just in case we have questions. Representative Bynum. Thank you, Co-Chair Foster.

Appreciate the member for bringing this amendment forward, but I, you know, I I'm indifferent, I guess, at this point on it. I haven't decided yet. But I'm a little concerned, you know, we're trying to develop tax policy for a gas line project overall, and I think that we want that to be durable over time. So my only concern would be if there happens to be delays outside of our control or changes that might happen either for the negative or the positive, that this— putting this in here might create an opportunity for the legislature to have to redo all of this work again. So I would just like some better clarity from the amendment sponsor on how this may or may not impact the bill overall as a standalone piece of legislation independent of the Mr. Alper.

Okay. And staff to Representative Josephson, Mr. Alper. Thank you, Mr. Chairman. Good to be back. For the record, Ken Alper, staff to Representative Josephson.

To Representative Bynum's question, it's important to restate that the 2032 termination language is already in the bill that came to us from the Resources Committee. And it says they have to start construction by 2032. June 30th, 2032, or the ABT terminates. The— there was an amendment that Representative Josephson ran on the floor on May 18th that added— there's some lack of clarity because, well, what happens then? Because elsewhere in the bill, this property doesn't pay traditional property tax, petroleum or municipal.

So if this gets terminated, that could potentially leave them in a gray area. So the clarifying language that if it's terminated per the language already in the bill, that means they would pay traditional property tax. So that's part 1. Part 2 is, well, we never really defined commencement of construction. So commencement of construction, like, definition language was added to this amendment, and that language, just to be clear, Mr. Chairman, was not novel.

There was similar language in the other body's bill, the Senate Resource Committee substitute. And then the new thing, the new component that Representative Josephson as I mentioned, and this was discussed with project sponsors, with Mr. Begich back in May, and then they were on board with the concept. This second termination, should they not get done by yet 5 years forward in 2037, the same condition would be met. We would terminate the AVT and thereby default to the underlying tax. And I'll also say, Mr. Chairman, this does not repeat kill the AVT statute the way the amendment is written.

Should a project get back in good standing or a subsequent project come along that meets the same conditions, they would be eligible to get this AVT treatment. It would just be an indication that this project has somehow failed and would lose its access to the special tax treatment. Representative Bynum, any follow-up? Representative Bynum? I'm okay for now.

Thank you. Okay, I'm going to go ahead and remove my objection to Amendment Number 7. Hearing no further objection, Amendment Number 7 has been adopted. And that next takes us to Amendment Number 8. Representative Sharagi?

I will not be offering Amendment Number 8 at this time. Okay, Amendment Number 9, Representative Josephson? Uh, yes, give me one second to gather myself here. Here. Um, it's a little unique from the, the remote location here.

So Amendment 9— just one more second.

Um, all right, Amendment 9. Um, basically what Amendment 9 does is It offers further assurances to municipalities that when they qualify for— or apply, rather, for impact aid, they can get that directly from the developer, and the state would retain any balance subject to the division in the House Resources Bill where some municipalities would get impact aid that is basically calculated similar to community assistance, and some would get what I'll call the old-fashioned property tax as to the pipeline portion in their community. But primarily, Uh, and this is something that Mayor Machicki testified to. There was insecurity about whether the legislature would appropriate these dollars, uh, and he noted that on the record. I would invite Mr. Chairman, Mr. Alpert, to clarify further.

Mr. Alpert, please feel free to hang around at the desk there if you're so inclined. Thank you, Mr. Chairman. Again, Ken Alper, staff to Representative Josephson. So Amendment Number 9, this came to us really from the municipalities themselves. They— the concern in the underlying bill, particularly the distribution of the alternative volumetric tax, or whatever the state's revenue is to them, would be passing through the state coffers and subject to appropriation.

And there was the concern both that the state might choose not to appropriate that in a fiscal crisis, or there would simply be a delay up to a fiscal year of getting the money. And they sought somehow the ability to collect it directly. Now, other versions of the bill have similar language. This is a little bit novel just because of the, the specific distribution mechanism in the underlying bill from resources, particularly on the AVT, on the pipeline segment. It's a two-part distribution of that money with half of the money distributed to the neighboring communities on a mileage ratio and the other half distributed to every community in the state on a population basis.

So the reason Amendment 9 is written the way it does is that the Department of Revenue still needs to be in the equation. They need to say to a given municipality, this is your share. This is your percentage, but then the municipality can bill for it directly, and then that would come off of the, the total. The state would simply get what was left. Now, there will be a wide mix of municipalities— there's over 100 of them in the state— that will be getting a share of this money.

Let's say half of them choose to use the powers granted by Amendment Number 9. They would take their share directly. The state would collect on behalf of the others and then distribute it under the mechanism described in the underlying bill. Subject to appreciation, these ratios will go out. But it's a relatively simple amendment.

I believe it has broad municipal support, and I could answer more detailed questions if there are any. Great, thank you. Representative Josephson, I don't know if I heard the words, um, you moved the amendment, so if I could have you maybe do that. My apologies. I move Amendment 9, and for the record, I would refer to my previous comments as my characterization of the amendment.

Great, thank you. And I have objected for purpose of discussion. Do we have any further discussion on Amendment number 9? Seeing— erpsen of Hennan. Thank you, Co-Chair Foster.

Um, I think Mr. Alper will probably be the one that needs to answer this, but Perhaps the sponsor can. I wanted to just make sure in my own mind because in another part of the bill where we have mitigation funds being administered out to municipalities and I can't remember if we are doing it via amendment but through DCCED. So we are going to have two tranches or two streams of the mitigation or in this case it is the AVT once it's being executed and that being distributed out via the community assistance formula versus impact aid. But we're going to, in essence, have two ways that a community would apply for or receive impacted money, some of it directly from the impact fund and some of it via the AVT producing revenue that we are now using in a formula to distribute. Am I correct?

