Gov. Mike Dunleavy is eyeing a property tax break for the long-planned Alaska LNG project. The Republican governor said he plans to propose a two-mill property tax for the 800-mile natural gas pipeline and associated infrastructure, a 90% lower rate than the state typically charges in property tax for oil and gas infrastructure.
Dunleavy described his plans in an interview with the Anchorage Daily News. The Republican governor’s spokesperson confirmed the governor's plans but declined to make Dunleavy or another member of the administration available for an interview.
The state shares a portion of the property tax revenue it collects with local governments, and some local leaders are raising concerns about Dunleavy’s proposal.
"We can't subsidize that project," said Kenai Peninsula Borough Mayor Peter Micciche. "We at least have to cover our costs."
Micciche said he expected the project would be a boon for the state and his region, bringing thousands of jobs to the Kenai Peninsula. But a low property tax rate for the project would essentially push some of the project’s cost onto local taxpayers, he said.
"We're going to have impacts on our schools. We're going to have impacts on emergency services, for sure," he said. "We're likely going to be the agencies they turn to for their emergency response plans, like all the other oil and gas facilities do."
Plans for a North Slope gas pipeline and Southcentral export terminal have been in the works for decades but have taken new life in the second Trump administration. The state turned the project over to a private developer, Glenfarne, which has put out a steady stream of announcements about agreements with potential customers, investors and suppliers. But the project has plenty of skeptics, who argue the project last estimated to cost $44 billion would be too expensive to make financial sense.
A consulting firm contracted by the state Legislature to examine the project, GaffneyCline, told lawmakers last month they may need to make a variety of changes to help the pipeline become a reality, including to property taxes.
In a statement, Glenfarne spokeperson Tim Fitzpatrick said the developer had not seen the specifics of Dunleavy’s proposal and couldn’t offer an opinion.
Micciche said he’s open to tax breaks that would support a pipeline, but he said local governments need to be involved in determining what exactly those might be.
At least so far, he said, that hasn’t happened.
"There is a deal to be had here, but it has to be born from facts, real math, local impact data," Micciche said. "It has to be transparently and fairly negotiated between all involved in good faith."
In an email, Dunleavy’s spokesperson, Jeff Turner, said the bill hasn’t been drafted, so it was premature to say the proposal was developed without their input. He said the deal was better than nothing.
"Right now, the state collects no property tax at all because the LNG pipeline does not exist," he wrote.
Fairbanks Rep. Maxine Dibert, a Democrat who co-chairs the state House Resources Committee, says she plans to discuss Dunleavy’s bill with local officials. But she says she plans to focus much of her attention on a separate bill that would require the project to include a smaller lateral pipeline to supply Fairbanks with gas to cut energy costs.
"For me, that is a line in the sand, that it needs to be guaranteed part of the project," she said.
Republican Sen. Jesse Bjorkman, who represents the central Kenai Peninsula, says he’s on the fence about Dunleavy’s proposal. He said he’d like to learn more about the project’s finances to determine what’s necessary. But in any case, he said, it would make little sense to cut the project a break on property taxes after Glenfarne makes a final investment decision, or FID.
"If they're gonna have an FID decision in January next month, then that cake is already baked, like the financials are already in place.
Glenfarne declined to say whether it would reach FID before the legislative session begins Jan. 20, but said it continues to work toward making the pipeline a reality. The company has previously said it expected a decision by the end of 2025.
"Glenfarne is rapidly progressing toward a final investment decision, as seen through our progress with numerous Asian commercial announcements and strategic partner agreements. We expect additional announcements in the next several weeks," Fitzpatrick said. "Our overall project schedule, including completing the pipeline in 2028 and delivering first gas to Alaskans in 2029 is proceeding on schedule."
