House Finance, 5/12/26, 1:30pm

Okay, I'll call this meeting of the House Finance Committee to order. Let the record reflect that the time is 2:06 PM on Tuesday, May 12th, 2026. And present today we have— appears to be everyone— Representative Allard, Representative Stepp, Representative Moore, Representative Bynum, Co-Chair Schrag, Co-Chair Josephson, Representative Jimmy, Representative Galvin, Representative Tomaszewski, Representative Hannan, myself, Co-Chair Foster, And a reminder, folks can mute their cell phones.

We have two bills on the agenda today. The first is House Bill 193. That's the paid parental leave bill. And the second one is House Bill 381, which is the oil and gas property tax bill, otherwise known as the gas line bill. And what I would like to do is if we could speak spend an hour or less, preferably, on the paid parental leave bill.

If we get up to the 1-hour mark, then we will set the bill aside and then move over to the gas line bill to make sure we are giving plenty of time for the gas line bill. So what I would like to do, the plan is for House Bill 195— 193, again, the paid parental leave bill, what we have is The last time we met on this bill, we did amendments. And so what we did is, because a number of significant changes were made, we went ahead and rolled all of those amendments into a CS so that we would have a clean version. So all we want to do now is just present the CS and then see if there are questions on that, adopt the CS, and then if it's the will of the committee, we'll move that. And then from there, we'll go to the gas line bill.

So With that, if I could have Representative Hall as well as her staff, Ms. Joan Wilkerson, if you'd like to come up. And so that we've got the working document before us, I would entertain a motion to adopt the CS, and then I'll object for purposes of an explanation. Representative Sharagi. Co-chair Foster, I move that the House Finance Committee adopt committee substitute for House Bill 193, work draft 34-F. LS 0612/S dated 5/9/26 is our working document. An object for purposes of the explanation.

So with that, welcome, Representative Hall, if you can put yourself on the record. Thank you, Co-Chair Foster and Co-Chair Josephson and Co-Chair Schraggy, members of the House Finance Committee. It is a pleasure to be before you again this afternoon. We have before you a PowerPoint presentation that outlines what is in the current version of the bill. And this is version S for HB 193.

So what is in this PowerPoint is a mix of language that was in the prior version, version L, at the major mile markers, and then additionally actions that were taken by this committee at the last hearing. So you will see like the big rocks that are part of the bill in here. And as my chief of staff, Joan Wilkerson, will describe as she goes through the slides. She will make very clear to the committee what was in that previous version L and also make very clear the actions that were taken by your committee the last time we were before you. And for the record, I didn't share— excuse me, Co-Chair Foster.

For the record, my name is Carolyn Hall and I represent the West Anchorage neighborhoods of Turnagain, Spenard, and Sand Lake, also known as House District 16.

Ms. Wilkerson. Thank you, Co-Chair Foster. For the record, my name is Joan Wilkerson. I'm staff to Representative Hall. We'll start— thank you very much.

We'll start with unemployment insurance changes that have been brought about not just by the amendments that you reviewed, but also the bill itself. So regarding employee contribution, that was reduced to zero. It was 0.10 presently, and it was reduced to zero. And so that was existing language. That wasn't a result of an amendment that you reviewed previously in the past week.

So that hasn't changed. Since two versions of the bill ago.

Employer minimum contribution is 0.3%. That was Amendment 5. And in version S of the bill, it's at Section 6.

The maximum qualifying wage base of $54,500 per year and a weekly benefit of $524 is Amendment 8. The annual inflation adjustment based on average taxable wage base is also in Amendment 8. And the changes that take effect on January 1st, 2027, that's in existing language. There was another amendment, which I'll get to in a minute, with a different date, but the 2027 date is for putting the whole program together and allowing Department of Labor to do that starting January 1st, 2027.

With respect to STEP and TVEP, employees contribute 0.35% to STEP and TVEP. That also is in existing language in Section 7. Employees contribute 2.5— or 0.25% to STEP and 0.10% to TVEP. Employers do not contribute to TVEP. Employers contribute 0.3% to STEP, and that's in Amendment 6— I'm sorry, 5.

So you did vote on that. Employer contributions will be diverted to the UI Trust Fund. —When it's necessary to protect fund solvency. That is in existing language in Section 6, and we can speak to that question in more detail. At the end of our last hearing, Representative Tomaszowski asked that question, and we're happy to address that in more detail after we conclude this part of the presentation.

Got a question on the slide prior. Representative Hannan. Thank you. It's actually the slide prior to that, Co-Chair Foster. And it's just you were giving us some locations in version S sections and then some you were giving us by amendment.

So I'm looking for what section is the maximum qualifying wage in. It came via amendment Amendment 8, but where is it now in the bill? I can locate that for you. And then the same with on the next page, the employer's contribution to STEP that came via Amendment 5, what section in the bill is it in? Ms. Wilkerson?

I can locate that shortly. Okay. Okay. If you need a moment. We can take a brief ease.

Mr. Foster, Representative, uh, Sharkey, thank you. I was just going to note that the, I believe, qualifying wage is on Section 10, so that should be one of the questions. Okay, and, uh, we'll give Ms. Wilkerson a moment to identify the other one.

Representative Hall. Through the co-chair, Representative Hannan, can you please remind me which bullet point? It's number 2 on this slide? Slide number 3? The second bullet point.

Employers contribute 0.03 to STEP via Amendment 5. And for the record, that's Representative Hannan.

Butcher Foster, is that not Section 6? Yes. And for the record, Representative Sharagi. And so I think we've got both identified. Representative Hannan, any further?

Sounds like you've got your answers. Okay, Ms. Wilkerson, please proceed.

On the next slide, employees contribute 0.15% to paid parental leave. That also comes from existing language as far back as 2 versions ago. And it's located at Section 2A and arises from— out of Alaska Statute 23-10-710A.

Employers contribute 0.2%. That also is existing language, comes out of Section 3(e).

Employer contributions will be diverted to the UI Trust Fund if or when labor determines it is necessary to protect the fund's solvency and after employer step contributions are diverted. That was Amendment 5. And it's also in existing language, version L, Section 6.

