Five Alaska mayors have voiced concerns regarding a proposed tax break for the Alaska LNG gas line project, citing potential negative impacts on their communities and municipal services. The governor’s bill aims to eliminate local taxes, sparking debate about revenue loss and its effect on essential services.

Concerns Over Revenue Loss

The proposed legislation, championed by Governor Dunleavy, seeks to eliminate property taxes and other local taxes for the $46 billion Alaska LNG project. The state plans to implement a volume-based tax once substantial gas deliveries begin from the North Slope. The Alaska Department of Revenue estimates this could reduce property tax revenue by approximately 90% when the pipeline is fully operational.

Mayors Testify Before Senate Committee

On Friday, the five mayors testified before the Senate Resources Committee, expressing support for the 800-mile pipeline project designed to transport gas from the North Slope to Cook Inlet. However, they simultaneously voiced concerns about potential revenue loss and the impact on municipal services.

Impact on Kenai Peninsula Borough

Peter Micciche, mayor of the Kenai Peninsula Borough, highlighted the significant impact the liquefaction facility – constituting 43.5% of the project – will have on the coastal region. He projected tens of millions of dollars in annual impacts for the Kenai Peninsula, potentially shifting the financial burden to local communities.

Micciche stated the proposed tax elimination would “cut deep into the fabric of how our communities work.” He also expressed concern about the proposed tax rate’s annual 1% increase, which he believes will leave the Kenai Peninsula financially “underwater” as the borough’s budget typically increases by 2.5% annually. He described the governor’s tax break as “a bottom offer.”

Glenfarne and Project Supporters Respond

Adam Prestidge, president of Glenfarne Alaska LNG, acknowledged the project’s impact on municipalities and stated the company is in discussions to alleviate costs and reassure communities. Former U.S. Sen. Mark Begich called the pipeline a “once-in-a-lifetime project” during his testimony.

Glenfarne owns 75% of the project, with the Alaska Gasline Development Corp. holding the remaining 25%. Both Prestidge and Begich were hesitant to provide specific details about the tax break due to confidentiality requirements, but Begich urged lawmakers to discuss revenue matters with Glenfarne in a closed-door session.

Financial Projections and Local Concerns

Governor Dunleavy’s bill is expected to generate over $22.5 billion in new state revenue. However, local communities could incur approximately $13 billion in costs over the next 36 years compared to current law. The proposed volume-based tax would levy 6 cents per thousand cubic feet of gas, increasing by 1% annually, and would only be implemented after the pipeline delivers 1 billion cubic feet of gas per day.

Edna DeVries, mayor of the Matanuska-Susitna Borough, believes the thresholds for tax collection are “far too high.” Chris Noel, mayor of Denali Borough, expressed concerns about increased costs for services like waste management and fire rescue, stating the borough would receive “limited benefits” as no local offtake is planned.