Mr. Elmer. Through the Chair to Representative Hannan, and thank you for asking the question because it did seem a little confusing because there are different streams of money that we're talking about here. The impact aid is not the subject of Amendment 9. Amendment 9 is purely about the tax, the alternative volumetric tax that would be coming in after the actual operation of the pipeline. Impact aid, which is during the construction phase, which is what we're talking about, you know, as written in the bill would be a fund that is administered by Glen Farn, who would receive applications from the municipalities.

There was a floor amendment back on May 18th that converted that into a grant program administered by DCCED. I believe there was broad support for that. That— this bill version before you predated that work. So there's another amendment in the packet that changes the nature of the impact aid fund. But again, Amendment 9 doesn't touch that.

Amendment 9 is just about the distribution of the tax after the pipeline is operating. And yes, there's the formula. The formula is not being changed in the amendment. It's going to go on the community assistance population formula, a portion of it, and another portion based on the actual mileage ratio— of where the pipeline— whose jurisdiction it's in— Matsu, Denali Borough, Kenai, et cetera. That part's not changing.

It's just enabling the municipalities to directly bill for their portion of that and not have to work through the state. Follow-up? Follow-up. Thank you, Chair Foster. Mr. Alper, why would this tax— or policy-wise, why should it be treated differently than other community taxes that the state receives and redistributes like the fisheries tax.

So tell me policy-wise why this would be distinct. Mr. Alford. Or should be distinct. Through the chair, and I think actually Representative Josephson might want to speak first, so I'll stand down. Representative Josephson.

Well, thank you. Through the Chair, Representative Hannon asks an excellent question. I think that, I think it's just to respond to principally what we heard from Mayor Machicki, and I would invite Ken to, Ken Albert, to explain further. Mr. Alper. So, Mr. Chairman, Representative Hannon is absolutely right.

There's a shared taxes section in the language back of every operating budget where we're distributing fish taxes and various utility taxes and cruise ship head taxes and lots of things like that that pass through the state. It sometimes— there's time involved, but that's— it just is what it is. The municipalities raised the issue and asked for for this. I don't think it makes a massive public policy difference one way or the other, but it's no skin off our back if it can be done in a clean manner so that they can bill directly. Representative Josephson didn't think there was any problem with it, and we offered to put an amendment together to implement that.

Representative Hannon. Follow-up. Thank you, Co-Chair Foster. And so, Mr. Alper, since you formally ran our tax division. When we are collecting taxes, I've always had the impression that there's a substantial delay between the taxes as we believe them to be collected and then challenges that may arise in litigation, and it's sometimes 9, 12 months out.

So I guess my concern is if we're putting this on an expedited— the tax was collected of a dollar and you're due 75 cents of it and we've given it out to a municipality and then later find out that really it wasn't 75 cents that you were due, it was only 70 cents because there were some things in the accounting process and challenges that result in a reduction in that. Are we putting ourselves where we're going to have a cash flow issue over revenue we're collecting but giving out to municipalities while we're still under the— I I think it's called the audit phase of that collection and verification. Through the Chair to Representative Hannan. So other sections of the bill talk about the appeal process. That's going to happen regardless of who's collecting the money.

If there's— and then the adjustment, generally speaking, won't so much be on the ratios. The Department of Revenue will tell the City of Juneau, the City of Fairbanks, what your portion is this year. The mileage number is not going to change, but the population numbers are. And in fact, the amendment— I'll draw the committee's attention to page 2 of the amendment, line 14. That's the reference to Statute 2960.860.

That adds a little bit of clarity that when we're talking about the distribution by population, we're using the community assistance formula that that already exists, that is a regulated number the Department of Commerce tracks that says, uh, this is what the ratio of the community assistance is and how it gets divvied up among the many municipalities in the state. So the ratios will be solid, but the numbers will change because maybe the volume will get adjusted once, uh, that they look through all of that. That would be easily managed in the next month's true-up. Like, these same entities are going to be getting more money every month, and they'll get a notice and say, hey, you were overpaid $2,600, remove it from your next month's bill, kind of thing. Any further questions?

Seeing none, I remove my objection. Seeing no further objection, Amendment Number 9 has been adopted.

So that next takes us to Amendment Number 10. Representative Schraggy. Will not be offered at this time. Not at this time. And the next amendment is Representative Galvin, Amendment Number 11.

Move Amendment Number 11. We have an objection. Representative Galvin. Thank you. And coming your way is a conceptual amendment that I'd like to begin with, if I may.

Representative Galvin. Thank you. Hopefully that's getting distributed. Essentially, overall, I'll I'll just tell you, describe what this amendment does is it gets a reporting from AGDC so that the public and all of us in the legislature can know whether we're on time and on budget. And I cleaned up the language a bit with this amend— conceptual amendment.

So for lines 14 and 15 on page 1 of this amendment, let me get to it myself. Right along with you.

Okay, so on page 1, lines 14 and 15, I do have replacement language that really— it's better suited for this sort of a large project that has— so many contracts involved. And so what we've replaced this with, lines 14 and 15, instead of the language that's there, it adds a qualitative assessment and update of timeline and budget and cost containment progress since the last report. So I'm sorry, I want to make sure that I officially move this conceptual amendment to Amendment 11, please. Object, but there's already an explanation, so I can remove the objection to the conceptual. Unless anybody has any questions on Conceptual Amendment Number 1, Conceptual Amendment Number 1 to Amendment Number 11 has been adopted.

Representative Galvin. Thank you. And as I said earlier, really, this is pretty self-explanatory. It's a making sure that we put into place here in this bill that there is a more regular reporting than we've been receiving. We've been receiving a great report from AGDC once a year typically, and this is on this project specifically, and it's asking for twice a year.

