Senate Resources, 5/12/26, 3:30pm

I call Senate Resources Committee meeting to order. Today is Tuesday, May 12th, 2026, and the time is 3:30 PM. Please turn off your cell phones. Members present today on the phone is Senator Rauscher. Senator Myers is here.

Senator Dunbar. Myself, Senator Giesel. Senator Clayman will be a little late today, and Senator Kawasaki and Vice Chair Wielekowski are in Senate State Affairs right now. They will be along shortly. Welcome and thank you to Julianne— Juliana and Chloe for helping us out with the audio and so forth.

Today we're having our 55th meeting. And the subject today is the Supporting the Gas Pipeline for Alaskans Act. And we are completing a— or continuing a discussion related to the project modeling by the Department of Revenue. So I will invite Dan Stickle forward. He is our chief economist with the Tax Division.

Mr. Sickel, you were going to be continuing a presentation you started a few days ago. I can't remember if it was yesterday. I don't think it was yesterday. Yesterday. Was it yesterday?

Yesterday afternoon. With two meetings a day, it's hard to— anyway, the presentation for People at Home is titled Senate Bill 280, Senate Resources CS Version H, and it's dated May 11, 2026. I think we were at slide 28. Is that about right? Detailed project modeling.

So welcome, Mr. Sickel. All right, thank you. For the record, Dan Sickel, Chief Economist with Department of Revenue. So yes, so to recap, yesterday we walked through the proposed legislation for Version H as well as our understanding of what the bill would do and our fiscal note and our implementation costs. And then the remaining slides were our detailed project modeling slides.

So we'll start with slide 24, which recaps our key assumptions. And I think this is where we had left off yesterday. But to recap, we're modeling— 32 years of gas sales, which includes 30 years of full exports, $46.2 billion assumed construction cost for the pipeline, $1.50 per 1,000 cubic feet gas purchase price on the North Slope, and then 2 phases of production. Phase 1 coming from a to-be-determined field that does require treatment costs, and then Phase 2 and the anchoring of the project being from Prudhoe Bay and Point Thompson Fields.

Any questions on this slide? Okay.

So slide 25 just highlights the 3 scenarios we were running. So we're looking at the current law scenario, which would be if the AK LNG project proceeded under our current property tax regime with no tax relief provided. Senate Bill 280 as introduced by the governor, and then the version H committee substitute. And so for each of these, we're showing the impact if the project proceeded, which is not a certainty under each of the— under some of the scenarios.

Slide 26 is a slide I've shown before. This is our Summary analysis for the current tax law, and again, to highlight those cost of supply numbers is what we really zero in on when comparing this, this slide to the other slides. So under current tax law without property tax relief, the in-state breakeven cost of supply would be $4.86 per 1,000 cubic feet in 2033, and the delivered LNG.

Price into the global market would be $9.07. And that represents the price that the developer would need to receive for the gas in order to achieve a 10% rate of return on, on the project, given all of our other assumptions. The numbers on the top part of this slide are the cash flow summaries. So for the state, federal, and municipal, this represents total revenue to each of those for the upstream and the midstream. This represents— it is their total revenue, but these are not profits.

These are just the cash flows that come in. And so all of any costs have to be paid out of these numbers.

Good. I see no questions. Slide 27 is the similar chart with Senate Bill 280 as introduced by the governor. And so we can see for the in-state cost of supply, the bill as introduced by the governor would have decreased that in-state breakeven from $4.86 down to $4.43 per thousand cubic feet, and the, the breakeven LNG price into the global market from $9.07 down down to $8.48 per 1,000 cubic feet.

I see no questions. And then slide 28 is the, the similar slide for the committee substitute before the committee. Based on all of the provisions, the, the in-state breakeven cost of supply would be $4.81, so about 5 cents per below current law. And the global market breakeven would be $9.11, which would be 4 cents per 1,000 cubic feet higher than under the current law scenario. And so one of the reasons you may ask, why is the— why is the cost of supply a little bit lower under the instate and a little bit higher under the export?

So one of the provisions of this bill is that there are caps on the in-state sales price to utilities. It's the $12 per 1,000 cubic feet before exports begin, and then $5 per 1,000 cubic feet after exports begin. And effectively, what that does is we model— we model that as a cost to the project. Those costs have to be absorbed at some point. And so when you get later into the time horizon and the, the cost of supply would increase with inflation, that difference between whatever the, the sales price would be and the $5 cap, we assume that that has to be recouped through the LNG sales.

Okay, see no questions.

Slide 29 is our chart of annual state revenues. This is under the current, the current law scenario. Again, early on we have a few years of slight reductions to state revenues as we assume that upstream producers will be making investments to expand production at Prudhoe Bay and Point Thompson to be able to deliver gas into the project. And then once full exports begin, looking at about $1 billion per year of total state revenues. And this would be under current law if the project were to proceed with no tax changes.

No questions. Slide 30. Under the bill is introduced, we have a similar Similar story in the early years and then about $800 million per year of state revenues. And that $200 million per year represents the tax reduction in the Governor's version of the bill.

I see no questions. Slide 31 is a similar chart for the committee substitute. And so we see there is still some temporary reductions in revenue in the early years as upstream producers make those investments. Once full exports begin, we're looking at about $1 billion per year of state revenue. And then in the later years, that revenue number actually increases quite significantly to up over $1.6 $1.2 billion in the 2050s.

And so what's going on there is this bill adds escalators to the alternative volumetric tax based on 2.5% inflation, we're assuming, rather than a 1% escalator in the, in the bill as proposed. And those escalators are coming on a higher base rate. This bill also extends corporate income tax to non-C corporations, and that becomes a significant contributor to revenue in the later years.

Senator Myers. Thank you. Mr. Stickel, does this chart include the community impact fee that's in the bill? Senator Myers, through the Chair, yes, it does. So we're modeling that as a pass-through revenue to the communities, though, so it wouldn't be included in this chart.

The analysis does include the community impact fee. Okay, thank you. Very good. I don't see any other questions.

So slide 32 is our sensitivity matrices, similar to what we've shown before. Shows that in-state gas breakeven price in 2033 based on a range of upstream gas purchase prices to the producers. And then a range of capital costs starting with our $46.2 billion assumed project cost and ranging sensitivities up to 100% capital cost increase. And then you can see our— the $1.50 and the base CAPEX has the $4.86 per 1,000 cubic feet under current law, the $4.43 under the bill as introduced, and then the $4.81 under the CS as the, the break-even prices that would be needed for in-state customers. And then you can see what those look like if you had different gas purchase prices or different capital cost assumptions.