The benefit, there was a change to it coming out of Amendment 3, reducing it from 8 to 26 weeks to 8 to 12 weeks based on fund solvency.

And the maximum qualifying wage base was changed to $54,500 a year or weekly benefit of $524 at Amendment 8. I know what you're going to ask me. Which I can find in the bill at— I want to say 6.

Got a question, Representative Ballard. Thank you, Co-Chair. So I'm a little confused. You're referencing L, but are we going off the S version? Ms.

Wilkerson, if we're going page by page or how we're doing this, because I'm getting a little confused. Representative Hall. Thank you, Co-Chair Foster. Through the co-chair, Representative Allard, what is on these slides before you are what I'm calling the big rocks, the major points of the bill. And it is a mix of, of policy determinations that were made before in House Labor and Commerce.

And it is a mix of the action items, the amendments that the House Finance Committee considered the last time we were here last week. Representative Ballard. Okay. I'm sorry. Representative Hall.

Thank you, co-chair. So then S version is the newest version. Through the co-chair, Representative Allard. Yes. And if it is helpful for committee members, there is a stamp on the bottom right of each slide, and it indicates what version it is that we are working through right now.

Please proceed with the presentation, Ms. Wilkerson.

Thank you, Co-Chair Foster.

The paid parental leave, slide 5. Employees gone through the employee contributions and the benefit is number of weeks and the max— maximum qualifying wage base.

Exempt employers with with less than 25 employees and seasonal employees are exempt from the necessity of participating in the paid parental leave program. Also, employers who can establish that they have as good or better paid leave program, and this arises from Amendment 2, As does the opt-in provision for employers who wish to participate in the program but would not otherwise be required to participate. This arises out of Amendment 2.

Paid— the Paid Parental Leave Fund is protected from the sweep by Amendment 1. And the actual receipt of benefits is available beginning January 1st, 2029. Most of the other provisions of this bill begin 2 years earlier, January 1st, 2027, because we assumed that it would take at least 2 years to, A, build up money in the fund to be able to pay the benefit, and also for Department of Labor to prepare itself both through program and through regulations to administer it. And that's what we have. Do you have questions about other references?

Representative Hannan. Thank you, Co-Chair Foster. Ms. Wilkerson, I want to go to the legal memo that came back with the draft and to the potential of creating two separate classes of employees with our creation of the exemption for employers with fewer than 25 employees and seasonal employees as an exemption. And I know, Ms. Wilkerson, that you are an attorney. So when I read this, I might need a little help translating it, and I am just wanting to make sure that Because it is referencing a legislative record detailing the connection between the objective of the bill.

So are there things that we need to make sure that we articulate why we have carved that out to make this defensible if it were challenged? Ms. Wilkerson? Through the Chair, Rep. Hannon, actually Representative Hall and I have discussed this. We believe that she would probably be the best suited, the sponsor of the bill, to address your answers. And just so folks know, the author of the memo, Ms. Allison Radford, is online.

And— but we'll go to the sponsor first. Representative Hall. Through the co-chair, Representative Hannon, thank you for that excellent question. And I have some remarks here that Ms. Wilkerson and I worked on together. And so if it's the will of the co-chair, I'd like to read from them.

Okay. The analysis is an equal protection issue in the most peripheral sense. The issue is whether there is a rational basis to grant a benefit to employees working for a business with 25 or more employees while denying the benefits to businesses with less than 25 or who are seasonal. This different treatment is purely economic and not based on a protected class status. So the test is whether the reason for treating the two groups differently is rationally related to a legitimate state interest.

There has been discussion in this committee about how this bill impacts businesses. [NOISE] We are reminded of the lessons learned following the passage of Ballot Measure 1 a couple of years ago. Our stakeholder outreach and concerns raised by members of this committee made clear there is a need to try to alleviate those concerns expressed from the business community after Ballot Measure 1's passage. The bill aims to help babies and families, but the needs of small and seasonal businesses must also be considered. There is a concern of harm to small businesses which are prevented from permanently filling positions which were open for the length of the leave.

This committee has considered these issues. Last week, this committee passed a conceptual amendment lowering the number of employees comprising a small business from less than 50 to less than 25 employees. The original amendment was from less than 50. That conceptual amendment and the umbrella amendment both passed. So we believe the committee has fully considered this issue and that there is no question of a rational relationship between the need.

And additionally, Co-Chair Foster and Representative Hannan, a lot of the construction of this bill has been built around protecting— doing what we can to protect the paid parental leave fund solvency. And that was also a consideration of what is in the bill before the committee. Representative Hannan. Thank you, Chair Foster. Thank you, Ms. Hall.

And now we have it on the legislative record. Also, I'd like to note that we have in the audience with us Representative Aishide. Thank you for joining us here. And I'd like to go over to Representative Josephson. Well, I—.

Thank you, Mr. Chair. Just to make some further record, I read this memo very carefully and of course this is very similar to memos like this. They could cut and paste this when these issues arise. I think as to the seasonal employees, the whole nature of it is typically an intense summer season, which we're just beginning.

Um, I, I suppose one could argue something about making family planning decisions steering around that. That gets a little tricky. But, um, the— I think the nature of it is that seasonal work is intense. Um, it's often, you know, 12 hours a day or more. And that it's short-lived because by October 1st, typically it's over unless you're talking about a different season.

I think we've ameliorated some of the concerns by reducing the number from 50 employees down to 25 who are eligible. I expressed some concerns with that number as a policy matter, less than a constitutional matter. I think one argument to be made, though, for smaller business is just the coverage issue. That, you know, if you have 100 employees and employee number 99 takes off time for paid parental leave, it's easier to cover employee 99 than if you've got 10. That's just logical enough.

That would help support a rational basis review. And those are just my thoughts on, on that test as it might be applied in this bill.

Further discussions on the CS? Representative Bynum. Thank you, Co-Chair Foster. I agree as well that making sure that we have put on the legislative record our decisions and what we've done in this bill, specifically the temporary workers and setting the threshold for the number of employees at 25 is an important conversation, and I think it's important that we clarify and make sure that we are very clear on what our rationale was. I think that when we're putting together this type of a program where we're creating a paid parental leave benefit, we want to do so while protecting the viability of small employers seasonal employers, rural businesses, and employers with limited payroll capacity.