It's intended to recognize that the project is reaching another level of activity.. And that we need to increase the frequency of reporting from AGDC to Alaskans and to the legislature. This specifically asks for 2 reports a year, one in February near the beginning of the legislative session and one in August that will update Alaskans and the legislature on the budget of how the project is going along, how it's doing with regard to cost overruns and how it's spending its money. Frankly, I think that there will be a lot of celebratory moments, hopefully, with regard to timelines and when it's expected to complete and reach the next milestone, et cetera, and give an update on the jobs being created by the project and its effect on the Alaska job market, including the wages that are being paid in proportion to workers who are Alaska residents These are all very important and relevant questions that Alaskans will be excited to hear about. And, and this is just creating that structure to the reporting timeline and contents for clarity.

And that's pretty much what it does. Okay. Any questions, comments? Representative Stout? Yeah, thank you, Commissioner Foster.

I just think it's— yeah, I mean, this is a transformational project, and then basically the amendment, amendment as amendment, would basically bring Alaskans along and let them know the stages of the project. And like Representative Galvin said, how many Alaskans are being employed and how this, the progress is. So I think because it's a generational project that changes Alaska, I think getting folks more interested, involved is good, and I think these reports are good. So I'm going to withdraw my objection. Seeing no further objection, Amendment Number 11 has been adopted.

As amended. As amended. Again, Amendment Number 11, as amended by Conceptual Amendment Number 1, has been adopted. And so that next takes us to Amendment Number 12. Representative Schraggy, not offered at this At this time.

Thank you. Okay, not at this time.

Representative Jimmy, you have amendment number 13. Yes, Co-Chair Foster, I move amendment 13. Object. Okay, we have an objection. Representative Jimmy.

Yes, thank you, Co-Chair Foster. Can you guys hear me clearly? Yes, we can. Thank you so much.

I move Amendment 13. Amendment 13 creates Coastal Resiliency Fund, drawing from a share of gas royalty generated by the LNG project, modeled on the Affordable Energy Fund structure this body knows well. Coastal communities in my district along the Bering Sea and Yukon-Kuskokwim Delta face accelerating erosion, flooding, and infrastructure loss. These are communities on the front lines losing land, lines, homes, and in some cases, the entire village site.

As the state moves forward with monetizing our gas resources, this amendment ensures there is a dedicated accounting structure and clear policy commitment to direct benefit toward the communities bearing the greatest environmental costs of that development. The Affordable Energy Fund model works because it connects resources, revenue to the communities needed in transparent, accountable— accountability ways. Amendment 13 applies the same logic to coastal resiliency. I urge your support. Hoi'ana.

Was there an objection? Was that Representative Staff? Okay, thank you. Thank you. Representative Staff.

Thank you, Co-Chair Foster. Thank you, Representative Jimmy, for bringing forward this amendment. I'm going to be in opposition for a couple of reasons. Number 1, 20% of the royalties already go to the Affordable Energy Fund in the project. That was an amendment we adopted earlier.

This would add another 20% of the royalties to be dedicated for a purpose. Those 20% of that royalty goes directly into the general fund, and a future legislature would be appropriating it for this purpose. That's kind of the fundamental breadbox of our Constitution. And I know that as we saw throughout this year, a lot of folks— I mean, we appropriate a lot of money, the Disaster Relief Fund, to kind of combat this stuff. And I'm very confident that coastal erosion is going to be a big concern of future legislatures where they can appropriate that revenue.

But if we were to adopt this amendment, fund meant. We would simply be taking general fund dollars and trying to dedicate them for another purpose. I want to try to maintain flexibility in future legislatures. Thanks. Okay.

Representative Tomaszewski, then Galvin. Representative Tomaszewski. Thank you, Mr. Co-Chair Foster, through the Chair. So, you know, I'm not really familiar with too much on the erosion mitigation fund and what it does. But I do know we have an attached memorandum by Legal Services that basically states this would violate the single subject requirement for the Alaska Constitution on this, on this legislation.

So I don't know if there's been an answer to the memorandum or if there's some other details that maybe the sponsor could give us on this constitutional issue. But I think that those questions definitely need to be addressed before moving forward with this. Mr. Chair. Representative Josephson.

I don't mean to jump the queue, but I'm not sure how else to do it. I can wait, but if it's proper time. Maybe I'll go Representative Galvin and then Josephson. Representative Galvin. Thank you.

I wanted to, I guess, echo what I heard from Representative Tomaszewski. However, I do think this is a very important issue that I appreciate the— my colleague bringing this up. I think that we should have a fund. I think that it should be actually probably far more than what a 20% could do, especially in light of what we are currently experiencing, not just in where we know we just experienced MRBAC, but also we still haven't completed our work for Shishmaref or Newtok. There's a lot of work yet to to happen.

I've heard that there's some associated federal dollars that perhaps could be leveraged as well. So I guess what I'm saying is I thank you very much for this amendment. I may not vote for it, but I am fully supportive of looking at legislation that would be stand-alone on its own, and I think that we would get a lot of support for for it because this has been— it's going to be rearing its head more and more every year looking at science. And it's on us to make sure to protect all of our communities. So I just want to thank you very much, Representative Jimmy.

Next, I have Representative Josephson and then Sharagi. Representative Josephson. Yes, Mr. Chairman, I'm going to support the amendment. The, the memo, which I've just read again, doesn't say that there's a definite constitutional infirmity. It says there could be one.

But the example it uses is an initiative from Croft v. Parnell. And there they, they question whether campaign finance and taxation of the oil industry were interconnected. Well, at first blush, campaign finance and oil taxes strikes me as very, very different, one from the other, than, um, the resiliency fund that's proposed in Amendment 13. That's connected because of climate and because— I mean, think about this, for example. What is this program?

What does this proposal include? It includes reinjection of natural gas in 45 reduction tax credits. Well, what's that about? Well, that's about climate change. That's what that's about.