And then again, to reiterate, the committee substitute does have those caps on in-state gas prices to utilities, and that is incorporated into the modeling. And the in-state price cap was $12.

Chair Giesel, so it's $12 prior to exports, and then it's $5 once exports begin, and that's per 1,000 cubic feet, and those are not inflation adjusted. And so where we see the, where we see the impact of those Caps is, as we get into the later years, since the caps are not inflation-adjusted, we do see those impacting the prices.

Gotcha. Senator Dunbar. Thank you, Madam Chair. It's funny, I never thought to ask this earlier on in these presentations. You've given us a bunch of these kinds of charts, but I get— I think I understand what blue means, and I understand— I'm sorry, I understand what green means.

I understand what red means. Does yellow mean that they are profitable, or does yellow mean that they are not at break-even? What color actually means that they're not breaking even here? Sure, Senator Dunbar, through the chair. So we didn't assign a specific price target to a specific color.

We, we just— green, green is a lower price, red is a higher price. We had Excel automatically do the color gradient.

Follow-up? Yeah, thank you, Madam Chair. So you're saying the color gradients don't have anything to do with whether or not they're breaking even? It's all just— they're breaking even at all these points. So in theory, they're earning 10% at each of these price points?

Senator Dunbar, through the Chair, so yes, these represent the price that would be required for the developer to earn that 10% rate of return. And I think in terms of qualifying what the colors mean, I think the next slide would probably be a little bit more appropriate for that discussion.

Okay. Thank you, Madam Chair. All right. I see no more questions on this one. We can go to slide 33.

Sure. And so slide 33 is the similar sensitivity matrix. Matrix, but with the breakeven LNG prices into the global market. Mm-hmm. Um, again, uh, under our baseline assumptions, $9.07 under current law, $8.48 under the bill as introduced, and then $9.11 under the committee substitute.

And these represent the prices that would be required for the project to, um, earn that 10% rate of return to the developer. And I, I mentioned this, uh, in terms.

Of the red and green, because right now, going— if you go out 6 to 8 years into the LNG futures market, delivered prices in the futures market are in the $8 to $9 range. And so that gives you kind of a, a ballpark of what sort of price might be needed to make the project attractive. And so, yeah, the The $8 to $9 prices do correlate to the green. Anything in the yellow category would be challenging, quite challenging. And then anything in the red category, I think, would certainly preclude the project from working.

So how did— Mr. Stickle, how did the 10% breakeven get established? Sure, Chair Giesel. So that was an assumption that we developed in collaboration with AGDC, and it's a— so we're assuming a 10% pretax rate of return. That is intended to be reflective of the range of rates of return that are typically granted to regulated pipelines. So typically for a pipeline project, an investment of this nature, that's the kind of the minimum rate of return that a developer would be targeting.

Hmm, okay. And we do have— we do have the ability to run sensitivity analysis on that. I think in a previous presentation, we showed 7.5% and a 15— either a 12 or a 15% rate of return. I've heard that the 12 to 15 is actually more common. So any questions on this slide 33?

All right, seeing none. All right, and then slide 34 is the conclusion slide. This should look familiar. So AK LNG project has the potential to generate significant revenue to the state and significant economic benefits and energy security benefits to the, to this to the state and to the country. The bill as introduced was a material decrease to the cost of gas and would absolutely make the project more attractive to investors and the developer.

This— the version before the committee would not have— would not be a significant change from current law in terms of cost of gas provided. It would be a slight tax decrease initially and then a slight tax increase over the life of the the project.

And then finally, with the caps on the in-state gas prices, that would almost certainly preclude an in-state only or this Phase 1 only pipeline. That would— the economics of that just wouldn't work.

So that's all I had for this presentation. Very good. Any questions on this presentation? All right, seeing none. So I had asked if you could, um, give us a, uh, an evaluation of what it would look like if we were to increase the gas production tax rates.

So thank you for preparing this.

All right. Yeah, so this next presentation looks at that, and slide 2 kind of outlines the request. So we were asked to look at— so currently, there is a gross tax on North Slope gas in the amount of 13% of gross value, and we were asked to look at that in 1% increments up to a 17% gross tax and what would the fiscal impacts of that be.

And so we base this analysis on— this is based on current tax law other than the project tax rate. So we haven't integrated this necessarily with any particular version of the bill. Gotcha. Okay.

Disclaimer as we go into any talk of severance tax, so it is a very complex severance tax, and there's a lot of moving pieces. And I'm an economist, not an auditor, so this is not an official tax determination or tax device— advice. And so slide 4, how does the North Slope production tax work presently? So for gas, there's a 13% tax on the gross value at point of production. That was a tax rate that took effect in 2022.

Previously, gas was part of the net profits tax calculation alongside oil with a 35% tax rate. The 13% gross tax was implemented as part of previous gas line legislation, which envisioned a possibility that the state would be taking ownership of both royalty and tax to taking ownership of about 25% of the gas and would take its royalty and tax in kind. And so that's where the 13% tax on— gross tax combined with about a 12.5% gross royalty got you to about that 25% total gross tax. And so that's where the 13% came from, but that did take effect January of 2010. Of 2022.

Now, there is a tax ceiling in place. It is 17.7 cents per 1,000 cubic feet. That's a tax ceiling on gas used in-state. And the idea there is to limit the tax liability for tax— for gas supplied to Alaskans and utilities and allow for a potentially a higher tax rate for export gas. And the interplay of this gross tax and the tax ceiling becomes important as we go into the, the scenarios that we're going to run through here.

In particular, if we assume a $1.50 per thousand cubic feet purchase price, the 17.7-cent tax ceiling is a lower tax rate than the 13% of gross value. And so at any of these 13 to 17% gross tax rates for in-state gas, the tax ceiling is going to apply, the 17.7 cents.

Um, the gas tax is calculated independently of the oil tax before applying credits, and I have a flowchart on the next slide that'll walk through that.

All lease expenditures are applied in the oil tax calculation. So if a company is producing both oil and gas, they'll pay the 13% gross tax subject to the tax ceiling for the gas portion of their production. They'll pay the 35% net tax minus credits for the oil tax portion of their tax calculation. And then any of the costs of operating and developing those fields are deducted as part of the net tax calculation on the oil side of things. And then this final bullet point is relevant as well for gas production tax, which is that the minimum tax floor, which is calculated based on North Slope oil value, is applied as a statewide tax floor as well as a North Slope oil tax floor.

So that tax floor is 4%? Chair Giesel, correct. 4% Of the gross value of North Slope oil becomes the tax floor for the statewide production tax calculation.

