No, the Legislature won’t vote on a compromise gasline bill today; second special session stalls over taxes

House and Senate scheduled July 1 floor sessions in the hope a joint conference committee would have acceptable legislation ready, but negotiations have hit snags

A joint House-Senate conference committee meets to discuss legislation related to a natural gas pipeline at the Alaska State Capitol on Friday, June 26, 2026. (Mark Sabbatini / Juneau Independent)

By Mark Sabbatini

Juneau Independent

Lawmakers haven’t given up on the second special session being more successful than the first in passing gasline legislation, but they are abandoning a timeline that called for a vote on such a bill Wednesday.

The House and Senate are scheduled to convene floor sessions today — the first since the second special session began June 20 — but they will be technical sessions where only the necessary leaders quickly gavel in and out without taking any official action on legislation. Legislators have been told they are not expected back in Juneau until July 16, three days before the end of the session that can last up to 30 days.

A House-Senate conference committee formed to draft a bill that resolves differences between the two chambers in legislation each passed related to the Alaska LNG Project met Friday and Saturday. But no additional meetings have been scheduled as of Wednesday morning after concerns were raised by project developers about some of the tax-related provisions being considered by lawmakers.

"We have very different versions of that bill that have passed the House and the Senate, and there are some risks with this bill," Sen. Jesse Kiehl, D-Juneau, told attendees at a local town hall meeting Tuesday evening.

Among the risks cited by Kiehl at the town hall and in previous interviews are costs significantly exceeding projections — with the state potentially getting stuck paying tens of billions to finish construction — and tax breaks that ensure the state will lose money while the project is built.

"If this gets built the state will lose money during the construction because oil and gas come out of the ground together," Kiehl said during the town hall. The producer has to separate them and "anything you spend on getting the gas ready to sell down a pipeline is deductible against your oil taxes under our current oil tax structure. That's not wildly unfair, but it means that there will be less money for our schools here in Southeast, for troopers around the state and there will never be cheap natural gas coming to Juneau as a result."

A different overall concern is the focus of the project’s developers and some other lawmakers — including Republican Gov. Mike Dunleavy, who has ordered the two special sessions after the Legislature failed to pass a bill he considers acceptable. They say the project’s immense cost — estimated at a minimum of $46 billion and a state revenue official says it could be twice that — means significant tax and other financial incentives are needed to make a project discussed for decades economically viable.

The House passed a bill eliminating about 85% of property taxes on gasline-related infrastructure in exchange for a tax on gas that eventually flows through the pipeline, with the Senate imposing higher taxes that increase during the life of the pipeline that expected to operate beyond 2060.

But the current breaking point is what lawmakers call an "S Corp" provision that makes the state’s corporate income tax applicable for privately held oil and gas companies. The Senate included that provision in a bill it passed and some leaders in that chamber’s majority caucus say it is necessary to get enough votes in that chamber, but Dunleavy stated this week he will veto such a bill.

"That provision is a line in the sand," he wrote in a column published by The Alaska Story. "Any bill that reaches my desk with those targeted tax increases and any other language that would negatively impact the viability of this project will be vetoed."

Some legislative leaders skeptical about the amount of incentives being sought argue the developers may earn billions of dollars a year from the pipeline for decades, and the state and municipalities will be deprived of their fair share of revenue as intended by the Alaska Constitution. They also say specifics about the potential costs and earnings of the project are lacking, despite months of hearings to discern details.

Rep. Calvin Schrage, I-Anchorage, the conference committee’s chair, told the Anchorage Daily News on Tuesday that a new draft of the bill is scheduled to be introduced this week that will address most of the concerns raised by Dunleavy and Glenfarne Group LLC, the project’s primary developer. Work by conference committee on a compromise bill for the full House and Senate will continue after the Fourth of July weekend.

“This is likely to be just a work draft to show that we’ve been able to iron out some of the differences that exist, but by no means will be a final product, and there will still be issues that remain that will have to be worked out for the legislation to have a viable path forward,” he told the newspaper.

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