One of the questions that might be asked is why small employers are treated differently. And that's because these types of employers, uh, when we're selecting, uh, the number 25 employees, often have limited staffing redundancy. They have limited HR capacity. Thinner cash flows, and greater difficulty covering extended absences without layoffs, closures, reduced hours, or a majority of operational disruptions. I believe that Representative Stapp extensively put on the record defining this threshold when we were talking about it between the small business and larger employers.

[Speaker:MR. BRYANT] So the 25 employees was the number that was selected. It is intended as a practical threshold where employers are often more likely to have enough workforce depth and administrative capacity to absorb leave requests. Ideally, we want to make sure that we are looking for the fact that small businesses and their ability to maintain payroll administration and labor economics is protected, hence the 25-employee threshold. One of the other questions that I think that is primarily going to be asked is why seasonal employers are treated differently as well. And I believe that the seasonal employment is often short duration, it's project-specific, tourism-based, construction-based, seafood processor-based, or industry-based within the seafood industry, or weather-dependent.

And mandatory paid leave in this short seasonal window will disrupt the limited operations and the season available. It creates disproportionate costs relative to the employment period. Why is it not arbitrary? We're making clear in the bill that saying a small employer or seasonal employee is— that it isn't that they aren't important, it's just that they are very— it is very difficult to apply the standards without impacting those small businesses. The distinction is based on the administrative feasibility, the economic burden, and the workforce realities, not the value of the employee.

So for the purpose of the employer size and seasonal employment limitations in the ability to implement the paid parental leave, it's a matter of protecting our workforce stability. It avoids disproportionate burdens on small and seasonal businesses while preserving employment opportunities and allowing that the state establish a program that is financially, fiscally, administratively workable in a workable manner. I believe that we have found that small employers and seasonal employers often lack the staffing depth, cash flow flexibility, and the administrative capacity of the larger year-round employer and then applying these same requirements would cause irreparable harm to these smaller businesses.

That's all I have. Just want to make sure we put it on the record and that that was my understanding of our deliberative process in the matter. Representative Stout. I think, Co-Chair Foster, obviously I didn't like the changes to the bill. I think I think the only people who are going to get the benefits now are the people who least need them the most.

Those businesses under 25 are the ones that are not going to have any type of benefits, most likely. But I am curious, all the changes we made, what does that actually do to the capitalization burn on the UI funds? I think that's probably the most important question. We made a bunch of changes and amendments. We had a bunch of charts and graphs.

How fast do we burn through the entirety of the UI fund after those changes? And when do these levers go down? Or kick off through the chair if we know the answer to that question. Representative Hall, would you like to tackle that? Or we do also have the department here as well.

I've got Ms. Paloma Harbor in the room as well as Mr. Lennon Weller, if you'd like to come up and, uh, or one or both of you, either way. Ms. Paloma Harbor, thanks for being here, and if you can put yourself on the record. Thank you, Chair Foster and Committee. For the record, Paloma Harbour, Director for the Division of Employment and Training Services with the Department of Labor and Workforce Development. Just as a quick comment through the chair to Representative Stapp, it would take— sorry, let me grab the right spreadsheet— the unemployment insurance Trust Fund would require additional contributions starting in rate class 15 as early as 2029, which again, as those contributions start to kick in for employers at those higher rate classes, their contributions to the State Training and Employment Program would be reduced until those contributions reach zero, and then once contributions exceed 0.6%, which would start happening in fiscal year— I mean, in year 2033, their paid parental leave contributions would start to decline.

But even out into fiscal year 2040, there would be some employers, employers in rate classes 1 through 7 that would still be contributing to the paid parental leave program. So not all employers would no longer contribute. Representative Stout. Follow-up, Co-Chair Foster. Through the Chair to Ms. Paloma Harbor, thank you for that explanation.

So basically 2023 to 2040 we're going to have two kind of classes of paid parental leave. Some will have it and some will not. What is that classification? Through the Chair. Ms. Harbor.

Through the Chair, Representative Stout. Rep. Stapp, so there's two separate things. There's the tax processing of the program and there's the benefits processing of the program. Just because employers' contributions for the paid parental leave program will go to zero does not mean that their employees will not be eligible for the program. They would continue to be eligible under the statute.

Follow-up? Rep. Stapp. Thank you, Chair Faustus. Through the Chair. So who's paying?

Ms. Harbor? Through the chair, Representative Stapp. So the balance will build over the first several years. So you'll be spending down some of the balance and then the employees and employers that still contribute will be covering the rest of the cost of the program. Fall.

Representative Stapp. Okay. What about that time period between 2033 and 2040? —Just that now if everyone is still eligible, not everyone is going to be paying because of the nature of these levers. How does that work mechanically?

Through the Chair. Ms. Arbor. Through the Chair, Representative Stapp, again, you'll—as employer contributions start to come down and depending on the expense of the program, so we'll just start experiencing expenses for benefits in 2029 under this model. And then employer contributions will start to come down.

And if benefits exceed the annual revenue of employer and employee contributions, then the balance would be reduced. Follow-up, Mr. Kocher. Representative Snap. Thank you, thank you, Kocher, Foster, through the Chair to Ms. Harber. If I didn't do anything at all, when would my employer contributions come back for the UI fund?

Through the Chair. Ms. Harber. Through the Chair, Representative Stapp. I don't understand the question. Yeah, follow-up, Mr. Kocher.

Follow-up? So I'll rephrase it for you. So let's say I did none of this stuff at all, my overcapitalization, my UI fund. If I did nothing, when do you project that the employer contributions come back? Through the Chair, Representative Stapp.

Again, employer contributions right now are at a minimum of 1%.

Anticipate that through 2040 they would remain at 1%. Okay. Paul. Hello. Yeah, thank you, Commissioner Foster.

So currently, if we do nothing, employer contributions are going to remain at 1% until 2040. If we do all this stuff, they will start ratcheting it up in 2029. The benefits will be exhausted by effectively 2040.

For most folks, Do you have a projected end date where basically all this money goes to the maximum rate and simply back to the UI fund? Through the Chair. Ms. Over. Representative—. Through the Chair, Representative Stapp, we did not take the projections past 2040 because it's just so uncertain at a certain point in time.