Senator Myers. Yeah, thank you, Madam Chair. Mr. Stickle, that 17.7 cents gas ceiling, um, Is that inflation adjusted? Senator Myers, through the chair, no. Okay, thank you.

All right, moving on. All right, so moving on to slide 5. This was a new chart that we inserted into our order of operations presentation this year to kind of try to distill down the complexity of the oil and gas production tax into a picture. And so on the top here, tax before credits is calculated individually based on different segments or ring fences of production. North Slope Oil is a segment.

All of your fields on the North Slope are combined into one tax calculation. North Slope Gas is a separate segment. Middle Earth Oil and Middle Earth Gas are their own segments. Middle Earth refers to any production outside the North Slope and Cook Inlet. And then within the Cook Inlet, every single field is its own segment.

So there's a separate oil tax and a separate gas tax for every lease or property in Cook Inlet. And those— so those are all the segments. So if you have Cook Inlet production, you have a lot of different segments. Tax ceilings and tax floors apply within every one of these segments, actually.

And that becomes your statewide tax before credits, is the sum of the tax liability, um, after accounting for tax ceilings and floors for each of those segments.

Then tax credits get applied. Uh, the primary tax credits are the per-barrel credits for the North Slope oil production and the per-barrel credit for, uh, Legacy Oil, or oil not allowed not subject to gross value reduction provisions. That's the sliding scale per taxable barrel credit. That credit is limited to the tax floor, and the tax floor, which is calculated on the North Slope oil value.

And so there's an interplay between all of these things, and when we were talking about the impact of lease expenditures and AKLNG on production tax. It's really all of the nuance in this picture of how all of these pieces interplay, and you— when you add in gas tax, it doesn't always work out to exactly 13% of the value translating into revenue.

But in any case, this North Slope gas tax segment is kind of the, the focus of this presentation, and it's that 13% gross tax subject to the tax ceiling, and we're varying that tax rate on this one specific segment. Very good. So in Cook Inlet, if they're only producing in Cook Inlet Well, I'm not sure what my question is, so never mind. It's a baffling slide. It is.

It's really excellent. You did a great job on it. It's definitely complex. Can I ask a question? Yes, Senator Dunbar.

The bottom right, when it says tax statewide tax less credits can go to zero, is that only for oil or can you also drive it's a gross, not a net tax, but is there some way to also drive the gas tax to zero? Yes, Senator Dunbar, through the chair. So there's a decision point here on which tax credits to use. The 024J is a reference to the non-gross value reduction or the sliding scale per taxable barrel credits. That is the credit that is limited by the minimum tax floor.

So if a company chooses to avail themselves of those credits, then they must pay us at least the minimum tax floor, which is based on the 4% of the value of North Slope oil tax. If they do not— if a company does not use those credits, then they can use other credits to take their tax liability all the way down to zero. Those other credits primarily would be the Per Taxable Barrel credit for new oil, the $5 credit for gross value reduction eligible oil, And so yes, those credits then could be used to offset oil tax or gas tax.

And actually, the gas tax can be offset by the sliding scale credits down to the minimum tax floor. And so in our, in our modeling, those, uh, both of those scenarios can come into play.

Senator Myers. Yeah, two things. First off, this slide makes me not envy you your job. Second off, the Cook Inlet by segment. I know we've sold some leases in Cook Inlet recently, and I think we've started production on a couple of them recently, but I haven't seen— I don't remember bills coming through telling, you know, talking about the taxes in Cook Inlet in the last couple, 3 years here.

So is, are those by segment pieces set by DOR and regulation then? Senator Myers to the Chair. No, so the segments are set by statute. So the Cook Inlet oil tax is subject to a 35% net profits tax with no tax credits. However, there is a permanent tax ceiling of $1 per taxable barrel for Cook Inlet oil tax, and that is on a by-field basis for the segment.

And then the Cook Inlet gas tax is the 13% of gross value with a permanent tax ceiling. The tax ceilings in Cook Inlet vary by lease or property. So some of them are at a zero tax ceiling, some of them are over 30 cents per 1,000 cubic feet. The weighted average is a little under the 17.7 cents, and then any fields that have come into production since 2006 are at the 17.7 cents tax ceiling. Okay, thank you.

All right.

Chair Giesel, just to some of the questions in the ceiling. So this kind of illustrates some of the complexity in the production tax system and how we've made multiple changes over the years. These tax ceilings for Cook Inlet actually refer back to the economic limit factor, or ELF tax, that was in place prior to 2006. And so with the, the PPT in 2006 and then ACES in 2007 and SB 21 in 2013, we've layered layers of complexity and we've grandfathered different provisions in. And so that's where a lot of this complexity comes is we've just kind of evolved and built onto the system over time.

Gotcha. Thank you. I think we're ready to move on. Which is a great lead-in to slide 6, uh, gas production tax complexity. Um, so talked about some of this already.

There's the interaction with the gas production tax and the oil production tax. Um, and then so the impact of gas production on a company that also produces oil can be positive to tax revenue, it can be negative to tax revenue, it can be neutral to tax revenue. And when I presented in the Finance Committee back in February, we laid out some very detailed scenarios of how each of those hypothetical situations could come to be. And I did supply committee members with your PowerPoint from that presentation. I think it was February 13th or around in there.

So they have received that. Excellent.

Okay, so slide 7, 7 is our modeling assumptions for this particular analysis. So we looked at what the gas production tax would be from the AK LNG project, given the same AK LNG assumptions that we've been working through in the previous presentation. Madam Chair. Yes, Senator Myers. Thank you, Mr. Stickell.

On the very bottom one there, the 18% being used in-state, is that also saying that the gas used as fuel gas at the treatment— or excuse me, at the LNG plant— qualifies for the in-state use? Senator Myers, through the Chair, I believe that is the case. We need to check and confirm on that. Unfortunately, my lifeline is not available. I believe that is the case, but we will confirm on that.

Okay. Thank you. And so what is going on here is in Phase 1 for those initial 2029 and 2030, all of the— this relates to how much of the gas is subject to that 17.7-cent tax ceiling. So for those first 2 years, all of the gas production is subject to the tax ceiling. Once exports begin, 18% of the gas is subject to the tax ceiling, and that does increase up to the 23% later in the project because we assume that in-state demand will increase throughout the life of the project.

Essentially, You have a low-cost source of supply that will gradually fill in for declines in Cook Inlet production. And also, given the low cost of supply, we expect increases in demand from industry and other baseload consumers.

All right. Ready to move on. So slide 8 puts some numbers to these. So we ran 5 different sets of numbers here showing our cumulative incremental production tax revenue. So this is both oil and gas production tax revenue over 10, 20, or 30 years of full exports.