So that's the connection to the amendment. It's, it's— and I would say it's not a dedicated fund like so many of our funds. It's going to take vigilance from supporters like Representative Jimmy to monitor the fund, make sure it goes where it's supposed to go, and protect the fund. But I think the, the connection is fairly obvious, and I'm going to support the amendment. Okay.

Representative Sharkey. Yeah, thank you, Co-Chair Foster. Regrettably, I'm going to oppose this amendment today. I, similar to Representative Galvin, really appreciate this amendment being run. I believe strongly that this is an important issue facing our state and our communities, and that this coastal erosion and global warming is having a very tangible impact on our communities.

That said, I have a number of concerns, many of which have been voiced already, but one of which, just to highlight again, is I just have concern with carving up revenue from this project at this point and essentially, even if not actually dedicating those funds, pre— pre-indicating where we intend for those funds to go. I would prefer that we retain flexibility at this point. And also would echo the concerns that this will not be enough to meaningfully address the issue at this time. I think we should be looking at something more robust with a greater thrust at a later time for us to address this. Thank you.

Okay. Seeing no further discussion, Representative Jimmy with wrap-up. Oh, I'm sorry. No, Jimmy.

Um, yes, then explain to give some clarity to those who have comments or questions. Uh, did you say who were you asking for, Representative Jimmy?

Mr. Ken Halper. Okay, Mr. Halper, if you could come up.

Thank you again, Mr. Chairman. Ken Halper, staff to Representative Josephson. And I think just with some of the questions, it's probably good to put a little scale to the conversation. What are we really talking about? The Affordable Energy Fund, which is in statute since 2014 and was restored to this bill earlier this morning, is 20% of royalties after permanent fund.

And that's the same way that Representative Jimmy's amendment is structured. Round numbers, there's going to be about $1.2 1.8 billion units, 1,000 cubic feet of gas running through this system in a given year at full capacity, presuming a $1.50 wellhead price, which is the number that's generally been bandied about by the project sponsors as an estimate. So that's $1.8 billion a year. Our royalty, call it 12.5% on the average. We've got a universe of maybe $200 million worth of state royalties, of which 25% would go to the permanent fund.

So now we've got $150 million of post-permanent fund royalty. 20% Of that— we're talking about $30 million a year that would be going to the program that would be set up in Amendment Number 13. That certainly is material. I do understand members saying these are some potentially billion-dollar issues facing the state, but this is a way that the state could kick in our piece potentially. Thank you, Mr.

Chair. Brief it is.

Okay, House Finance back on record at 2:27 PM. And so that was Representative Jimmy's closing. And so with that, Representative Stapp, do you maintain your objection? Yes, I would like to give my closing remarks. Representative, uh, can you get a little closer to the mic?

Um, if we're on speaker, if you could take us off speaker. Representative Jimmy, can you repeat that? Can you—. I'm off speech. I've been off Speaker, can you hear me?

I think it's a connection, but I would like to give my closing remarks. Oh, um, we assume that that was your closing remarks. Um, Representative Jimmy, go ahead and proceed, and then we'll try not to do this in the future. Representative Jimmy. Thank you, good job, Pastor.

Um, thank you everybody for your questions and concern, but I hope you, my colleagues, We'll relay that taking care of these issues are much worse and expensive on the back end of a disaster. As we see with the disaster fund, this will not be the last disaster in rural Alaska. Thank you. Okay, thank you, Representative Step. Do you maintain your objection?

Yes. The objection is maintained. Madam Clerk, uh, we are going to call the roll on Amendment Number 13. If you could please call the Roll roll. Call.

Representative Tomaszewski. No. Representative Hannon. No. Representative Bynum.

No. Representative Moore. No. Representative Galvin. No.

Representative Jimmy. Yes. Representative Allard. No. Representative Stapp.

No. Representative Schraggy. No. Representative Josephson. Yes.

Representative Foster? Yes. 3 Yea, 8 nay. So on a vote of 3 yea to 8 nay, Amendment Number 13 has not been adopted.

And so that next takes us to Amendment Number 14. Representative Josephson?

I move Amendment 14. Object. Okay, we have an objection. Representative Josephson?

Yes.

At bottom, what this amendment does is— well, I'd say it this way, Mr. Chairman. There wasn't a huge amount of drama in the 7 or 8 hearings we had. We had one the Thursday, must have been the 21st of May, and then we had probably 7 in Anchorage. There was a little occasional excitement. But, um, Mr. Sims of NSTAR came in and noted that, uh, he would not approve contracts, uh, purchase contracts that exceeded $16, as I understand it.

Um, and what this amendment would do is say that the project cannot pass on cost overreach, um, cost excesses, um, over that amount. And so that's the essence of the amendment. I, I would once again, with your indulgence, invite Mr. Alper to further explain. Okay, Mr. Alper, if you'd like to add anything, and then we'll go to a conceptual amendment. Mr. Alper.

Mr. Chairman, for the record, Ken Alper again, staff to Representative Josephson. I don't think I need to add anything. My representative explained it pretty well. The $16 number was put on the record. The amendment before you has an inflation adjustment to it, and I believe I've just received the conceptual amendment is on that topic.

And maybe I'll stand by to comment on that once it's introduced by the maker. Okay, Representative Sharagi. Thank you, Co-Chair Foster. I move conceptual amendment number 1 to amendment 14. Okay, and I'll object for purpose of discussion.

Representative Sharagi. Thank you, Co-Chair Foster. Conceptual amendment number 1 to amendment 14 deletes beginning 1 year after the commencement of commercial operations of a gas pipeline advanced, operated, or owned in whole or in part by the Alaska Gas Line Development Corporation or subsidiary of the corporation. And replaces that with each year after the effective date of this section. And very simply, what that does is it bases— it creates the base for the inflationary adjustment begins now, as opposed to that base or that $16 being baked in at the time when gas begins to flow.

