Gov. Mike Dunleavy plans to introduce a bill that would establish a low property tax for the giant Alaska LNG project, a move that would help support its development.

The bill, to be introduced at the start of the session, proposes a rate of 2 mills on the assessed value of the project, Dunleavy said in an interview Friday. That’s one-tenth of the 20 mills, or 2%, that the state levies on oil and gas infrastructure, a portion or all of which can go to local governments with such infrastructure, depending on their rates.

The governor said his bill would cover the length of the project’s lifetime, which has been estimated at 30 years or more.

The governor said his administration is also employing a third-party consultant to study potential sources of additional revenue from the project that could be available to the state and local governments.

Two borough mayors reached for this article raised concerns about the proposed tax rate, including whether local revenue from it would be offset by other benefits, and why the Dunleavy administration has chosen it as a starting point for legislative discussions without their input.

Peter Micciche, mayor of the Kenai Peninsula Borough, said he didn’t think the rate is high enough to win support from local governments that would host project infrastructure.

“We’re all supportive of the AKLNG project,” he said. “But it can’t solely be on the backs of our local taxpayers. I think there’s a fair deal to be had, but a deal that has to be born from facts, real math and local impact data.”

“It has to be transparently and fairly negotiated between the involved parties in good faith, and we’re standing by ready to engage in that process and move Alaska and that project forward,” he said. “But I can’t imagine that a 90% reduction in local revenues associated with oil and gas properties has any chance of moving forward.”

The bill also comes as Alaska legislative leaders have expressed concern about how quickly they can thoroughly consider a long-term plan providing fiscal support for the project, an effort that will include considering potential benefits and risks to the state and other complex questions.

The bill comes after a consultant for the Legislature, GaffneyCline, told the Legislative Budget and Audit Committee last month that legislative action will likely be needed on issues such as property taxes and “fiscal stability,” before the project developer can make a final decision on investment.

Lawmakers say they also plan to weigh whether GaffneyCline faces a conflict of interest, given that its parent company, Baker Hughes, has said it plans to provide key equipment and make a “strategic investment” in the project.

Dunleavy said lawmakers will “need to roll up (their) sleeves, get serious” and pass legislation involving the project.

Alaska LNG, among the largest U.S. infrastructure project proposals in modern history, also faces unanswered questions likely to complicate any efforts by the Legislature, including if the longtime current cost, estimated at $44 billion, is accurate.

The project’s developer, Glenfarne, has said an updated cost estimate will be completed this month. Worley, a global engineering firm, is doing the work.

The estimate won’t be released publicly, but it will be available to the state, Glenfarne said Friday.

“Worley’s work evaluating potential cost increases or reductions, for both pipeline and initial LNG export components, is on track to be completed by year-end as scheduled,” said Tim Fitzpatrick, a spokesperson for Glenfarne, in a prepared statement. “As a private developer, Glenfarne does not publish competitive cost information. We’re in commercial negotiations with contractors, suppliers, and LNG buyers, and cost information will remain confidential. Lenders and investors will be provided necessary and customary information.”

“The state of Alaska will have an investment opportunity and will have access to all necessary information,” Fitzpatrick said.

A 2-mill property tax

Project plans call for construction of an 800-mile pipeline delivering natural gas from the North Slope to Alaskans by 2029, an estimated $11 billion first phase.

In the second and more expensive phase, an export and gas-liquefaction facility would be built in Nikiski to ship much larger quantities of the gas overseas for use in Asian countries. The project has called for gas exports to begin in 2031.

[Previous coverage: Alaska LNG has caught a wave of high-level attention. Is it winning over its skeptics?]

Several similar projects to tap Alaska’s North Slope gas and send it to buyers have failed to be built over the decades.

But Alaska LNG stands out for making progress that others haven’t.

It recently completed the federal permitting process necessary for the project’s construction.

Large gas consumers in Asia, such as Tokyo Gas in Japan and POSCO International Corp. in South Korea, have signed preliminary gas-offtake agreements for more than half of Alaska LNG’s available gas volumes. Those are not binding commitments to buy the gas, though they could lead to final agreements.

“Glenfarne is rapidly progressing toward a final investment decision, as seen through our progress with numerous Asian commercial announcements and strategic partner agreements,” Fitzpatrick said. “We expect additional announcements in the next several weeks. Our overall project schedule, including completing the pipeline in 2028 and delivering first gas to Alaskans in 2029 has not changed.”

Dunleavy on Friday said his property tax bill will not be lengthy.