And we showed that with the gross gas tax rates of up 13 through 17%.

So under the status quo with the 13%.

Gross tax rate, about $10 billion of total production tax associated with the AKLNG development. That would be for both oil and gas. And then with the 17% gross tax rate, that increases to $12.3 billion.

Any questions? Yes, Senator Dunbar. Thank you, Madam Chair. I'm looking at the Is the incremental growth in revenue smooth from across percentage points, or do you— is there a different marginal value? I'm trying to do the math quickly in my head.

It looks similar. Senator Dunbar, through the chair, it's, it's fairly smooth, and I think that's illustrated in the coming slides where we graph out each of those percentages. Thank you.

So you are assuming that oil production from Point Thompson, the condensates, will increase over time.

By what— how much do you expect? I mean, do you have a percentage you expect each year? Sure, Chair Giesel. So it's a significant increase in production.

It works out to 270 million barrels over the life of the project. And basically, when Point Thompson begins producing gas into the, into the, into the project for export, we expect a large increase in oil production along with that. I don't have the exact numbers with me, it's many tens of thousands of barrels per day, and we expect that to be fairly stable for many years before starting to decline in the later years. Gotcha. So in looking at— and I think I brought it with me, perhaps not— there was an EIS, a final EIS.

There it is. That was done I'll get those later. I think this was 2022. But they did speculate a potential on the North Slope. Now, this was not— this is not all Point Thompson.

This is actually Prudhoe. But a potential loss of 452 million barrels if the gas— if the oil— yeah, gas production was initiated in 2029. Is that— now, that's in a scenario where the reservoir pressure would steadily decrease as the gas was extracted. I don't know how much AOGCC took that into account when they approved the gas offtake. Do you have any information about that?

Chair Giesel, I don't have Detailed insights. Okay. I've seen the same, the same document you reference as well as the, the prior document from BP that had some slightly lower decline numbers. The assumption that we are baking into the modeling for Prudhoe Bay is that there will be no net oil impacts. Yes.

We certainly have the ability to run scenarios, so we could look at you know, a scenario where there was a lower oil production, anywhere up to that 450 million barrel oil loss. That's a scenario that we could run if desired. Okay. Thank you. We will be talking with AOGCC later, I think tomorrow, actually.

So thank you. Senator Dunbar. Thank you, Madam Chair. So I'm just trying to interpret these numbers a little bit and do some quick math here. So it looks like through 2042, each percentage point gets you about $173 to $174 million.

I didn't see it broken out elsewhere, but— oh, there it is, I guess, slide 12. All right, I'll wait till we get to slide 12 then and ask my question. Thank you. Sure.

All right, I see no more questions on slide 8. All right, so slide 9 is our first of several charts. So what we're showing here is the, the annual— taking those totals over, over many years and breaking them down into the annual values— what is the annual additional production tax revenue associated with the AK LNG project-related development. And so we can see, and we've plotted it out here with the current gross tax rate of the 13% for gas ranging up to the 17% for gas.

And then the next slide, slide 10— put slides 10 and 11, put some bullet points to further dig into this same chart. That's great. So slide 10 shows some of the different time periods here. So from 2033 through 2051, in general, for production tax revenue increases to— from inflation. So we're assuming higher overall value as prices increase that roughly balance declining production at Point Thompson.

So we do have the— that incremental production comes in strong and then declines over time, as with any typical oil field decline rate. And then that decline rate increases in the later years of the modeling. And also, a point in the last— 7 years or so of the modeling here is we are not counting on production tax revenue and royalty from so-called yet-to-find gas. So once we get out beyond the 20-year time horizon, there is a need for some additional gas above and beyond what we're forecasting from Prudhoe Bay and Point Thompson. We haven't baked in the upstream revenues from that gas, so that represents a potential upside from the project.

I see no questions.

Slide 11 continues with the bullet points. So as we've talked about previously, for the first few years of production, there is a negative incremental production tax that relates to deduction of development costs. From the oil tax calculation, and also some of that interaction with the per-taxable barrel credits that we talked about earlier in this, in this slide deck. We are assuming some significant additional development costs at Point Thompson. That bullet point should say 2038 instead of 2034.

That's a modeling assumption. So we're assuming that the Point Thompson incremental development will happen in two stages, that there will be a stage of development in the near future with some additional infrastructure and wells being drilled, and then another stage about a decade further on with some additional drilling as well. And so you see with that bullet point 5, just the impact of that, that additional investment in that one year. And that's nothing magic about 2038. That's just the assumption of where we put that spend.

Gotcha.

Very good. Any questions?

All right.

All right. So slide 12 looks at the cumulative impact compared to current law, and so I'm looking at the 10, 20, and 30-year numbers that we showed before, how much additional revenue would the state raise from going from the 13% tax rate up to the 14%, up to the 17%? And so you— yeah, you can see that over 10 years, over the first 10 years, there would be about $174 million of additional state revenue by increasing that rate by 1%, and then about $590 million if we increased over the 30-year time horizon.

Very good. Senator Dunbar. Thank you, Madam Chair. So this is where I'll ask my question. What—.

Why is it— does it increase just because of inflation, or is there something else driving it up? And at first I thought maybe it was because Point Thomson was backed out in 2038, but that doesn't make sense because Point Thomson would apply regardless of which percentage we're at. So why is— why are we getting more profits— or I'm sorry, more revenues in the out years when we're at max capacity in 2033? [Speaker:MR. BOLL] Sure. So Senator Dunbar, through the Chair, so slide— the next slide will actually show a chart of this and put some finer points.

On that. These numbers on Slide 12, these are cumulative over the— so the first column represents revenues through 2042, and then the last column also includes, you know, includes the '32, '33 years of revenue.

But to the question, there is— an increasing value of the gas. If we assume a fairly constant throughput of gas into the project, we are assuming that gas prices will increase with inflation at 2.5%, and so we are assuming that the gross tax will effectively increase by 2.5% per year in nominal terms. Follow-up, Madam Chair? Yes, follow-up, Senator Dunbar. So I'm trying to think in terms of annual revenue impacts based on each percentage point.

And it looks like it's— I mean, the first one's easiest to do, right? That's $17.4, it looks like, um, million per year. Am I doing that right? And then, Senator Dunbar, through the chair, so for impacts per year, I would refer you to slide 13, but that That 174 represents about a decade of full export production. So, um, that would be about $17.4 million per year, roughly.

And then logically, Madam Chair, if I might follow up, and then yes, follow up, you multiply that by 2 and, you know, you're at basically $35 million a year, and that's pretty close to $347 million. And then increases a little bit with inflation. It looks like it goes up to almost $20 million a year through $20.52. I mean, if you divide, you know, basically $400 by $20. So, but that's generally what we're looking at, sort of maybe $17 to $20 million per year, somewhere in that range per percentage point.