In working with project developers and other stakeholders, I believe this allows us to to put in place these protections while still allowing this project to be economically viable in theory. Any discussion on Conceptual Amendment Number 1 to Amendment Number 14? Seeing none, I will remove my objection. I don't see any further objections, so Conceptual Amendment Number 1 to Amendment Number 14 has been adopted. That takes us back to the main amendment.

Chief Perry, brief it is, please.

Okay, House Finance back on record at 2:34 PM on Monday, June 8th. Representative Schraggi. Thank you, Coach Foster. I would now like to move conceptual amendment number 2 to amendment 14. Jack, discussion?

And Representative Schraggi. Thank you. Conceptual amendment number 2 to amendment 14. Would, on page 1, line 12, delete "for each 1,000 cubic feet" and replace that with "per MMBtu." So it would read, if the amendment is— if Conceptual Amendment 2 is passed, it would read, "Pay more than $16 per MMBtu of natural gas." Is that on— Page 1, line 12. Okay.

Perfect. Okay, um, was that an objection, Representative Galvin? I would just— oh, if we are—. I withdraw my objection. Okay, a conceptual amendment too.

Okay, I'd like to object. Okay, so, uh, Representative Josephson is objecting to conceptual amendment number 2 to amendment number 14. Representative Josephson?

Well, could Rep. Mr. Schrag, please describe, uh, the, the need for this amendment and, and how it changes the language. I know how it changes the language, but, but what is the underlying change? Representative Schrag. Coach Foster, I, I would argue that in essence there is no material change. It's a fractional difference, but the gas is sold in MMBTUs, and so this would be conforming into how the gas is actually sold in practice.

And I would defer to Mr. Alper for any additional comments or clarification. Mr. Alper. Mr. Chairman, broadly, the intention of Amendment 14 is to sort of cement in statute what was told to the committee by NSTAR, that they've got this $16 inflation-adjusted contract, and we want to make sure that other purchasers of gas will receive the same benefit. It or limitation. Uh, the two conceptual amendments more perfectly align Amendment 14 with what we've learned to be the actual terms of the NSTAR contract, that that $16 is a base rate now, and even if gas doesn't flow for 4, 5, 6 years, it will be inflated to the— that moment of the final sale.

And also that sale is based on 1 million BTU, which, as Representative Sharagi said, is maybe a percentage point or two different than 1,000 cubic feet. But regardless, it's the actual metric by which the gas is being sold. So the amendment should align with the sales contract that it's trying to replicate. Representative Bynum. Oh, thank you.

Thank you, good chair Foster. I'm not exactly sure how this might pan out with the committee here. I just have some reservations with putting into statute language that about contractual negotiations.

Representative Stepp, I just— we're on the conceptual amendment, not the underlying. I'll wait then. Okay. Okay. Seeing no further discussion on conceptual amendment number 2, Representative Hoffsor.

I remove my objection to amendment 2 to amendment 14. Okay. Seeing no further objection, conceptual amendment number 2 has has been adopted. And that takes us back to the underlying amendment. Representative Bynum.

Thank you. Thank you, Co-Chair Foster, through the chair. I think I have a— just from a conceptual point of view, that we would be putting into statute things that are being negotiated through a contract. I'm not sure how this actually helps the project become viable and/or creates an opportunity for this project to move forward. I do believe that this would be the legislature, in my opinion, interfering in what companies, suppliers, utilities are doing with their negotiations.

It also could potentially create a harmful impact, meaning that a utility is coming in and they are setting up different structures in their negotiated gas prices that may not be within the $16 initially., but have longer-term positive impacts. So I understand that the concept is to try to protect ultimately ratepayers at the end of the day, but I don't know that the legislature trying to step in and interfere in contractual negotiations on these prices is going to be a positive impact. Okay. I've got Representative Rep. Schraggi. Thank you, Mr. Foster.

To the prior speaker's comments, I don't know that this amendment does help this project along, but what it does do is it protects ratepayers from higher natural gas prices while not interfering with the viability of this project. And that is the goal, is to make sure that we are continuing to move towards a place where this project is economically viable and can has a real realistic chance of moving forward while ensuring that ratepayers are protected. I know that there's been extensive deliberation in both bodies on what the price Alaskans would be paying for natural gas if this pipeline were built, and tremendous concern about a phase 1 only project coming to fruition. And this would allow us to ensure that Alaskans would not be paying more than that $16, which I think is competitive with other sources that we would be able to to take advantage of if we were not moving forward with a gas line project. In terms of interfering with contractual negotiations, we've heard from, uh, Enstar directly that they are, uh, in the process of moving forward and executing a contract at, uh, essentially this price.

Uh, but without that contract actually being signed and executed, it does not provide assurance to Alaskans today that they would not be paying higher prices than are listed here in this amendment. And that's why I'll be supporting this amendment today and why I think it's a good idea for Alaskan residents. Thank you. Okay. Representative Hannon.

Thank you, Co-Chair Foster. My comments and thoughts are very similar to Co-Chair Schragg's. And although I, I agree with Representative Bynum's initial point in big policy. Intervening with a specific contract isn't a good necessarily thing that the legislature should be intervening. I think this project has provided some unique opportunities in policy discussion, and one of them that we've heard— I've heard at least very consistently from Alaskans is, "I either need a lot more information about the cost to make sure that cost overruns don't impact me, especially if Phase 1 and Phase 2 are divorced from each other.

Um, and this seems like a way to craft an answer to that concern and address Alaskan consumers' concerns, yet still, um, not having all of the numbers related to the total of the project before us. So having a provision that I think is sort of unique in that it's not a good area for us in policy to be referencing contracts. I think this project, we keep talking about it, it's unique and it's transformative, and the biggest opposition I have heard from people is they don't want Alaskans left holding the bag that they can't afford. So I'm going to support this amendment, and I— it appears that perhaps the project developers are accepting of it, which I think it helps move the project along without having to show all the cards. And so that's that uniqueness of legislative crafting of policy where we go, it's not always a good, but this may be the solution that allows me to be a yes vote.

