Gov. Mike Dunleavy speaks about at a May 4, 2026, news conference about his property tax bill intended to help draw investment in a massive natural gas pipeline. The news conference was held in his Anchorage office. (Photo by Yereth Rosen/Alaska Beacon)
Alaska Gov. Mike Dunleavy is urging state lawmakers to act on his proposal to cut state taxes by $7.2 billion over the next 36 years to subsidize construction of the proposed trans-Alaska natural gas pipeline.
Failing to act, he said, could keep the pipeline from being built at all.
“This bill is too important. This concept is too important,” Dunleavy said. “This is not setting up a tax for the lemonade stand down here in the corner by the hot dog stand. This is the biggest (natural gas) project on the planet.”
But some state lawmakers are skeptical about the size of the governor’s proposed subsidy. Two alternatives — one in the House and the other in the Senate — are advancing through committees in the final weeks of the session.
Other legislators believe the pipeline already makes financial sense and no change is needed.
As a result, four different paths await state legislators in their last weeks, and it isn’t clear which one they’ll take — or whether the governor will call legislators into special session on the issue.
There’s also been no agreement with cities and boroughs affected by the proposed tax cut. There’s also no public agreement with North Slope gas producers or the state’s labor unions.
At the core of the problem facing lawmakers is how much — if any — subsidy is needed in order to attract investors who would pay for building the pipeline project in two stages.
The first stage would involve a pipeline from the North Slope to Cook Inlet for in-state use. The second stage would construct processing plants at the north and south ends of the pipeline, allowing larger volumes of gas to be exported overseas.
If both phases of the project are built, Department of Revenue economist Dan Stickel told legislators on Tuesday, the result would be cheaper natural gas than currently available from Cook Inlet.
“If the full project goes forward, it’s a significant reduction in cost to Alaskans,” he said.
Rep. Zack Fields, D-Anchorage, noted that Alaskans could be locked into high natural gas prices if the second phase is never built or if both phases are built but no exports take place.
For a hearing last week, the Department of Revenue estimated that under that scenario, prices in Anchorage would exceed $27 per thousand cubic feet by 2033, more than double current prices.
It’s unclear how likely that worst-case scenario is.
The larger the subsidy, the greater the chance that the project is built in full and the lower the price of gas for Alaskans, project proponents say.
“Our objective is to have the lowest cost gas for Alaskans and have certainty on the project,” said Adam Prestidge, president of Glenfarne Alaska, the project’s developer.
A problem, some legislators say, is that they’re working without information. Glenfarne, an international firm that last year bought 75% of the project and became its developer, has not shared its latest estimate for how much the pipeline will cost.
“I think it’s important for us to have starting points on what the actual numbers are, because if it needs tax relief, let’s figure out what the relief is,” said Sen. Bill Wielechowski, D-Anchorage.
Legislators also don’t know how much North Slope gas producers will charge for the gas, or what international buyers will pay for it.
Some of that information is impossible to know — legislators are trying to anticipate the price of natural gas in 2033 and beyond, once the pipeline is up and running.
Other information is being kept confidential until a final investment decision or when proposed prices are submitted to state regulators, something that’s months away at the earliest.
Legislators are being asked to take action within weeks.
“We’re not really competitive in the global market if the (cost) overrun is 40%,” said Rep. Julie Coulombe, R-Anchorage, on Tuesday.
The gas pipeline’s publicly stated cost on Tuesday was $46 billion, but most legislators believe the true figure is higher.
“I think it’s really $57 billion … if not higher,” said Sen. Bill Wielechowski, D-Anchorage, relying on a prior statement from former U.S. Sen. Mark Begich.
Begich, a Democrat, lost to Gov. Mike Dunleavy in the 2018 governor’s election. Now, Begich is a paid adviser, hired by Dunleavy’s administration on a $100,000 contract.
In a Tuesday hearing, Begich said lower taxes would not increase profits for investors or developers and would simply lower the end cost of gas for consumers.
“If you lower the tax, it does not go to the return or the profit or anything of this project,” he said.
“I am just telling you right now, every dollar you save consumers is a dollar in their pocket in an economy that is struggling,” Begich said.
Under his calculations, Wielechowski said, the average Southcentral Alaska family would save $55 per year if the pipeline is built and produces gas according to the latest available cost analysis from the Department of Revenue.
The subsidy needed to create that savings amounts to a loss of $500 per Alaskan per year, he said, money that could be used for the Permanent Fund dividend or state services.
“That’s not a good deal,” he said of the exchange.
The latest available version of the Senate proposal shows an increase in revenue to the state, rather than a subsidy. Instead of earning $27.9 billion through 2062, the state would earn $42.1 billion.
“I would describe that as very burdensome for the project and potentially prohibitively so,” Prestidge said.
“I will characterize that tax at that level as something that would require some real reconsideration of the drawing board of how the project is structured and taken forward,” he said.
In the House, discussions have been less acrimonious. The House Resources Committee on Tuesday morning discussed a proposed a subsidy of less than $5.9 billion, smaller than the governor’s concept but similar in other regards.
“It would be a tax reduction but a smaller tax reduction than proposed by the governor,” Stickel said of the House proposal.
On Tuesday afternoon, the committee worked methodically through a long series of amendments to its plan, frequently consulting Prestidge and Begich about how each might affect financial negotiations.
The House and Senate bills are each in an early stage of development. If passed by the resources committees, each would have to pass through their respective finance committee before advancing to a floor vote and on to the other half of the Legislature.