Is that correct? Senator Dunbar, through the Chair, yes, that's correct. Okay. Thank you, Madam Chair. All right.

Now, this particular policy change would not affect the likelihood of the project going forward. Would that be a correct statement? Chair Giesel, not necessarily. So an increase to the tax rate for the upstream could potentially— it could potentially impact the price that the upstream owner will be willing to sell their gas for. So if they know that they're going to face a higher tax burden, they may want to get a little bit higher amount of revenue to offset that, which could have some, some impact on, on project economics.

Senator Dunbar. Thank you, Madam Chair. So, so, two points. One, I, I was unaware of the 17.7 cent, uh, ceiling, which seems like an incredibly specific number, and I'd love to know how that was arrived at. But it sounds like we're already at that ceiling, and so if this were to increase, the price at least wouldn't be passed on to in-state consumers.

I guess that's my first question. And then my second is— and I know you're probably not the right person to ask this, but maybe someone else online is— if the, the pipe is, is built and it's, it's up there on the North Slope. Um, how does the duty to produce, uh, under the leases play with this? So, you know, you, you said that maybe they could pass those costs on. Um, but if we can demonstrate that they're making a reasonable profit, um, are they actually able to pass those costs on if they have a duty to produce the gas.

[Speaker] Senator Dunbar, through the chair, so I would absolutely defer the duty to produce question. I can answer the question about the 17.7 cents, however. So the 17.7 cents represents the weighted average gas production tax rate in Cook Inlet that was in place under the ELF tax system in, in 2006. And so what we, what we did when we passed the net profits tax, the, the petroleum profits tax in 2006, is we set a tax ceiling for production in Cook Inlet. And for each field, that tax ceiling was based on the average tax rate for the field for the previous 12 months.

For oil, the average tax rate in Cook Inlet was zero for all fields. So there was a zero tax ceiling in place for Cook Inlet. For gas, the average tax rate varied by field, but on average it was at 17.7 cents. And so what we've done is for any Cook Inlet field that was in production prior to 2006, frozen their pre-2006 tax rate as a tax ceiling. For any new fields, it's the 17.7 cents tax ceiling.

And we have also, for in-state gas from areas outside of Cook Inlet, including the North Slope, we've referenced back to that Cook Inlet tax ceiling so that all in-state gas has that same tax ceiling. Follow-up, Madam Chair? Yes, follow-up. And to some degree, I'm just doing my own check on learning here. So You said 17.7 cents.

Now, this is percent, and you are assuming they are selling it at $1.50. So, you know, whatever this is, 13, 14% of $1.50 is already over 17.7 cents. Is that why we are already hitting the ceiling at all of these points? Yes. Senator John Barr, through the Chair, that is correct.

Gotcha.

Further questions? All right. Seeing none. All right, so the final content slide is, is slide 13. And so this shows the impact compared to current law of holding all else equal of going from the 13% gross tax up to the 14, 15, 16, or 17-cent gross tax.

And as you can see, until 2032, there is no impact from any of these tax changes, and that's exactly because of that in-state tax ceiling, which governs at 13%. And so whatever increases to the gross tax rate are implemented would not impact in-state gas, assuming the $1.50 per MCF purchase price. And then Once come, come 2033, once we have full exports, we would assume some impacts from this policy change, and then those— the value of that additional revenue would increase over time with inflation, and then dropping off in the later years of our modeling, again based on what I described earlier, where we're not counting in revenue from the yet-to-find production yet.

Senator Dunbar. Thank you, Madam Chair. So, Mr. Stickell, the governor has proposed an alternate volumetric tax. We already have this tool in our toolbox. If our goal was to raise a similar amount of money to an alternative volumetric tax, what are the pros and cons and positives and negatives of using one of those tools versus the other?

Um, sure. So Senator Dunbar, through the chair, I think just off the top of my head, the one of the key differences is that the alternative volumetric tax applies to the midstream and the project and the ability to make the, the project financeable and economic, whereas the —gross tax rate applies to the upstream. So you're dealing with a different set of customers or a different set of taxpayers and a different set of economic decision-making. Follow, Madam Chair. Yes, follow, Senator Jadabar.

You know, there are no firm contracts that I know of, at least on the North Slope, for this gas. And— but if the producers were to write into the contract that they could pass on these these increases to the midstream purchaser and the purchase price, would, would it sort of be a wash? Would you be agnostic from a public policy perspective as Department of Revenue whether you use this tool or the AVT?

Uh, Senator Dunbar, through the chair, I feel like that answer probably has some nuance, and I'd probably want to report back, consult and report back on that one. Understood. Thank you, Madam Chair. So, Mr. Stickle, I'm looking here that the— this particular policy change would not have an impact until 2032 when they were at full export production. I mean, so, so I guess I'm having trouble seeing how this might affect the project going forward because it wouldn't affect it until they got to full export, which.

Which is where most of the return is for the midstream and the producers. Yeah, sure, Chair Giesel. So it would be a— at the margins, it would be an increase in tax liability for the upstream producers. And so that would, at the margins, impact their economics, and presumably it would impact their negotiations with the developer.

As to what gas price they are willing to accept.

But this wouldn't— but I'm looking at the graph. It shows that it has zero impact. Yeah, Chair Giesel, it's zero impact through 2032, but then as we showed on the previous slides, there is a, you know, Going back to slide 12, we'll look at the cumulative impact. And so these cumulative impacts are essentially the cumulative tax increase on the producers. And so they'd be for each person, you know, we talked about the $17 to $20 million per year average over the life of project of increased revenue to the state.

That's also a $17 to $20 million per year tax increase to the producers.

So on slide 13, that yellow line that's at the zero up to 2032 is actually higher than zero. Chair Giesel, so these are— slide 13 shows annual revenues, and so there would be, under our modeling assumptions, there would be zero change to each individual year of tax liability through through 2032, and then beginning in 2033, there would be increased tax liabilities.

I see. Okay. Gotcha.

All right. Any other questions?

Seeing none, thank you. Welcome, Senator Clayman.

All right. Well, thank you very much, Mr. Stickell. Any other questions for Mr. Stickell? All right, thank you for joining us.

All right, so we have— there was an amendment deadline last week, and I do have some amendments that were turned in, and so we'll go through those right now. We have brief at ease now, Chair. Brief at ease.

We're back on the record. Uh, Senator Rauscher, um, we were just— we just want to confirm that you can hear us and are able to respond. Can you hear me? Yes. Can you guys hear me?