But we could run it out to—. No, that's okay. I just— just follow up, just one last comment just on the record. It just shows the kind of the nature. I think this has been like a really valiant attempt, but there's like obviously there's structural problems with doing this kind of at this point because the question is like, what do you tell people in 2042?

Right? I mean, that's my one question. Maybe to the bill sponsor, like, well, if we do this and we enact this in law and we know that we're going to burn through all these funds, and jack that employer contribution rate to the UI fund and all this back up, but we're going to run out of benefit anyways. What do we tell people that maybe they had one kid in 2029 and then— or 2030— and then in 2040 they're going to have another kid and we say, oh, by the way, we don't have that program anymore. What do we say through the chair?

Ms. Representative Hall. Through the co-chair, Representative Stepp, I appreciate that question.

And I will, I will say that there is a high level of uncertainty as far as who is going to take advantage of this benefit. There, there are some unknowns. And I, I'll also say that Alaska, in my opinion right now, is desperate for a reason for people to live here, stay here, move here. And it has been proven time and again that having a paid parental leave program, especially for a younger generation such as Gen Z, that this is something that they want to take advantage of when it comes to finding a place of employment. Additionally, when it comes to public policy, the public policy-making process is very iterative, as we all know very full well, and it changes over And so when I think of creating a paid parental leave program, I also think of the BSA formula.

And I think of oil taxes. And how occasionally we have to go back and revisit past actions of previous legislatures. And so I would anticipate that a future legislature would come back to this issue and take appropriate action based on the conditions that have shifted over time. [SPEAKING SPANISH] I think, Mr. Chair, thank you, Representative Hall, for that.

I'm just going to finish it off with Ace and Paloma Harbor. Basically, we would have to jack up the employer contribution rate to fund this thing in perpetuity. Question to Ms. Harbor through the Chair: What rate would we have to set it at in order for us to reasonably consider fund capitalization at a level where we could pay this benefit in perpetuity? What would that number be?

Be? Best guess. Through the chair, Representative Stapp, the only way to ensure that the model is sustainable in the long run regardless is to have it work the way the unemployment insurance trust fund works where the contributions on an annual basis are based on actual experience. So that would be my recommendation in the future. Representative Stab.

I get that. If we free floated the rate, what would your expectation be? 3%? 3.5%? Ms. Harbor?

Through the Chair, Representative Stab, I cannot do math in my head and I will not conjecture. Sorry. That's fine. Thank you. Representative Hall.

Thank you, Co-Chair Foster. Ms. Harbor can certainly correct me if I am wrong on this, but I would anticipate that a future legislature could consider changes to the employee tax rate, but I don't know that I'm— I don't know how Ms. Harber might— what her opinion on that might be. Ms. Harber, uh, to the chair, um, absolutely. I mean, a future legislature can choose any tax changes they might want to consider to employers or employees.

Obviously, that's Okay. Representative Bynum. Thank you, Co-Chair Foster. Through the chair, thank you, Representative Hall and your staff for being here. One of the— so we've had a big change in the last few weeks on how this plan was going to be administered.

Originally, when we look at it, we were going to be diverting money, or we are going to be utilizing the unemployment insurance portion, and the structure was basically this one plan. And we were talking about the funding being overcapitalized.

If we have covered it, I apologize, I don't recall it. How are we capitalizing this plan now for the paid parental leave portion? So what I mean by that is, is we are going to be starting to collect taxes, this employee tax, and putting it into that fund. But how are— what are we doing to start off with money in this fund? Because as soon as this goes into law, there'll be some period of time, and then people will begin to be able to utilize this.

And so if we don't have any substantial funds set aside already, the fund could immediately go basically negative or zero. So what are we doing for initial capitalization? Representative Hall. Through the co-chair, Representative Bynum, the, the capitalization will begin on January 1st, 2027, and the benefit will not be available until January 1st, 2029. So there is— there will be 2 years of capitalization going into the paid parental leave fund.

Representative Bynum. Thank you. Thank you, Co-Chair Foster. As a follow-up through the chair, do we— what was— do we have an updated model on what that is anticipated to be with the changes, or is that not changed from the previous version to now? Representative Hall.

Co-Chair Foster, I believe that might be a better question for the department to answer. Ms. Harbor.

Thank you again. For the record, Paloma Harbor, Director for the Division of Employment and Training Services within the Department of Labor and Workforce Development.

Through the chair, Representative Bynum, we did update our information and it is going to be— I'm going to be presenting later to the committee the updated fiscal notes. Fiscal notes, but one of those fiscal notes shows the revenue to the fund that we anticipate on an annual basis.

So in the first year, we anticipate $37 million into the paid parental leave program. In the second year, we anticipate $38.2 million into the program. There will be some expenditures in those first two years related to adminis— collection of the tax and developing the regulations and preparing for the program. But the benefits would not start to be incurred until fiscal year 2029, as mentioned by the representative. And again, even then, it would only be half of a year's cost, around $9.7 million, and then it would grow to potentially $19.4 million in the out years.

Representative Bynum. Thank you. And to clarify that, that's the expense or the expenditure anticipation out of the fund? Through the Chair, Representative Bynum, that's the benefit cost only.

So total cost, let's say we look at fiscal year 2030 because that would be the first full year of the benefit program, we'd be looking at $20.7 million in costs for the workers' compensation component and another $478,000 in UI. So $21 point— and again, I can't do math in my head— $4-ish thousand or million. Sure. And then one final follow-up. Representative Bynum, has the department Have you run updated models of this and are those available?

Ms. Harber. Through the chair, Representative Bynum, we did update our charts for this. They are— they have not been reviewed through the governor's legislative office yet for submission to the committee.

But we can work on that. Thank you. Ms. Harber, we've touched— you've touched on the fiscal notes. So while we're there, I think you've got the updated fiscal notes that we just need to make sure we put on the record as having reviewed. If you could just reference the control codes and if there's anything additional you'd like to touch on, we're happy to hear it.

Okay, thank you, uh, Co-Chair Foster.

So the first fiscal note I'll go over is for component number 2276, the unemployment insurance component. It is control code YKFNX.

