Dunleavy says ‘little reason’ to continue Alaska LNG special session as lawmakers wait for his bill

Gov. Mike Dunleavy suggested there is “little reason” to keep the third special legislative session focused on a proposed property tax cut for the Alaska LNG project until his administration can present language that both the Legislature and the project developer find acceptable, leaving the process in limbo as lawmakers who have spent months negotiating await an executive proposal.

What happened Monday

Lawmakers convened a pro forma opening of the third special session called to consider a multibillion-dollar property tax cut for the Alaska LNG project, but the governor had not yet introduced legislation. The brief technical sessions in the House and Senate lasted only minutes and were attended by a handful of legislators. House Speaker Bryce Edgmon presided over the House meeting; only three other members were present for the proceeding.

Why the session is stalled

Negotiations over a tax package for the Alaska LNG project have failed multiple times this year. Lawmakers and the governor previously considered competing approaches: the House passed a so-called “clean bill” that would cut the project’s property taxes without adding other tax changes, while the Senate favored a version that included an expansion of the state corporate income tax to cover certain pass-through entities in oil and gas.

The conference committee produced a compromise bill that the Senate approved but that died in the House on a tie vote. Gov. Dunleavy publicly said he would veto that compromise because it included the corporate income tax expansion.

Where the parties stand

• Governor: Dunleavy told lawmakers he would continue meeting with stakeholders and the Alaska LNG developer, Glenfarne, before reintroducing legislation. He said his office will try to find a “path forward” that can pass both chambers and secure Glenfarne’s support.
• Legislature: House and Senate leaders said they will wait to see what the governor proposes before taking further action, with plans to hold technical sessions again later in the week.
• Developer and industry: Glenfarne, which owns 75% of the Alaska LNG project, and major industry players have objected to the Senate’s corporate income tax language, arguing it would raise costs and harm the project’s economics. Hilcorp Alaska explicitly warned lawmakers that broadening the tax could increase upstream costs that ultimately affect the gasline’s feasibility.

What’s at stake

The Alaska LNG project is pitched as a long-term solution to regional natural gas shortages and as an export opportunity. Proponents, including Gov. Dunleavy and many Alaskans, say the roughly $55 billion proposal would deliver North Slope natural gas through an 800-mile pipeline — first to Alaskans beginning around 2029 and later as liquefied LNG exports around 2031.

Officials have warned of near-term gas shortages in some parts of the state. An industry executive, Enstar President John Sims, told lawmakers that local gas scarcities could arrive as soon as this winter — a timeline well before the project’s estimated start of deliveries — which supporters cite to underscore the urgency of legislative action.

Where talks broke down

Members of the House have repeatedly rejected bills that included the tax-expansion language the Senate supported. House leaders and the governor favor a bill that would exempt the Alaska LNG project from a corporate income tax increase; the Senate’s version would have expanded the tax to certain S-corporation and LLC oil-and-gas entities but not the gasline itself. Business groups and the developer contend that taxing upstream producers would raise costs that flow through to the project.

Governor’s position and next steps

Dunleavy posted on social media that his administration would continue meeting with all parties to identify an acceptable legislative path. House leaders said the pace and substance of future House action will depend on the governor’s proposal. Technical sessions were scheduled to resume later in the week to keep the special session technically open while talks continue.

Unresolved questions

• Can the governor, the developer and the Legislature bridge differences over corporate tax language and reach a bill that passes both chambers?
• Will lawmakers press for separate legislation to address corporate tax changes rather than combining them with a property tax cut for the Alaska LNG project?
• How quickly could state and local gas shortfalls arrive if no immediate legislative fix is enacted?

Timeline of the year’s measures

1. March: Gov. Dunleavy introduced a bill during the regular session to provide a property-tax cut for the Alaska LNG project.
2. Special sessions (two earlier this year): Senate-passed bills that included tax changes were repeatedly rejected by the House; the House approved a clean property-tax cut without added corporate tax changes.
3. Late spring/early summer: A bicameral conference committee drafted a compromise that passed the Senate but failed in the House on a tie vote; the governor said he would veto the compromise because of corporate tax expansion language.
4. Late July: A third special session opened in pro forma fashion while lawmakers awaited a reworked bill from the governor’s office and further discussions with Glenfarne.

Why this matters to Alaskans

The debate ties together immediate consumer concerns about heating and power availability with long-term economic and fiscal-policy questions. Lawmakers must weigh incentives designed to attract investment in the gasline against revenue-raising measures that some officials argue are needed to offset the cost of tax breaks. How Alaska resolves the package will affect project economics, potential statewide gas access and the state’s fiscal picture.

Attribution

The reporting in this article is based on coverage by the Anchorage Daily News. Specific factual claims about the special session, positions of lawmakers, the governor and industry comments are drawn from that reporting.