Yes. Can you hear us? Yes, I can hear you. Okay, great, great. I can hear you.

All right. So we have concluded the Department of Revenue's presentation, and we are going to take up amendments that were offered when the amendment deadline occurred last week.

So we wanted to make sure that you could hear us since many of these amendments are yours. In fact, I think all but one.

Yes, I understand. I'll do the best I can from afar while traveling. All right, very good. Thank you. So the first amendment is offered by Senator Myers.

It is— and as you look at your amendments there, it is amendment number G3. Senator Myers. Thank you, Madam Chair. So I'll move amendment G3. And I'll object for purposes of discussion.

Thank you, Madam Chair. So what G3 does is it makes spur lines, um, exempt from the standard property taxes. As of right now in the bill, we are exempting the main line from the regular oil and gas property tax, but then, uh, subject— or, but then adding in the AVT instead. So this would extend that to the spur potential spur lines, particularly the Fairbanks spur. So I'm doing it for the Fairbanks spur, but it would apply as written to all spurs as defined in the bill.

At the current estimate for spur line construction for Fairbanks and at current customer levels for Fairbanks, the standard 20-mill property tax rate would mean approximately an extra $1,000 per customer per year that would have to get passed on to pay that tax. The tax— the gas coming down from the slope would already have the 30 cents added. Because from the AVT, 15 cents from the, from the gas treatment plant, and 15 cents from the pipeline. So the gas is already being taxed. So that would be over and above that.

And a couple of things to note, the way that spur lines are defined in the bill, which is on page 31, lines 15 and 16, it says that it's a pipeline that will connect to a local community or utility network. So if you built a spur to Fairbanks, and go into IGU's network, that would qualify. But it would not qualify if you built a spur, for example, over to Donlin Mine, which is one thing that has been discussed, because that's not going to a community or to a utility. That's going to a specific industrial customer. Another reason that that matters is because there has been talk recently that the Fairbanks spur could potentially just end up being a spur that is built that just goes to a data center or a power plant on Eielson.

And not into IGU's network. And in that case, it would not qualify. So we've talked so much here about how we want to keep gas prices lower for, for in-state use, particularly for residential customers. This is what this amendment is attempting to do. Very good.

So let me orient the committee. First of all, this amendment was drafted to version G. We have Version H before us right now, and so the correlating locations in Version H are Section 38, that's on page 27, and the definition is— I just saw it and I marked the page and now I can't find it. Oh, it's on page 31 of Version H. Section 43, and it's in F. 43F. Mm-hmm. Um, the alternative tax does not apply to the spur line.

So, where is— there she is. Um, Ms. Kawasaki?

Uh, so.

And this section, as you pointed out, Senator Myers, the alternative tax under the section does not apply to a spur line. Property tax associated with the spur line remains subject to taxation. Ms. Kawasaki, comment on this amendment. Good afternoon, members of the committee, Madam Chair. For the record, my name is Sonya Kawasaki.

Senate Majority Legal Counsel. I think that Senator Myers accurately stated the mechanics of this amendment for the purposes of the bill as written, which was— this was version G, and I appreciate the extra explanation on the possibility of not applying to an industrial area. And other than that, I guess it would be up to the members if this is a policy decision that they want to include. One thing I will note is that Section 31 of the bill is— was part of the governor's bill. It was an attempt to relate the existing petroleum property tax to the sort of model that the Alaska Gas Line Development Corporation operates under now, and especially in light of with its partner Glenfarn.

And if you read the amendment, you can see that AGDC The exemption for taxes under the petroleum property tax had been prior to introduction as a change for the alternative volumetric tax. It was the exemption for petroleum property taxes was meant to apply to AGDC or joint ventures, partnerships, or other entities that include AGDC, and those were exempt.

Currently under current law, but because of the new model that I think ADDC has approached the gas line project, that the attempt was to create an in-law mechanism that anyone who is involved in this gas line project would be exempt from taxation. And Senator Myers, Amendment would simply add the spur line to the exemption as well.

Madam Chair, if I may add to that slightly. Senator Myers. Yeah. So as of right now, the talk of the spur line getting built is Glenfarn would— as of the moment anyway, I know it is rapidly changing. Glenfarn is not necessarily going to be involved in building the spur line, nor would AGDC.

The current talk is having Enstar and Doyon partner together to build a spur to Fairbanks.

Thank you, Senator Meyer. Other questions for Senator Meyer? Senator Wielechowski. I'm trying to find the definition for spur line. In the current bill, which is version H, it's on page 31.

No, wait, that isn't the definition, is it? Yeah, yes, it is. On page 31? Yes, yes, there it is. Branches from the main gas pipeline project to deliver natural gas to a local community or utility distribution system or similar infrastructure not serving as a primary export or mainline transmission facility.

Senator Wielechowski? I'm just curious if this could somehow be interpreted to mean that gas lines that are running across the North Slope to deliver gas to various places. And maybe that's a question for Revenue.

Mr. Stickle?

Sure. Dan Stickle for the record. Could you repeat the question, please? I'm just trying to figure out the definition of spur line here, and it's defined in— on page 31 of Version H, lines 16 through 20. I don't know if you have that in front of you.

Looks like I do.

Could you describe whether or not that potentially means any of the lines running across the north slope?

Senator Wilkowski through the Chair. So I understand the intent is not to include transmission lines. I wouldn't be qualified to give a legal interpretation off the cuff.

I could speak to what I understand the intent to be, which would not to be included— including the transmission lines on the North Slope. Madam Chair, if I may to that.

And I think it is the F1 that would specifically describe that it is a branch from the main line to deliver the gas into a local community or system.

Very good follow-up. Are there any utilities on the North Slope? In the Prudhoe, within the office, other than Barrow? Senator Wilkowski, through the Chair, yes, there are utilities on the slope. So that would be excluded from this definition?

Or that would rather be included and not become tax exempt under this? Senator Wilkowski, through the Chair, it's a good question. I'm really not qualified to opine off the cuff.

Follow-up? I'm just looking at 3125.0054, and because that's referenced in number 2, and I— or similar infrastructure not serving as the primary export and mainline. I don't know what that means. I don't know how broad that is. If I may, Madam Chair.

Oh. Senator Myers. Yeah, thank you. So I did check that. So that goes— that statute reference there on line 19, that goes back to AGDC's original enabling statutes.

That it had two options effectively. It said either AGDC is going to work on an in-state only line, previous version referred to it as ASAP line. That's the 4. And then the second one was it's going to work on an export project. That was 5 under that 3125005.