So you'll see in the first year there's some costs associated with implementation. So I will just say this did change from the prior version of the fiscal note. Um, the out-year costs for this fiscal note are based on what we currently experience for the programs we administer, the State Training and Employment Program and the Technical Vocational Education Program, on collecting those taxes. And so we assumed that the ongoing operating costs for those would be around the same amount. However, under the current version of the bill, there is an exclusion for seasonal employment that we talked about and employers less than 25 that does not apply to those other programs.

So we do have to do some programming, uh, in our system and changes to our quarterly reporting and then, um, helping employers understand those changes. So those are all first-year costs. So those costs, um, starting in fiscal year 2027, $392,200 in personal services. $349,000 In services. Again, those include the one-time programming costs, and then we'll go down to $101.4 on an ongoing basis.

And then $23.8 thousand dollars in commodities or supply costs, again in the first year as we send out mailers and updated quarterly reports in paper copy, and then that'll come down to $1.2 thousand in the out years. For a total cost of $765,000 in the first year and $477,900 in the out years. On the revenue side, the changes made by the legislature in, in the, in this version, uh, increases the State Training and Employment Program revenue, uh, to 30— by $34.4 million in fiscal year 2027 and up to $35.4 $5 million in 2028, and then it'll start to come down again as employer contributions have to go to unemployment insurance, down to $19.2 million in 2032. Uh, the second line under change in revenues is a new fund code for the Paid Parental Leave program, and again, revenues would be $37 million in the first year up to a high of $39.3 million in fiscal year 2029. And then coming back down to $34.5 million by 2032.

Okay, and is there a second fiscal note? Yes, uh, Co-chair Foster, uh, this is for component number 344 and the control code is IETGD, and this is for the workers' compensation component. Again, this is the component that will actually administer the benefits side of the program. And the costs will be in personal services, $980.8K annually. Um, for services, $467.5K annually.

And for supplies or commodities, $27K annually. Um, for a total cost in fiscal year 2027 of $1,475,000. $1.3 Million. Those costs do grow, as mentioned previously. I have previously mentioned that we don't have a great way of estimating the benefit costs for this program, so these are guesses, but they do grow.

In fiscal year 2029, um, we anticipate a benefit cost of $9.7 million for a total cost of $11. $11,167,200 To the program, uh, and then growing as the program is for a full year in 2030 and beyond to a cost of $20,659,000. And again, it will take 5 permanent full-time positions to administer this program, um, and we estimate a capital cost of $10 million for the programming related to this new program. Okay, I've got a question. Representative Josephson.

Actually, I think Rep. Bynum was before me. Okay, Representative Bynum. Thank you, Co-Chair Foster. Through the chair, do we have any ability to look or get any help from our federal partners on determining what the usage of this might be? I know that the— there's already information being selected.

Also employees have available to them FMLA. Those are components that are part of a federal program and I just wasn't sure if there is any reporting from that that might be helpful. Ms. Harper? Through the Chair, Representative Bynum, we can pull information on births to get some very rough approximations. We used fertility rates by age group, I think I mentioned, to to come up with the rough estimate that we used.

So we, we used the data we could. What we would— what would be required to get a really good estimate would be data from our Alaska Bureau of Vital Statistics, or whatever their current name is, on births that we can then crosswalk with our quarterly wage reports to say how many of those were for individuals that were employed and not in a seasonal job or not for a small employer, and then really do a deeper calculation, but we don't have a data sharing agreement with them for that purpose at this time. Thank you. Okay. Representative Josephson.

Ah, yes. I'm trying to remember what I was going to ask. One thing, it's fundamental here, just to confirm. So under the bill, employees in firms, we'll call them, of less than 25 would be contributing a portion of their income to paid parental leave. Is that right?

Ms. Harper. Through the chair— co-chair Josephson, that is correct. The way that the current version of the bill reads, seasonal employees would not contribute, but employees and employers with less than 25 employees would still be contributing. Thank you. Representative Stapp.

Thank you, Mr. Chair, Mr. Foster, the Chair, and Ms. Harber. Just one last one on the capital appropriation for software. It is estimated at $10 million. Is that coming out of the UI Fund too, through the Chair?

Ms. Harber? Through the Chair, Representative Stapp, no expense related to the paid parental leave program can come from the unemployment insurance trust fund. It has to come from the new fund, the paid parental leave fund. Follow-up. So new contributions.

So what happens if that cost overrun of the IT system is like $35 million instead of $10 million? What happens? Through the Chair. Ms. Harper. Through the Chair, Representative Stapp, as we mentioned, at some point that fund balance will burn down.

The higher the IT cost associated with this program, the quicker that burn down would occur. Yeah, follow-up. Follow-up. So even though we are using the new contributions to fund this thing, we would effectively at least be backdooring the existing money in the UI fund. Wouldn't that be correct, or would we delay implementation?

So like I said, my concern with software system is $10 million for software system is not going to happen in the state of Alaska, unfortunately. So what does that do to implementation of the new fund? Through chair, Ms. Harber. Through the chair, Representative Staff, from an operational perspective We could not expend more money than we were appropriated. And we certainly couldn't expend more than the revenue to the fund.

Right? So I do believe as you are articulating we would have to delay implementation of the new program until we had a system that could operate it. And that was—. That we had funding to operate it. All right.

Thanks. Representative Tomaszewski. Thank you, co-chair Foster. Not so much a question on this fiscal note. What are the other employer costs that will be related to this program other than the 0.8% there?

Representative Hall. Through the co-chair, Representative Tomaszewski, if I'm following If I understand your question correctly, other expenditure— expenditures or considerations that an employer would have to consider is they would still be paying health insurance for the individual who is receiving the benefit and not there, and then also ensuring that their job is protected so that they can return to the workplace. Okay. Follow-up? Follow-up?

So the employer whose employee is taking this benefit would have to continue paying for their health insurance for the 3 months that they are gone. Representative Hall, through the co-chair, Representative Tomaszewski, that is correct. And I can in theory maybe find— I believe it's on page 7, line 13, employment protection, health insurance maintenance and Enforcement. There is information there that should provide additional information in answering your question. Okay.