It’s the only bill he plans to introduce dealing with Alaska LNG, given that early legislation involving the project a decade ago established a strong foundation, he said.

“I’m going to introduce one bill on the gas line, because that’s really the only thing that’s really something worth putting in,” Dunleavy said. “Meaning the bills that enable the gas line that were passed in ’14 and ’15 had everything in there.”

A 2-mill rate would generate $100 million in the project’s first year, if it’s assessed at $50 billion, and lesser amounts as the project’s value depreciates over time.

That is below the $1 billion the project would generate at that value under the state’s 20-mill, or 2%, property tax rate.

At 2 mills, the income represents more income than the “zero” the state will get if the project is not built, Dunleavy said.

“We will still get royalty, we will still get severance taxes,” he said, referring to taxes and royalties from gas production.

Alaska LNG would also create thousands of jobs and lead to lower energy costs, he said.

The administration also plans to hire a “third party to examine any and all methods by which the municipalities and the state could capture revenue, meaning other types of taxes, PILTs, fractional ownership, other types of co-ownership in the pipeline,” he said, using PILT to refer to payments in lieu of taxes.

That co-ownership, 25% of which was reserved by the state’s gas line corporation, could potentially include municipalities, the state, corporations or individuals, he said.

“There are no other bills that we are contemplating, because the structure was put together really well by the Legislature back when the (original) bills were passed,” he said.

‘A jaw-dropping reduction’

The property tax at its current rate could add 9% to the project’s cost to deliver gas, GaffneyCline told the Legislative Budget and Audit Committee last month.

Fitzpatrick, with Glenfarne, said GaffneyCline and other experts have “identified Alaska’s high oil and gas property tax as an impediment to project development for more than a decade.”

“Glenfarne is already moving this project forward in advance of a formal FID (final investment decision) and will continue to work with the Legislature as we approach FID,” Fitzpatrick said in the prepared statement. “A final resolution to this longstanding problem will help Alaskans get lower cost energy as quickly as possible.”

The governor outlined his plans for the proposal in a private meeting with legislative leaders Thursday, the same day he presented his budget draft that called for spending more than $1.8 billion from savings to cover costs in the current and coming fiscal years.

Senate Majority Leader Cathy Giessel, R-Anchorage, said in an interview that the property tax proposal will be very contentious because it will have a significant impact on the state and local communities.

“That is a jaw-dropping reduction in a property tax,” Giessel said. “I know that it will affect the state, but it certainly will affect the municipalities and boroughs that the pipeline will go through. That’s a huge give on the part of the state to make this otherwise astronomical gas pipeline affordable and economic to even do.”

Giessel also said major questions need to be answered by the project developer and lawmakers.

For example, she asked, if North Slope oil producers provide gas for the project, will they be able to deduct expenses associated with that effort from the oil production taxes they pay the state?

“We need to refine the gas lease expenditure deductions and how that impacts oil,” she said.

Other concerns include preventing large cost overruns such as those experienced for the 800-mile trans-Alaska pipeline that began moving North Slope oil to market in 1977, she said.

The Legislature will be hard-pressed to make all the necessary changes this session, in part because Dunleavy provided a budget that will take up much of the discussion, she said.

“The timeline for any deliberation over our oil and gas tax structure typically has taken several years of work,” Giessel said Friday. “We’re now in the second session of a Legislature in an election year, and we have been now handed, yesterday, an incredibly irresponsible budget. We’re going to have to, frankly, put it to the side and write a budget, because this governor did not put the work in to actually do that. I don’t see how we possibly get any kind of tax structure on gas resolved before the middle of May.”

House Speaker Bryce Edgmon, an independent from Dillingham, said the House will look at the issues closely and will need to hire its own third-party consultants.

Setting a long-term property tax rate for the project is “inherently a challenging issue,” he said.

“But we will certainly do our part in terms of considering it,” he said. “Whether it can be prosecuted in a single session, that’s a whole different matter.”

Sen. Elvi Gray-Jackson, D-Anchorage, the chair of the Legislative Budget and Audit Committee, said she’s “looking forward” to seeing the governor’s bill.

“We’ll just take one step at a time,” she said. “Glenfarne claims they’re going to have a final investment decision in early 2026. We’ll see.”

Gray-Jackson said in a recent opinion article that she directed GaffneyCline to provide a report on key issues involving the Alaska LNG project. The report was pubicly released Monday.