So thank you, Mr. Chairman. Could we have a brief at ease? Sorry. Brief at ease.

Okay, House Finance back on record at 2:44 PM on Monday, June 8th. And next up on the list, I had Representative Galvin. Well, thank you, uh, Co-Chair Foster. Through the chair, uh, I just wanted to thank Co-chair Josephson for getting this on paper for us. When we heard more information from Glenfarn and particularly John Sims from NSTAR, it kind of helped us better articulate to our constituents what they have been wanting to hear, and that is due to cost overruns or other things unknowns, we weren't able to put into on paper that sense of security.

So like we heard from Representative Hannon, this helps to deliver that. And I think that is the sort of security that I think Alaskans are looking for. So I will be supporting this amendment and likely not offering an amendment that I have that's related to this one. Thank you. Okay, uh, Representative Stout.

Yeah, I think, Co-Chair Foster, so I'm just kind of want to put it out there in the public. So this amendment basically mirrors what we know to be the contract that Instar already has with the developer based on Instar's testimony. My reservation for this amendment is I just, I don't want to put, uh, this level of detail in state law. I mean, it makes me feel like I'm reaching in and trying to control contract terms, but it basically is the contract terms they already have. So talking with the developer, I don't, don't believe it harms the project.

And Representative Galvin did state clearly that it does give a lot of ease to the public about the questions around cost overrun, risk, and consumption. So I'm going to be a no vote, but I just want to make— let everybody know all this amendment does is basically put in statute what is what we already know to be contractual terms. Okay, Representative Schwaggy. Yeah, thank you, Coach Foster. Actually completely agree with Representative Stamp there.

I've got a bit of reverence for statute, and I would prefer not to be putting hard dollar numbers in statute and taking this sort of, uh, step. However, without that contract being signed, this is the only way that today any of us can go back to voters and a guarantee to them that they will not be paying a higher price of gas as a result of this project. Ideally, we'd have a signed contract. We would know definitively that Alaskans would not be paying more than $16 per MMBtu. We don't have that signed contract, so this is the only way to do it.

I don't know why we would oppose this if the project developers don't oppose, oppose it, and it allows us to go back to voters and say that you will not pay more than $16 per MMBtu. MMBTU. Maybe you'll pay less, but we know you won't pay more than $16. It seems like a common sense thing to do. And again, I'll be in strong support.

Thank you. Okay, I'm going to go to wrap-up unless there's anyone else. Okay, Representative Josephson, wrap-up. Uh, no wrap-up. Representative Stepp, do you maintain your objection?

Yes. The objection is maintained. Madam Clerk, if you could please Please call the roll on Amendment Number 14 as amended by Conceptual Amendments Number 1 and 2. Madam Clerk. Representative Galvin.

Yes. Representative Allard. No. Representative Stapp. No.

Representative Hannan. Yes. Representative Jimmy.

Yes. Representative Bynum. No. Representative Tomaszewski. No.

Representative Moore? No. Representative Schraggy? Yes. Representative Josephson?

Yes. Representative Foster? Yes. 6 Yay, 5 nay. So on a vote of 6 yay to 5 nay, Amendment Number 14, as amended by Conceptual Amendments Number 1 and 2, has been adopted.

So that next takes us to Amendment Number 15. Representative Galvin? I I will not be offering Amendment 15 at this time. Not at this time. Okay, that next takes us to Amendment Number 16.

Representative Josephson.

Move Amendment 16. Object. Okay, we have an objection by Representative Stepp. Representative Josephson.

Yes, uh, so what this amendment does is for, as I understand it, all oil and gas companies and types, whether they're a processing facility, an LNG developer, an oil producer, whether they were a C corp or not, they would pay the C corp equivalent of the corporate income tax using the existing structure. Currently, that is, as you know, done exclusively by C corps. This has been an issue that has been vetted intensely by various committees in the building for a number of years. I think that it creates more fairness vis-à-vis, for example, other major companies that are C corps, and I think it's a reasonable thing to do in the circumstances. I think the single subject is easily met because we're talking about oil and gas companies and we're talking about taxation.

And so I think it's pretty self-evident that the single subject is met.

The Other Bodies Resources Committee had at one point, I believe, adopted this. Mr. Chair, I would invite Mr. Alper once again to elaborate on Amendment 16. Okay, Mr. Alper. Certainly, Mr.

Chair. For the record again, Ken Alper, staff to Representative Josephson. This language, the so-called entity tax, has been around for several years. Whether it's described as a loophole or closing or an equity measure, it is, as the sponsor said, an attempt to apply the provisions of Alaska's corporate income tax to other non-corporate entities. The key language here, implementation-wise, it's going to be treated just like the corporate income tax, meaning the company's federal returns would be a larger number.

This is what our total earned income, our profits were. And then there's an apportionment formula with various ratios in our existing tax code that would be applied back to bring a portion of that back to Alaska, to which the tax table on page 1 of the amendment would be applied. I'll note, Mr. Chairman, that the tax table here is different than the C-Corp tax table. It does not— whereas a regular corporation starts paying taxes after $20-some thousand, I believe, This would not kick in until a company made $1 million. So smaller companies, junior partners, what have you, might not— won't inadvertently get pulled into this tax.

Only the income over $1 million apportioned to Alaska would be taxable. The way that the language before you is nearly identical, with a single technical cleanup change that I'll point out if someone wants to know, from what is currently in the Senate Resource Committee Committee's substitute bill. The key language is in the definition of taxable income, which starts on the bottom of page 3 of the income— of the amendment and moves on to page 4. And that is where the language has evolved a bit since this conversation started 3, 4 years ago, adding new lines. We're really originally talking about oil producers, pipeline transporters, that sort of thing, and now we are adding gas treatment, carbon capture, carbon storage, liquefied natural gas processing, transportation of LNG, to make sure that the sponsors of this project, who we hope, quite frankly, will earn many millions of dollars of profit operating a successful pipeline in Alaska, that should those developers and owners not be traditional corporations, that they would also contribute to the state treasury through something akin to the corporate income tax.