Thank you. Follow-up? And so I was looking at a different part of the bill. I don't know exactly where it is. But the paid parental leave is known to help improve the health and life outcomes of infants and parents of newborns.

But it says it also allows for bonding time with foster and adopted children. So this also include a foster child. So if an employee took on a foster child, would they also be able to use that— use this program for parental leave? Representative Paul, through the co-chair Representative Tomaszewski, if those particular conditions under which the foster child is being placed and the employee is eligible, then yes.

And so follow-up, follow-up. So how many times can they do this? I mean, sometimes— how often does a— I guess I don't know how long a foster child stays with a family before they're moved to another foster child home or a permanent placement, do you have any kind of expectation like how many times could an employee actually do this? Could it go back to back with subsequent foster children? Representative Paul.

Through the co-chair, Representative Tomaszewski.

If we look at briefities—. Briefities, sorry, just Okay, House Finance back on record at 2:59 PM on Tuesday, May 12th, 2026. And Representative Hall. Thank you, Co-Chair Foster. Through the Co-Chair, uh, Representative Tomaszewski, your question was about foster children and foster placement and how many times somebody could basically dip into the well to receive the benefit.

They are allowed to have— there is a single qualifying event within a 52 consecutive week period, and the 52 consecutive week period can be found on page 5 on line 1, and information regarding Foster children and foster placement can be found on page 3 on line 20. And if I could, Mr. Kocher, read this little section. Rep. Sandefall. Okay. So page 3, line 20.

It says a document from the foster care agency involved in the child's placement or from another individual approved by the department. The department being the Department of Labor, confirming the placement or anticipated placement of the child for foster care. And so I think it's important, um, for us all to be reminded, myself included, that, um, when folks are asking more nuanced and detailed questions when it comes to certain hypotheticals, a lot of this, um, is— will be, um, left under the department's review and creation of the regulatory process. And they'll be maintaining connections or building connections with these individuals who are identified as those who are able to basically say, yes, this is a legitimate foster placement, or this is a legitimate adoption, this is a legitimate birth, what have you. So there is, through the regulatory process that will be created, those fine nuanced details will be worked out.

Representative Tomaszewski. Thank you, Co-Chair Foster. So once per year is, is the answer per person, I guess, or eligible parent. And, and Foster Chair, Children and adopted children are also— is there an age limit? Representative Hall.

Through the co-chair, Representative Tomaszewski, that is a great question. And I, in my mind, and I'm sure this is listed somewhere, but I believe legally we consider once a child reaches the age of 18, then they would not qualify. So I'm happy to follow up offline though to ensure that that is— I can get a more accurate answer. Okay, thank you. Let's see, we've got Representative Bynum, then Allard, and then I'm going to remove my objection on the CS.

And so again, just the CS is just the cleaned-up version of the bill after we went through the amendment process. So with that, Representative Bynum. Thank you, Co-Chair Foster. I'll just hold off until we get back after the CS. I— okay, my question isn't going to change whether or not we adopt this CS.

Okay. Representative Allard. Okay, I'm going to go ahead and remove my objection to adopting the CS, and hearing no further objection, the CS, which is version S, is before us as our working document. Representative Bynum. Thank you, Co-Chair Foster.

One of the questions or one of the answers that had come up earlier was specifically about what the employer is actually paying, and I just wanted some clarification from the department if I can get it. Hi. Ms. Harber.

Thank you, Co-Chair Foster. Chair, thank you for coming back up. I know we're sending you back and forth. You had indicated, you said that under the CS, and now that we've adopted that, that the opt-out for the employer feature, you mentioned that you said that the employers would, even under 25, would still be paying the point 8%, which means that 0.2% would still be going to the paid parental leave. Is that accurate?

Ms. Harbor. Again, for the record, Paloma Harbor, Director of the Division of Employment and Training Services. Through the Chair, Representative Bynum, that is correct. So the way that the amendment was worded, um, The only individuals excluded from the tax for the paid parental leave program would be seasonal or employees hired for less than 6 months. Okay.

Follow-up. Representative Bynum. Yes. Thank you, um, Co-Chair Foster. I just seems problematic to me, even if it's a small amount of money, that we're taxing an employer for an employee benefit through this program.

That then they don't partake in. And now maybe we could make the choice and say that that's an opt-out feature, but it just seems problematic to me that the tax would still apply. And, you know, we're basically— this small business is going to be put into a condition where, you know, they may not have the flexibility to lose the employee. That's hence why the 25 threshold was set to begin with. But yet they're still obligated to pay a tax for a benefit that cannot be given to an employee of theirs.

Ms. Harbor, through the chair, Representative Bynum, um, that is accurate that they would be contributing whether or not they chose to opt into the program. Representative Bynum. Thank you. And then the bill, we moved the threshold for the amount of money that is going to be covered.

It went from $42,000 to $54,500. Is that the maximum wage in which the benefit— or I'm sorry, the tax applies for the employer and the employee? Through the chair. Absolutely. Thank you.

Through the chair, Representative Bynum. That is correct. And then one other follow-up from the changes that we made. Initially, the way the current law is set is that 1.15% of the employer's contribution is going into the UI trust.

There was a— I believe that there was an element where that went to zero, and then we made an amendment to put it back to 0.3%. And so right now under the current bill, only 0.3% 0.3% is going into the UI trust. Now, to me, that doesn't seem like a sustainable thing. We haven't— we haven't looked at any updated numbers, but is that— did we just add on the additional 0.3% that the employer is going to end up having to cover long term? Meaning, will this cost go up over time?

And if so, by how much? Do we know? Through the chair, Representative Bynum, the whole way this legislation has been developed is that overall employer contributions to unemployment insurance, the minimum tax is 1% currently. Under— as this slide articulates, employers for a time will be paying only 0.8%. So that's a savings of 0.2%.

As you mentioned, the employer contribution to unemployment insurance, instead of going to zero as under the previous version, is being maintained at 0.3%. Just— it was basically in response to the concerns that the drawdown on the unemployment trust fund would happen too rapidly, and thus the employer contributions would be taken back from the State Training and Employment Program and the new paid parental leave program a little too rapidly for the sustainability of that new program. But to answer the last part of your question, as soon as employee contributions exceed that— I mean, once they exceed 0.6%, there's no more going to paid parental leave— I mean, to the State Training and Employment Program. And once it reaches 0.8%, there's no more going to the paid parental leave program. So there is no additional tax for these new programs moving into the future if unemployment insurance requires that tax to be above 0.8%.