So in both cases, we're talking about a line coming off of the slope. The existing utility in the Prudhoe Bay area that serves the oil field company, you know, all the airport there and all the oil field service companies and the like, that's not branching off of either the main natural gas pipeline described in 1 or branching off of the in-state-only pipeline, which was described in line 19 there. So The way I read it, in neither case would the North Slope Utility qualify.

Other questions? Senator Dunbar? Yeah, Madam Chair, thank you. So I'm looking at the language of the amendment itself, though, on page 1, line 13 and line 12 and 13. I'm relating it back to the Bill, and I know that it sort of lives in a part of the law that is intended to be related to the project, but the way it reads here is, um, for the construction, operations, or maintenance of, of a natural gas pipeline project or spur line.

And so just, just by adding or spur line there, because it's not, it's not attached to anything else, it doesn't say it's a spur line related to the project.

I do wonder if we are inadvertently perhaps exempting existing spur lines in the North Slope or elsewhere. I'm willing to be talked out of that, but just reading sort of the plain language of the amendment seems to do that. Well, when it—. Madam Chair, Senator Myers. Thank you.

So when we talk to legal to get this drafted, we specifically referenced with them spur line as was defined there on, well, what is now page 31, line— lines 15 and 16, and as the definition for spur line. So that's the direction that we went. I would have to go back and double-check some of the other references for spur line, but when we went to legal, we said specifically this is what we want.

I'll just say, Madam Chair—. Senator Dunbar, follow up. If we adopt this amendment, Madam Chair, we're certainly building a record right now, I think, in our discussion that we do not intend this, and the maker of the amendment doesn't intend this to exempt all of the existing North Slope spur lines. I think the word project on line 17 and 31 probably does the most work here. It's not just branching off a main natural gas pipeline.

It's a main natural gas pipeline project, which I think we all take to mean this project. But thank you, Madam Chair. Senator Wilkowski. I'm wondering if for Mr. Stickel or whoever, maybe I guess we don't have anybody. We don't have anyone online.

He's solo today. Looking at page 31, lines 14 through 20. It, so it says the— we're creating the alternative volumetric tax. It says the alternative tax under this section does not apply to a spur line. Then it goes on, property associated with the spur line remains subject to taxation.

And so I guess I'm curious if there are current property associated with a spur line that remains subject to taxation that might be excluded by this amendment, if you know.

Sure, Senator Wilkowski, through the chair. So I haven't looked in detail at this amendment. The oil and gas property tax does apply to oil and gas pipelines aside from distribution, local distribution lines, but it does broadly apply to oil and gas pipelines. Including on the slope. And the intent here is to exempt just the— in the base bill is to exempt just the AKLNG project and the mainline and to not exempt a spur line.

Yes. Madam Chair. Senator Myers. Yeah. If we go to the second page of the amendment.

Very first line, spur line has the meaning given in 4359.010(E). I understand that because of some change between G and H, that is now 4359.010(F), which is the definition that we were just speaking about. And again, because it does not— because the utility on the slope does not branch off of the main pipeline. That is being built that would start at the gas treatment plant and head south.

Therefore, the— it would not qualify.

So in this amendment, Senator Myers, you're intending this to be referring to the spur serving Fairbanks, but that may not be the only spur line that comes off the main main line. Certainly there's the Mat-Su. One could come off there. One could come off at the Yukon River. We've talked about that in the past.

So all of those would be exempt from the petroleum property tax also, since this is broadly saying spur line. Yes, so that it is broadly saying spur line. I've been in a couple of discussions that have mentioned potentially a branch off to the Cantwell area, to the Healy area. Um, so, but in those cases, again, we're talking about in the definition already used in the bill, a spur line going into a either utility or community distribution network. I don't believe Cantwell or Healy have those yet, but they would have to get built.

But you'd be talking about, again, a community network. And again, the The only result of that would be passing on this tax as a cost to Alaskans. I'm—. I wrote this primarily regarding the Fairbanks Spur, but I recognized in the language, yes, that that could apply to other spurs. But when we're talking about going to people's homes, we're not talking about, as I said, we're not talking about going to Donlin, for example.

That would be a spur line in the technical sense, but not a spur line in the legal sense of what we're doing here. Then that could still get passed on to that industrial customer standard, you know, under the usual $20,000 property tax that would still apply. If there was a spur line that was dedicated to say Fort Knox mine up in Fairbanks, that would also, the $20,000 tax would still apply as well, you know, and in addition to, you know, the Fairbanks Borough property tax as well, you know, all the usuals.

It— but if we're talking about something that goes into a utility network, it's going to people's homes, or into a community network going into people's homes, that should be tax-exempt. Because otherwise, the only thing that we're doing is raising the price of gas for Alaskans. And we've— we're already taxing that gas as it is, because just in coming down the pipe, it's already got 30 cents attached to it per MCF. Thank you for that. Senator Wilkowski.

I'm just— I'm wondering if revenue knows or somebody knows. Do the lines for like Enstar— does Enstar pay property taxes on their gas lines that deliver gas throughout South Central? Senator Wilkowski, through the chair, Dan Stickle, for the record, at the state level, no. I'm not positive on the municipal level.

Senator Wilkowski. I'm not necessarily opposed to this amendment. I just feel like I don't have enough understanding at this moment to be able to vote on it. And I would like the opportunity to consider it some more if you're open for that. If I had to vote on it, I'd vote no right now, but I could be persuaded if we dug in a little bit more.

Senator Myers, would you object to us setting this amendment aside for further consideration the next time we do amendments? Madam Chair, I don't mind that. I just— not knowing the timeline for sure, the timeline of when we're trying to kick this bill out of committee, that's the only concern that I have, but otherwise I'm open to that. Alright, thank you. With that then, with the committee's consent and Senator Myers' consent, let's set this aside so that we can dig into it a bit more.

The fundamental rationale is sound. We just want to make sure that we're not doing something we don't mean to do. So this amendment, while it's drafted to version G, It should be to Section 38 on page 27 of H. I'm just making note of this for myself in case I forget where it was. And the definition is on page 31, um, lines 14 through 20 is the definition of the spur line.

All right, so we'll set this aside. Just making note here. All right, so that takes us to the next amendment, and I'm just going by the numbers of the amendments. Let me make sure I've got them. I lost my papers, so make sure they're not shuffled.

There we go. So the next amendment is Amendment H4, and this is, uh, offered by Senator Rauscher. Senator Rauscher.

Madam Chair, I move Amendment Number H4. And I'll object for purposes of discussion. Senator Rauscher. Thank you, Madam Chair. Um, Madam Chair, this one basically, it, uh, it deletes the S-Corp language.