Tax. Okay, thank you. I've got Representative Galvin and then Stepp. Representative Galvin. Thank you, Mr. Alper.

I appreciate that, um, very comprehensive explanation, but I do have a couple of questions. As you know, I'm supportive of making sure that we have what I'm going to call a level playing field when it comes to taxation. I think I'm pleased to know that this does not look at just one company. That's important that we look at what, you know, what that is going to be. I see that this amendment takes a more comprehensive view of companies that qualify as an oil and gas entity, goes beyond just production of oil and gas, and includes transportation, gas treatment, etc.

I think all those aspects are important at this point. I was not comfortable with a similar version of this that came over in a bill that didn't have what I consider to be the proper vetting. I also recognize that at this particular juncture, these entities involved in the AK LNG project are negotiating long-term contracts, and I feel it's important for us to let them know what the tax structure will be going forward. And there's something about that, that there is a— that we're being very clear and transparent about that as a state, and that it would be inappropriate for us to wait longer to place the tax for these otherwise tax-exempt entities because they would enter into contracts and then the tax will likely change shortly thereafter. So I do think this is important for us to include it in a bill so that As they're making those commercial arrangements, they understand what the tax structure properly would be at closing time.

It's, I think, time to close this loophole so that these companies can enter into their contractual arrangements with a more stable tax structure in the current income tax that allows for the S corporation loophole that really is It's not a stable income tax. It needs to be closed before we move on to a stable tax law. That said, I do want to ask one question of you or of the maker of the amendment. If there was consideration for perhaps having a date certain that would be after the flow of the gas. I ask for that because because I think of these companies, some of them will be newer, probably a lot of extra subcontractors, et cetera, who are all participating in this project.

And I wondered if it would make more sense to put this in effect once the gas is flowing, even if it's at 100. I mean, just something so that we know that this project is in place and let's make sure that we're doing what we should be doing to get our fair share. And we'll go to Representative— we'll go to Mr.— did you want Mr. Alpert to—. I mean, I think if Chair Foster, this is a relevant, I think, topic that I may be considering a conceptual amendment So I would like to hear how the sponsor, or rather his staff, think about this item. Mr. Alper.

Mr. Chairman, through the chair to Representative Galvin's question, the effective date is actually— was pulled from what was in the other body's bill. That's in 2026. The— although it would certainly apply to the sponsors and developers of this project, should they be eligible entities as described— S corps, LLCs, that kind of thing. It would also apply to other companies currently operating in Alaska, including oil producers, pipeline shippers. So if you were to seek to put a delay into the implementation of this, that would be a delay into the implementation on those current income-earning companies in Alaska.

That's a policy call. The dollar value associated here on the oil side is, from what we've heard, the Department of Revenue's fiscal notes are a little vague and a little indeterminate, but we generally hear the number approximately $100 million floating around right now. So it would mean deferring that revenue as well for several more years. Follow-up? Representative Gelman.

Thank you. I appreciate that. I spoke with several of the larger producers who One of whom is certainly going to be impacted by this. And I guess what I heard that I'll share with the committee is that there are annual investments made that are in sync and lined up, especially with a project like this, for example, and also their other work at hand. And that having an immediate effective date may have impact.

That perhaps is— that would have implications that we did not intend. That said, again, I am very supportive of this. I just— I want to make sure that it is something that works and doesn't have unexpected impacts that will affect not just this project but perhaps others. Rep. Simmons Dowell. Thank you, Co-Chair Foster.

I'm going to oppose this fairly strongly, really for 4 reasons. Number 1, we're currently in special session, Co-Chair, for a specific purpose. That is actually to get a bill that is acceptable to all parties for the purpose of the state building a transformative project, not to talk taxes about other entities that aren't even directly associated with this project. I mean, this amendment would tax producers at Cook Inlet trying to solve the gas shortage that aren't even on the pipeline route. The second issue, Mr. Kocher, is going to be, though the single subject rule might be satisfied, the equal protection clause in the Constitution is certainly not, and that would have the potential of impacting the bill negatively in litigation.

I mean, if this amendment were to go go through and the S corp tax would be included in the pipeline bill, you could set the stage for somebody litigating the bill and thereby delaying the project. Third would be we've had 2 years in the House Finance Committee to take a look at the S corp taxes. We've never done that in this committee since I've sat on it. We've never vetted this policy. And though it does seem straightforward, there's always a thing called the law of unintended consequence when you try to add an amendment to a bill that you haven't taken the time to vet in your own Finance Committee.

And like I said, we had 2 years to do that and we didn't do it. And finally, the amendment basically would add cost for the developer to develop the pipeline and therefore it would make it harder for the developer to develop the pipeline. And I don't think that should be our objective here. I think our objective should be to help facilitate the best we can the developer's chance at building this transformative project for the future of Alaskans. Thanks.

Representative Bynum. Thank you, Co-Chair Foster. Through the Chair, I was going to basically echo all of the comments, or most of the comments, from my colleague from Fairbanks. Ultimately, in the last 2 years, here in day 20, I believe we're in special session. We finally have this loophole or S corp tax in front of us.

The hearing for this bill has been, well, the time we just heard it. And so I'm not prepared to make a decision on this particular tax and the implications across the state and how it might impact businesses, specifically in oil and gas, and/or even the finances of the state overall. I mean, we're going on assumptions and an amendment that has just been put in front of us. And I guess for clarity, maybe this was brought in on the floor, amendment for HB 1. HB 1 or SB 180, a brief conversation there.

