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Dear Friends and
Neighbors,
Happy Summer Solstice!
Anchorage received 19
hours and 21 minutes of daylight.
Photo: Gold Creek, Juneau’s source
of drinking water, coming out of Silver Bow Basin. At headwaters
was the 1880s Alaska-Juneau Gold Mining Company operations.
THIRD Special Session -
Day 3
Gas Pipeline is the only
topic.
Why a THIRD SS? The
Governor didn't like the changes that the Senate made in the
policy.
Gas Pipeline Bill Passed the Senate
The Governor was unhappy
with the Senate adjustments made in his Gas Pipeline bill.
"S-Corp tax"
Fundamental to remember:
Alaska has no personal income tax.
Only
"C-corporations" pay corporate income tax in Alaska.
There are over 12,000
"S-corporations in Alaska.
The S-Corp tax is more technically called
Subchapter S Tax in the Internal Revenue Code –
· Glenfarne falls under this federal tax
category. This category is taxed through the personal income
taxes paid by citizens who own the private Subchapter S
company. These eligible domestic corporations or LLCs to pass their
income, losses, deductions, and credits directly to company owners.
The business itself does not pay federal income tax.
· Different from Subchapter C of the Internal Revenue
Code. These C-Corporations are any business entity taxed as a
distinct, separate legal entity from its owners. The company pays
the taxes on net profits. It is the default tax classification for
state-registered corporations.
· Exxon and Conoco, who produce the gas on the
North Slope, are C-corporations. They
will sell the gas to Glenfarne-owned Gas Treatment Plant and Gas
Pipeline.
· Baker Hughes, a C-corporation, is a
construction contractor hired by Glenfarne to
manage and build many portions of the Gas Project.
· Alaska Airlines, a C-corporation, will
transport 22-68% of the out-of-state workforce needed as they work their shifts on this project.
· (This “22-68%” is the number given in the
Federal Energy Regulatory Commission (FERC) EIS submitted by AGDC
and Glenfarne. See page 4-624 and 4-626 of EIS (Final
Environmental Impact Statement-Alaska LNG Project | Federal Energy
Regulatory Commission).
Alaska Airlines,
BakerHughes, Exxon, and Conoco will all pay federal corporate tax
and state corporate tax.
Why should Glenfarne be
exempted from Alaska State Corporate Income Tax?
· Alaska Department of Revenue projects that the
Subchapter S policy contained in the Gas Pipeline bill would result
in about $100 million/year in 2033, and up to nearly $600
million/year by 2052 in state revenue from just Glenfarne
alone. Reference
5-14-2026, Senate Resources, slide 33.
· Amendment: S-corporation
tax, proposed in the Gas Pipeline bill, would begin the tax at NET Profits of
$1-2 Million, tax of 5% of profits; $2-3 Million: 6% tax; $3-4
Million: 7% tax; $4-5 Million 8% tax; more than $5 Million: 9.4%
tax.
· There are other S Corporations be included in
this tax update. It will apply to companies who produce or
transport oil or gas.
Other SENATE CHANGES MADE in the Gas Pipeline
bill
· Union contracts honored as project
labor agreement, prevailing wage, and apprenticeship utilization
requirements
· Inflation
in the pipeline taxes would be EQUAL to the inflation rate in the cost of gas paid by Alaskans would
pay. Original version from the Governor had Alaskans paying FULL
INFLATION, while Glenfarne's taxes were half of that inflation
rate.
· Prohibit Alaskans
paying Glenfarne back for FAILURE OR ABANDONING THE PROJECT.
· Prohibit Alaskans
paying for Glenfarne's COST OVERRUNS on the project.
· Prohibit Glenfarne
entering into a legal relationship with a foreign entity, either
directly or indirectly through another person or entity without notifying the Legislature.
On
page 27 of the bill the Senate version required that Glenfarne reach
Final Investment Decision by January 1, 2028. This means they
would have recruited the funding commitments from investors.
The Senate version
required that Glenfarne complete construction of the gas
pipeline to the SouthCentral gas system by December 31, 2032.
This would be before the Cook Inlet gas contracts expire in 2033.
We were not successful in
correcting all the problems that the Senate Majority identified in
the bill.
Here
are all the amendments offered on June 19.
However, with the
amendments listed above, I was comfortable voting in favor of the
bill.
It passed the Senate 12-8.
There have been rallies
claiming that this pipeline would ensure "cheap gas for
Alaskans".
Nothing will do that.
In fact...
Alaska
Department of Revenue says: The Revenue impact of
this bill is indeterminate. The revenue impact could be positive or
negative and could impact state finances by hundreds of million of
dollars, or more, per year. Key uncertainties include the impact of
this billon whether the Alaska LG project moves forward, detailed
final project cost and timing, timing for when the temporary tax
abatement ends and the AVT applies, component capital expenditure
weights, and completed construction costs. (Costs estimated for
Dept of Revenue: more than $1 million/year)
Bills that pass into law without the
Governor's signature
HB
184 AIDEA: WORKFORCE HOUSING
DEV.; MUNI TAX
HB
239 CRIME/CNTRL SUBST/ADDRESS
CONFIDENTIALITY
HB
27 MEDICAL MAJOR
EMERGENCIES; CPR CURRICULUM
HB
363 ALCOHOL: PATRIOTIC ORGS;
CLUB LICENSES
HB
28 EDU:
SCHOOLS/TEACHERS/SCHOOL BD/LOAN PRGM
HB
117 ELEC MONITOR TRAWL
FISHERY/SET NET PERMIT
SB
104 VEHICLES/BOATS: TRANSFER
ON DEATH TITLE
SB
146 REAA & SMALL MUNI
FUND: MT. EDGECUMBE
SB
164 ELIMINATE TAX DISCOUNTS
SB
167 PFD ELIGIBILITY; PFD FOR
OVERTURN CONVIC.
SB
178 EXPAND EARLY INTERVENTION
SERVICES
SB
187 SCHOOL NUTRITION/MEAL:
PROHIBIT FOOD DYES
SB
23 CIVICS EDUCATION
SB
272 HEALTH INFORMATION
EXCHANGE
SB
79 PAYMENT OF WAGES; PAYROLL
CARD ACCOUNT
SB
89 PHYSICIAN ASSISTANT SCOPE
OF PRACTICE
Resolutions
SJR
20 CLEAN UP MARINE DEBRIS
SR
4 250TH
ANNIVERSARY OF UNITED STATES
Items in this Newsletter:
· Special Session #3 Proclamation
· Gas Pipeline Finance meeting
· Oil and Gas Pipeline Topics with Current
Topics, Stuff I Found Interesting, Education, Politics, Healthcare
· Resource Values, Permanent Fund Data
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