Um, it makes for compensating changes throughout. It, uh, basically the reason here is I'm trying to find a path forward with probably the— whoever's going to end up with the bill to sign. But anyway, removes any new tax that undermines the bill's purpose. It maintains Alaska's competitiveness and it prevents unintended consequences. Keeps focus on the project, reduces risk of complex compliance issues and restructuring.

I think there was some language and some discussion and some debate on what this may or may not pose in this particular bill, and that's the purpose. After listening to all of the, uh, the many meetings that we've had in the many interviews, that's the, that's the reason for the, uh, that's the reason for the amendment. Thank you. Senator Dunbar. Um, I guess I should say I oppose the amendment.

Has there been an objection to the amendment? I objected for purposes of discussion. Very good. Thank you, Madam Chair. Um, I'll just, uh, say to everyone.

I, I—. There's an op-ed in the current edition of the Anchorage Daily News that I wrote about the S corp that I hope folks read. Um, this would be a, uh, you know, Glenfarn has not expressed that they are opposed to having this provision in there. Uh, this would be— removing it would be a tremendous wealth transfer, uh, from the people of Alaska to Glenfarn, which, you know, there's some— if that's what you want to do, that's fine, but we're talking hundreds, up to $460 million in the out per year. So I think this is now an integral part of this bill.

It does not burden the project or the ability of projects to get built. So I would urge folks to vote no on this amendment. Thank you, Madam Chair. Is there further discussion? Senator Myers.

Yeah. So I talked to a couple of folks recently about how some of the federal tax laws have intersected with what we've been doing here. It was brought to my attention that, that so far Glenfarn, Alaska has not yet registered with the IRS as to whether or not they're a C corp or an S corp. Well, and they haven't needed to yet because since they haven't made any money, they haven't had to file a tax return. We're not sure yet if Glenfarn is going to be registering as either a C or an S. But as I brought up, I believe at our meeting yesterday, I believe that there is a good chance that they're going to need to register as a C corp anyway in order to access the capital markets that they're going to need to build the line. On the chance that they don't need to be a C corp, we've already heard from Gaffney Klein that even with the bill as was originally introduced, uh, by the governor 2 months ago, that we would still be at a competitive disadvantage to our Canadian neighbors because of— when it comes to the total taxes on the project, we could, we could eliminate the property tax entirely, not even do the AVT, and we would still be a little bit behind if corporate taxes, uh, do end up getting paid at the 9.4%, whether it's a C-Corp or an S-Corp.

So On the off chance that they do decide to register as an S corp, and again, I don't know which one they're going to register as. If that helps us with the project economics and actually gives us a better shot of this going forward, I think it's worth it. Otherwise, if we want to talk about the wealth transfer, then the end result is there will be no wealth transfer if the project is not built. There will be no potential lowering of gas costs if this is not built, if we don't go to— if we don't get the full export portion. Otherwise, we already know where the gas costs are going.

The gas costs in Cook Inlet is already $16 and going up. We've already heard that the import costs are already in the same range and again, most likely going up. So if we want this project to have the best shot going forward, this helps. Thank you. Senator Wielekowski.

Thank you, Madam Chair. My recollection is Glenfarm testified they did not oppose this provision, if not outright supported it. And I don't want to say that they supported it, but I know they said they didn't oppose it. And, um, and so they, they're not claiming to this legislature that they, they need this to make the project.

On the upstream side, I would note that based on the calculations we have from Department of Revenue, the producers stand to have an internal rate of return of 83% on their gas. I don't think it's unreasonable that we capture some of the value of that. That's an extraordinary rate of return. I would just like to point out that, you know, we like to talk about dividends and paying people dividends, and some people are supportive and some people are less supportive. Whether you want the money to go to education or dividends or wherever, This is how you lose your dividends, with amendments like this.

I want the people of Alaska who are listening at home, amendments like this cause you to lose your dividends. Because what this is doing is transferring $400 million from the people of Alaska in the outer years to corporate, corporate corporations. Huge, huge, huge corporations that will make billions of dollars in profits. $400 Million per year. Actually, it's a little bit more than that in the outer years.

That comes out to every man, woman, and child in the state of Alaska losing $600, whether that's for a dividend, whether that's for education funding, whether that's for infrastructure funding. Every man, woman, and child of Alaska giving up $600 per person if this amendment passes right now. This is how you lose your PFDs. It's amendments like this. And that's why I'm voting no.

Thank you. Thank you, Senator Wilkowski. I wish I had the transcript from yesterday's in the other body, in their Finance Committee, because this question was asked by Representative Hannan. It was asked of Glenfarm. And if I'm not mistaken, their answer was that they were an LLC, which is a pass-through entity.

Regardless of whether they are a pass-through entity or not currently, if in fact they become a C corporation as you mentioned, Senator Myers, would be required of them or whatever, or they choose to do that, this tax will be the same on them. This is, this is the same corporate tax that C-corps pay right now. So either way, the state of Alaska should be receiving this portion of income from companies that are making large profits in our state through oil and gas. So, so I would oppose this amendment as well. Further comments?

Seeing none, Senator Rosier, did you wish to have closing comments on this amendment?

Well, yeah, I appreciate it. I am not sure that It hurts anyone's PSD if there's no pipeline. That really hurts everybody's PSD. So, that's just my understanding. I'm not sure about the numbers and everything that we're given because we keep asking for numbers, but yet I don't know how those can come about without the numbers we haven't gotten that I heard just a bit ago.

But anyway, I appreciate it very much, and that's my closing argument. All right, thank you. I am going to maintain my objection.

Marquinn?

Senator Dunbar? No. Senator Clayman? No. Senator Wilkowski?

No. Senator Kawasaki is not present. Senator Myers? Yes. Senator Rauscher?

Senator Rauscher. Okay. Senator Giesel. No. Did you not hear me?

Yes, we did. Uh, pardon me, it's Juliana, um, is our secretary. You heard Senator Rauscher, Juliana? Correct. Very good.

And I was a no. Okay, the roll is 2 yeas, 4 nays. And on a vote of 2 yeas and 4 nays, Amendment Number H4 fails to be adopted. So we are at the conclusion of our meeting today. We have 1, 2, 3, 4, 5 more amendments to go.

We will set these aside for our next hearing, um, and at this time we will conclude our meeting, setting this aside for our next meeting, which is tomorrow morning at 9:00 a.m. At that time, let me take a look at what we have scheduled for tomorrow morning. Tomorrow morning is Wednesday, May 13th, and in the morning we will be hearing from Gaffney Klein. If there is time, we will also open for some public testimony tomorrow morning. So at this time, we will adjourn. Let the record reflect the time is 4:59 p.m. PM.