Dunleavy said lawmakers can find the time to properly deal with the issue during a 120-day session and reach agreement on a complicated subject, like lawmakers do in other states.

The governor said that if the Legislature focuses on this bill over trivial bills, “such as recognition of tall people’s week or, you know, some of the bills that we do down there, we’ll get some substantial things done just like they do in other states in much less time.”

“We may have grown accustomed over the years, in Alaska in the Legislature, that just about everything is a hard, almost impossible lift,” he said. “But when we look at what they’re doing across the country, we should not be fretting over anything. We should be eager to get to work, roll up our sleeves and get some fantastic legislation done that will be (a) game changer for the state of Alaska.”

Borough mayors raise concerns

Mayors with two boroughs that would encompass Alaska LNG infrastructure, if the project is built, said they were concerned that the governor has moved forward with a specific idea for the property tax without input from the boroughs.

The governor met with those affected boroughs in October, but did not provide specific details of any proposed strategies regarding Alaska LNG, such as the 2-mill property tax, they said.

Micciche, mayor of the Kenai Peninsula Borough where the gas-liquefaction and export facility would be built, said the borough wants to see the gas line project built.

But the borough wants to make sure it can break even under a project that could create additional requirements in the borough for housing, roads, emergency services and other costs, he said.

“I look forward to those discussions so that we can lay out what the actual impact will be and discuss how our costs will be covered,” Micciche said.

Grier Hopkins, mayor of the Fairbanks North Star Borough, said one of the borough’s top priorities is seeing the gas line built.

But the borough needs to make sure the gas it provides is affordable to support the local economy, and it needs time to study the issue.

“I’d be happy to work with the governor and the other municipalities to find an agreement, but he needs to sit down and work with us,” he said. “I hope we can work together and something is not unilaterally moved forward before they can talk to us.”

Josiah Patkotak, mayor of the North Slope Borough where the project would start, declined to comment at this time, a spokesperson said.

A donation fund has distributed over $3.3 million to communities impacted by Typhoon Halong.

The Western Alaska Disaster Relief Fund quickly formed in the days after the storm struck Yukon-Kuskokwim Delta communities. It destroyed homes and property, and displaced hundreds of people from their home villages.

The fund is facilitated by the Alaska Community Foundation (ACF) and has continued to collect donations to support disaster relief. It also has over a dozen partner organizations, including the Yukon Kuskokwim Health Corporation, Bethel Community Services Foundation, and the Association of Village Council Presidents.

In an announcement this week (Dec. 8), the foundation reported that $2.9 million has gone directly to tribal councils, city governments, and other regional organizations in Kipnuk, Kwigillingok, Chefornak, Napakiak, Napaskiak, Nightmute, Quinhagak, Bethel, and Tuntituliak. The money is intended to support temporary housing and home repairs as well as essential supplies and emergency assistance.

Some funding Over $225,000 of the fund has been used to purchase ATVs, snowmachines, and other winter supplies to aid in clean up and travel between villages.

Other money $130,000 has gone towards replenishing subsistence food stores. These funds were doled out with support from Bethel Food Bank, SeaShare, and the Kuskokwim River Inter-Tribal Fish Commission which are facilitating a traditional foods drive out of Bethel through the end of this week (Dec. 10).

Donations have also supported programs for mental health and violence prevention facilitated by the Teens Acting Against Violence Program under the Tundra Women’s Coalition.

They’ve also supported displaced students in the Lower Kuskokwim School District through school supplies and clothing.

KYUK also received support through the fund for its reporting and facilitation of community communication.

The Western Alaska Disaster Relief Fund will continue to accept donations. To make a contribution, visit their website at alaskacf.org/westernalaska.

Months after Gov. Mike Dunleavy ordered state agencies to begin reducing the number of regulations governing their operations, several have yet to complete a full tally of the baseline number of rules eligible for reduction.

Dunleavy in August issued an administrative order tasking all state agencies with reducing the number of regulations that dictate their operations by 15% by the end of 2026, and by 25% the following year.

In his order, Dunleavy said that reducing regulations was necessary to “attract investment and grow (Alaska’s) economic base.”

But state departments are behind schedule in achieving the initial phase of the order, which entails counting the number of regulatory requirements in each agency. That count was meant to be completed by mid-October, to serve as a baseline for agency reduction goals, according to an instructional document disseminated earlier this year.