Just as a note, Commissioner Foster— having the updated models would be very helpful in just trying to to actually see what's happening long-term. Thank you. Representative Ballard. Yeah, I don't— I want clarification on one thing and then I'm going to hold off on all my other comments because I'm thinking we're going to probably try to pass this out today and then I'll go in for that. But through the co-chair, I just want you to reiterate this on record.

Are you telling me that an individual, whether they adopt, foster, or have a child, can take 12 weeks off every year from their place of employment? Just for clarification, please, Representative Hall. Representative Hall. Through the co-chair, Representative Allard, it takes a qualifying event and the person needs to be eligible for the program. And so if the person is eligible for the program, has a qualifying event and that event happens once in a 52-week period, then that person does receive the benefit.

So the answer is yes. Okay. Thank you. Okay. If it is the will of the committee, I would entertain a motion.

Representative Sharagi.

Thank you, Co-Chair Foster. I'll make a motion. I move House Bill 193, work order 34-F, LS 0612/S out of committee with individual recommendations and attached fiscal note. Check. Okay, we have an objection.

Representative Stepp, would you like to speak to your objection? Yeah, thank you, Chair Foster. Um, yeah, I mean, look, I actually— I like a lot of the concepts in the bill. I just think it needs some more work. Um, but we're counting down the days here at the end of session, um, so I'd be happy to work with sponsor over the interim if in the event that didn't come law, because I do actually like this concept a lot, but mechanically, I think by these hearings it just needs some work.

So with that, I'll withdraw my objection. Okay. Object. Representative Ballard. Thank you.

So I actually have a lot of heartache with this bill. Um, there's a new mandatory payroll tax. There is a burden for small businesses, a serious burden. Massive expansion of unemployment insurance benefits, automatic CPI escalator, extensive regulatory and compliance burden on employees, Department of discretion over benefit duration, the permanent fund dividend collection mechanism, program launches before actuarial validation. And then I'm going to go into say that the combination of new mandatory payroll tax, a sweeping expansion of unemployment benefits, an automatic CPI escalator that removes future costs from legislative control, extensive employer mandates with significant litigation exposure And a program that launches before an actual review raises serious concerns about fiscal responsibility.

For me, the free market principles and the government overreach is astounding. To support parental leave would be better served by pushing for a voluntary framework, tax incentives for employers who offer leave, or a much narrower and fiscally bounded program. Rather than this broad expansion of states' payroll tax and benefit apparatus. My objection is not going to be removed. Okay, we've got Representative Galvin and then Bynum.

Representative Galvin. Thank you, Co-Chair Foster. Through the chair, I want to give Representative Hall a hearty thank you. Thank you to the staff. I appreciate your work.

And thank you to the department. This is a big load, a heavy load, and it's also so important, I think, for strengthening families. We do not have the same demographics as we had 50 years ago. When I was a child, 90% of families had one adult at home. That's flipped.

Now about 10% have an adult at home. And that relationship with the child, whether it's a foster child or not, is so important in terms of strengthening families. And so I honor you for bringing this forward. It's brave to bring something so new and also so complicated and difficult. I want to thank Representative Stapp for willing to step up and help make this possible.

This is very important to the future of Alaska. It's important to retain our young families here, give them some reason to come up here, and I believe this is one of those pieces. And so as complicated and heavy as it is in this room right now, I want to lighten the moment and say, listen, this is a shared responsibility. We all believe in strengthening families. I know that.

And I think that this is one step toward that. So thank you very much, Representative Hall. Representative Bynum. Thank you, Co-Chair Foster. Through the Chair, Representative Hall, I appreciate you bringing this complex issue forward.

I think that it's healthy or good for Alaskans, good for Alaskan businesses, not just government, that they would have the ability to, to be able to participate in a program like this. I know this is something that a lot of the bigger companies and corporations allow and have available to their employees. But I think today, where we sit at today, I probably am going to be a no on moving it out of committee because I don't believe it's ready to be moved out of committee. I think there's still much work that needs to be done on this, and this is the last stop. So there is no referring this back to Labor and Commerce or State Affairs or any of the other committees to, to really get the additional information from the department, getting the models vetted out.

Those are things that I would really like to see before we actually were to move the bill out. I understand that there's, there's a desire to move the bill forward because of the time in front of us, but I'm just not prepared to vote yes today on moving the bill. I do hope that it does receive more additional work, and I look forward to that process, but I don't think it's ready for a yes vote on the floor. And so I can't support moving it. Okay.

Representative Hannan. Thank you, Chair Foster. Since we may not end up giving floor speeches on it and we're doing that here, I'm going to give mine of— I think this bill has two really significant things. One, it's time for us to update our unemployment insurance benefits rates. We are an embarrassment as a state to to how little we pay people in UI.

Secondly, the fact that we have no state mandate for paid parental leave and we have all these problems keeping young families in Alaska is significant. And like others, I applaud Representative Hall from taking on— because anytime you're dealing with unemployment and benefits areas, it is complex. There is a lot of federal regulation. And I've been very pleased with Representative Stapp's enthusiasm and practical realities about it. Like him, I wish we weren't excluding small employers because we know that big employers likely do have benefit packages.

I'm old enough to remember when large employers in Alaska had on-site child care as a temptation to have you come work at their hospital. And new tech companies all did that to have young employees with kids coming to work for them. And 25 years later, we can't barely keep people employed in Alaska because they can't find childcare and they can't afford to be off work. And boy, I wish all the brain science we know about young children They, they should be surrounded by a caring adult for the first 6 months to a year of their life. And right now we've watered it down to just 12 weeks as a maximum.

And I wish it were 52 weeks, but I'm going to be a yes vote to move it on so that we keep the dialogue at the front of our mind and emphasize that policy-wise, that's what we need to strive to do. And, you know, our bandwidth here at the Finance Committee is always short at the end. We are not the best to dig into labor law and details. But for a freshman legislator to take on something of this complexity, I want to give her that vote of encouragement. I don't know that we're going to have the opportunity for a floor speech in that, so that's why I've taken this opportunity to say I am a yes vote day.

