Dunleavy calls third special session on gasline; compromise bill fails in House after passing Senate

Governor says S Corp tax provision ‘raises serious concerns’; next special session set to begin July 27

House Speaker Bryce Edgmon, I-Dillingham, talks on the phone during a break in a House floor session on Thursday, July 16, 2026. He announced shortly afterward Gov. Mike Dunleavy is calling a third special session to consider legislation on a natural gas pipeline starting July 27. (Mark Sabbatini / Juneau Independent)

By Mark Sabbatini

Juneau Independent

This is a developing story.

Gov. Mike Dunleavy on Thursday ordered a third special session to consider legislation advancing a natural gas pipeline, saying a compromise bill passed by a legislative committee earlier during the day is closer to acceptable, but still "raises serious concerns."

"To allow work to continue toward a positive outcome, I am calling a special session beginning July 27 in Juneau," he declared in a Facebook post at 2:11 p.m., shortly after the Senate passed the bill with the minimum number of votes necessary.

The House convened shortly after the Senate’s vote, with Dunleavy’s declaration announced by House Speaker Bryce Edgmon, I-Dillingham, at the onset of floor debate. The Republican governor stated he will veto the bill if it does pass.

The House fell two votes shy of passing the bill on a 19-19 vote, with two members excused absences. All three of Juneau’s Democratic legislators voted in favor of the bill.

The key sticking point for Dunleavy and others opposing the bill is a so-called "S Corp" provision that makes privately owned oil and gas companies subject to the state’s corporate income tax. The tax is currently imposed on publicly traded companies (referred to as "C Corps") and some policymakers favoring the change say private companies (S Corps) are benefiting from a "loophole" that costs the state significant tax revenue.

The legislation considered Thursday, House Bill 381, exempts income from the natural gas line from that tax, but Dunleavy said it "is neither simple nor straightforward and could have unintended consequences that destabilize the business environment in Alaska and negatively impact Alaskans."

The governor, in a press conference after the Legislature adjourned the special session, said the S Corp provision should be considered as a separate item in the future.

Several Republican House members referred to HB 381’s S Corp provisions, arguing it will alter the state’s tax structure in a way that harms the oil and gas industry without the assurance that a gasline will be built. House Majority Leader Chuck Kopp, R-Anchorage, said the current version puts the state’s future credibility with developers and investors at risk.

"We should not attach a controversial tax provision to one of the most consequential bills in a generation in this body," he said, adding "investors don't always seek the lowest taxes — they seek stability."

Rep. Calvin Schrage, I-Anchorage who chaired the conference committee, said surveys have shown a large majority of Alaskans favor closing "a major loophole in our tax structure."

The Senate barely passed HB 381 by an 11-8 vote early Thursday afternoon after Sen. Matt Claman, D-Anchorage, changed his no vote to reach the necessary 11-vote tally. He said during floor debate he opposed the S Corp provision, but in a brief interview after the session said he changed his vote to support the position of the bipartisan majority caucus he is a member of. One member of that caucus, Sen. Jesse Bjorkman, R-Nikiski, was an excused absence from Thursday’s floor session.

The next 30-day special session will overlap the final weeks leading up to the Aug. 18 statewide primary. Legislators during the first two special sessions gaveled in on the first day and then left Juneau for extended periods while a handful of lawmakers met in committees to consider various aspects of gasline bills.

Edgmon, after the House officially ended the second special session by adjourning sine die, said he expects the next special session will begin with a new gasline bill that will again have to go through the regular committee process for legislation.

"I'm not sure that the results are going to be any different and it's unfortunate," he said. "We put a lot of good work into the product this time around, and you know, you heard (Schrage) talk about the proximity to the primary election and the summer coming to a close and people having other things to do. I don't know that things will change."

Dunleavy also ordered a special session last year to consider education legislation and an executive order creating a state Department of Agriculture. Those four sessions, at up to 30 days each, in total essentially equal each of the two regular sessions the 34th Alaska Legislature gaveled in for between January and May.

• Contact Mark Sabbatini at editor@juneauindependent.com or (907) 957-2306.