So I don't think that I'm in a prepared in a— or in a position to vote for this in a positive way. There might be some merits to it, but it's definitely not something that I think we should be considering at this time. Before I go to wrap up, I don't see any further discussion. So with that, Representative Josephson, wrap up.

Yes, thank you, Mr. Chairman. I wanted to mostly speak about, I mean, I will say somewhat reluctantly that on the 20th of May, we were still hopeful to hammer out a bill and avoid special session. The scuttlebutt in the building was that this may be the tool to help do that. But setting that aside, I wanted to talk mostly about the Equal Protection Clause argument, because I think it's not strong. The equal protection issue, when it comes to economic interests, is in its weakest sort of position, right?

So it's not about segregated buses in Montgomery.

It's about, uh, it's about income. And the other, the other lens, by the way, that courts look at this is they say, are similarly situated people treated the same? And here the answer is yes. If you work in the oil and gas industry and you're an S corporation, you're going to be treated like other S corporations that work in the oil and gas industry. And secondarily, you're going to be treated like other C corporations.

So I suppose there's an argument that it actually improves equal protection in that respect rather than undermines it in some way. Um, I, I don't have any other comments. Okay, and so we've got wrap-up, uh, Representative Stepp, or the objections maintained. The objections maintained. So with that, Madam Clerk, we will be voting on Amendment Number 16.

If you could please call the roll. Representative Stapp? No. Representative Jimmy?

Yes. Representative Tomaszewski? No. Representative Hannon? Yes.

Representative Bynum? No. Representative Galdon? Yes. Representative Moore?

No. Representative Allard? No. Representative Schraggy? No.

Representative Josephson? Yes. Representative Foster? Yes. 5 Yays, 6 nays.

So on a vote of 5 yays to 6 nays, Amendment Number 16 has not been adopted. That next takes us to Amendment Number 17. Representative Josephson? I move Amendment 17. Object.

You have an objection, Representative Josephson? You okay?

Mr. Chair, I've heard several objections and the point is taken.

I move Amendment 17. The members of the committee may recall that perhaps half a year ago the governor released a fiscal plan And in that, he proposed what I think is commonly called the Dalton Highway surcharge. This would expand that to apply— well, let me be clear. Its application would apply up and down the new pipeline route. So, essentially, most of the highway system could receive funds.

Through DOT from this surcharge to keep and maintain our roads. And the reason that this is important is that there's going to be severe impacts on bridges and roads. There will be inevitable expenses of the cost of dealing with the infrastructure, infrastructure. To repeat myself, the governor himself had proposed this idea. Um, now he didn't propose it linked to a gas line bill, but he proposed it as part of an infrastructure— or rather, a fiscal plan bill.

This would be 30 cents per taxable barrel. Um, it would raise approximately $50 million. I ask for the committee's support. Okay, and do we have any discussion on Amendment Number 17? Rep. Sandow's down.

Yeah, I think, Coach Foster, so I'm going to pose this one strongly too, though. I always appreciate Representative Kocher-Josephson, and I'm going to be actually very sad that his retirement is coming soon. But I'll just say, look, this is kind of the same thing. Like, we had this bill as part of a fiscal plan bill. There's some complicated mechanics here, and basically, you know, this would add a tax on the oil industry, irrespective of the purpose being the Dalton Highway.

But it's really outside the scope of the bill. It changes cost structure not only for this project but for all the producers on the slope. And without a lot of time to be able to talk about the implications about this in committee, I just think we should continue to have a scope here of that we are in special session for the purpose of this gas line bill, and the objective should be to keep the gas line bill relative to the gas line and not other subjects. So I'm going to be a no. Okay.

Do we have any further discussion? Amendment number 17. Seeing none, wrap up. Representative Josephson. Yes.

Again, as to, as to my colleague from East Fairbanks, his comment about but let's keep this focused on the Gas Line Bill. This would be one of the greatest LNG projects ever, uh, divine— designed, made, constructed in human history. The impacts are going to be great, and we know that the Dalton Highway is— has a significant problem now that's largely been hard to cure, and resources are part of that I just think this is a reasonable thing for all of the users of the North Slope to contribute to, and I ask for your support. Okay, and with that, the objection is maintained. Repson of Steppe, I maintain the objection.

Okay, Madam Clerk, the amendment before us is Amendment Number 17. 18. If you could please call the roll. Representative Jimmy?

Yes. Representative Allard? No. Representative Stapp? No.

Representative Galvin? Yes. Representative Moore? No. Representative Hannan?

Yes. Representative Tomaszewski? No. Representative Bynum? No.

Representative Galvin? Yes. Representative Josephson? Yes. Representative Schragg?

No. Representative Foster? Yes. 5 Yea, 6 nay. So on a vote of 5 yea to 6 nay, Amendment Number 17 has not been adopted.

Representative Josephson, you have Amendment Number 8— 9, I'm sorry, that was Representative Okay, Amendment 18 is next. Representative Josephson. I will not be offering Amendment 18. Okay, are you withdrawing it or just not at this time? Um, don't tell me.

I, I will not be offering it at this time. Okay, not at this time. Okay, and so that now takes us to Amendment number 19. Representative Sharagi. Brief it is.

Take brief it is.

Okay, House Finance back on record at 3:11 PM on Monday, June 8th. And so what I think we're gonna do is I think some folks are gonna be talking, some more committee members, and I think alleged legal is gonna need a little bit of time to do some possible work. And so we're going to go ahead and call it a day. When we come back tomorrow, we'll come back to to pick it up where we left off, which is Amendment Number 19. We have 19 through 23 to get through, and then once we do that, we'll start back at the bottom.

And we're at the top for the amendments that folks wanted to roll. We'll come back to those. And so our next scheduled meeting is tomorrow, June 9th, at 11:00 AM. And so with that, are there any questions? Seeing none, we're going to go ahead and be adjourned at 3:12 PM.

Thank you.