According to an undated tally provided by the Department of Law on Wednesday, numerous agencies had been granted an extension until March 2 to count their regulations, including the Department of Administration, Department of Fish and Game, Department of Military and Veterans Affairs, the Department of Revenue, the Department of Transportation and Public Facilities, the Division of Elections and the lieutenant governor’s office.

According to the governor’s plan, agencies have until Jan. 5 to submit a draft outline “setting forth regulations identified for reform based upon stakeholder meetings.”

Among departments that had tallied their regulations so far, the Department of Commerce, Community and Economic Development was leading in the number of tallied restrictions, reporting a baseline of more than 30,000. Its goal was to cut that number to just under 26,000 by the end of 2026, and just under 23,000 by the end of 2027.

That department is charged with overseeing licensing for dozens of professions across the state, including doctors, nurses, pharmacists, optometrists, social workers, architects and accountants, among many others. Numerous professions in the state are governed in large part by regulation, rather than statute, allowing for boards and commissions to more easily update their requirements in response to evolving best practices.

The number of regulations varied widely among agencies. The Department of Health — which oversees the state’s Medicaid program, among numerous other responsibilities — reported a plan to reduce roughly 4,000 of its 16,000 regulations in a two-year period.

The Department of Corrections, meanwhile, reported having only 57 eligible regulations for reduction. Its goal was to cut that number to 54 next year and 47 the year after that.

When issuing his order, Dunleavy said he wanted to focus on permitting reform in the Department of Natural Resources — which is aiming to eliminate more than 700 of its 3,000 regulations — and the Department of Environmental Conservation, which planned to reduce more than 3,000 of its 13,000 regulatory requirements. The Department of Fish and Game, also identified for permitting reform, has so far counted 650 regulations but sought an extension to finish its baseline count.

The Department of Law, which is in charge of implementing the governor’s administrative order, did not provide an accounting of its own regulations or how it intended to reduce them.

Attorney General Stephen Cox said in a statement in September that the Department of Law “intends to be a model in this process” by publishing its own reform plans.

Assistant Attorney General Rebecca Polizzotto said last month that some departments had been granted extensions for counting their regulations “because of particular board meetings or how they want to do stakeholder engagement.”

Despite the extension granted, Polizzotto said she still expected “a majority of agencies” would be in “substantial compliance” with Dunleavy’s order by the end of 2026.

As for the following year — that will be up to the next governor. Dunleavy’s time as governor ends next year and he is termed out from seeking reelection. The next governor can keep the order in place, or repeal it.

Dunleavy’s regulatory reform effort follows initiatives from previous governors who also sought to reduce, update and clarify state rules. But Polizzotto said Dunleavy’s order is different.

“As opposed to just issuing the order, he actually has put together a program of how to effectuate that,” Polizzotto said in an interview last month.

Dunleavy’s regulation-slashing effort was launched shortly before he appointed Cox to serve as Alaska’s top attorney in August. Cox, who moved to Alaska in 2021, said he had been previously “involved in regulatory reform efforts at the federal level.” In an interview, he called Dunleavy’s administrative order “a very sophisticated program” that’s “modeled after best practices that have happened in other states.”

Alaska’s effort is modeled after a similar initiative in Virginia, where Republican Gov. Glenn Youngkin earlier this year announced he had surpassed the 25% regulation reduction goal he had set in 2022.

According to a study conducted by the Mercatus Center at George Mason University, Alaska is already one of the least-regulated states in the country. Alaska ranked 44th out of 48 in the 2024 study (Arkansas and West Virginia were not included), with roughly 65,000 regulatory restrictions. For comparison, Virginia ranked 16th, with nearly 146,000 restrictions. California topped the list with 420,000 restrictions.

Polizzotto said that even if Alaska has fewer restrictions on the books, it still has work to do eliminating and updating old regulations that are no longer in use.

“That’s just not good law, and you should not have it on the books regardless of if you have fewer regulations than another state,” she said.

Asked why Dunleavy set a 25% reduction goal for every agency — rather than taking into account the vast variation in the number and scope of regulations in various agencies — Polizzotto the goal was to “strive for consistency.”

To make it easier to hit the governor’s target, the Department of Law is allowing agencies to use a variety of methods to achieve the reduction target, including by reducing the number of requirements for a given professional license, or by reducing the word count or page count in guidance documents for Alaskans seeking information on regulatory requirements.

“I don’t think we’ve come across any doubt that any agency can meet that 25% goal. Some agencies might need a little more assistance, but some agencies might be able to exceed that 25% goal, because they have so much that just hasn’t been cleaned up,” said Cox.