I wish the bill were stronger. I wish we could solve a lot of our employment issues for young families. But I'll be voting yes to move it from committee today. Thank you. Okay.

Seeing no further comments, Representative Ballard maintains your objection. Yes. The objection is maintained. And so, Madam Clerk, we are voting on House Bill 193, version S. If you could please call the roll. Representative Tomaszewski.

No. Representative Bynum. No. Representative Hannon. Yes.

Representative Jimmy. Yes. Representative Galvin. Yes. Representative Stapp.

No. Representative Moore. Yes. Representative Allard. No.

Representative Schraggy. Yes. Representative Josephson? Yes. Representative Foster?

Yes. 7 Yea, 4 nay. So on a vote of 7 yea to 4 nay, House Bill 193, which is version 34-LS0612/s, moves out of committee. Committee, um, I guess it's not as amended since this is a CS. So I believe— okay.

So it's moved out of House Finance with individual recommendations and attached fiscal notes. And if folks could please sign the committee report. And Representative Hall, any comments? Thank you for— Co-Chair Foster, thank you very much for this opportunity to have some closing thoughts very briefly. I first and foremost want to thank the very careful consideration of House Finance Committee and for the diligent questions.

I truly do appreciate the committee's time and consideration. Additionally, this bill doesn't have just my name on it. It has gone through a lot of work and a lot of really talented people have been a part of the dialogue when it comes to crafting this particular policy. And I'd specifically like to give a shout out and an acknowledgment to Representative Ted Eichide, Representative Zach Fields, Representative Elise Galvin. Certainly the Department of Labor has been— they've been very helpful as we've been trying to work through the different machinations of this bill.

I'd also like to thank my chief of staff, Joan Wilkerson, and also my former chief of staff, Tristan Walsh, who helped me work on this legislation. This legislation has been around for— this particular bill has been around since about mid-April of last year, and a lot of work has gone into it. So I really appreciate the committee's time and consideration on this. Thank you. Representative Hall, you put a lot of work into this, and we appreciate you taking this to the next step.

So with that, I'm going to take a 5-minute break. We do have a long haul ahead of us. I'm thinking that we can maybe go till 5 o'clock when I know that there's another meeting at about 5:15. If we finish before 5, that's, that's great. But we do have 3 things on the gas line bill that will be after a break.

House Bill 381 is our gas line bill, and we— the 3 presentations we have are a completion of the questions from, uh, that we have for Glen Farn. And then after that, we'll be hearing from the House Resources aide in terms of what happened between the governor's bill and the bill that they pushed out of House Resources, what changes were made. And then after that, we have a presentation from the Department of Revenue. So we've got quite a bit of ground to cover, and so we'll take a break and then we'll come back. So we'll be at ease at 3:21 PM.

Okay, I'll go ahead and call this meeting of the House Finance Committee back to order. And the time is currently 3:32 PM on Tuesday, May 12th. I am slightly dragging this out to get— allow for other community committee members to trickle back in here. So again, I'll repeat kind of what the plan is. There's a meeting at 5:15, so our intent is to go until about 5, and hopefully we can cover enough ground to get us through the completion of the Glenfarm presentation as well as questions.

And then after that, we'll go to the House Resources presentation and then Department of Revenue. And so with that, if I could have the folks from Glenfarm back up, I would like to invite up Mr. Adam Prestidge, president of Glenfarn. Mr. Mark Begich from Northern Compass Group. And if you could both come up and put yourselves on the record just so folks know online. We also have Matt Kissinger, commercial director for the Alaska Gas Line Development Corporation.

We also have— I'm not sure why, but my script— we keep leaving you out, Mr. Frank Richards, but we also have Frank Richards here as well.

So I think— did we get through the entire presentation? We're just down to questions. And who would like to start us off? Mr. Bagich. Mr.

Chairman, thank you very much. We had one last slide, then just a little commentary around it, and then we'd be very happy to take questions from the group. Again, Mark Bagich with Brownstein High, which is Northern Compass Group, is a subcontractor working for the state of Alaska governor's office to Department of Law. Let me turn it over to Frank Richards. Mr. Frank Richards.

Mr. Chairman, for the record, Frank Richards, the president of the Alaska Gas Line Development Corporation. And I'm not sure— we have the slide up on our screen, but it's not available on your screen. Oh, there it is. Looks like it is. So from last week's questions, we were asked to again identify— provide some background information.

So what this slide really does is really show where Alaska currently sits within the province, comparison to other jurisdictions that have liquefied natural gas projects in them. And this is really to show, again, the spectrum of not only property taxes but corporate income taxes. And so the top line here represents the current 20 mil property tax rate that's currently in effect under Alaska Statute 4356. in excess of $500 million a year depending on the cost of the full project when it's developed. And then with the corporate income taxes totaling about 24— 28.4% for Alaska. Now in comparison to other lower 48 states, Louisiana, Texas, and Maryland, as well as our competitor in Canada, we are essentially an order of magnitude higher in the property tax that we have on the books compared to those other jurisdictions.

And that was really the intent of this slide, was to, to show the comparison that we have a tax rate that is extremely high for oil and gas property, but it places us outside of the competition that we have in the lower 48 and in other jurisdictions in the world. So that was really the intent of this slide. Okay. Let's see, Mr. Bagish, did you have something before we go to questions? No, no, Mr.

Co-chair. That was our last slide and we'll be happy now to take questions and continue conversation. Great. So where we left off at the last meeting, I had in the queue Representative Hannan, Josephson, Stepp, Galvin. Also, I'd like to recognize that we have in the audience with us Representative Freer, co-chair of the House Resources Committee.

Thanks for joining us. And So with that, Representative Hannon. Thank you, Mr. Chairman. On the point Mr. Richards just pointed to on slide 18 of tax comparisons from other jurisdictions, I want to ask about the Maryland S corp exemption does not apply to nonresident members. Can you tell me what that means?

Does that mean corporations not headquartered in the state of Maryland must pay an S corp tax. Mr. Richards. Through the chair, Representative Hannan, again I apologize, I'm, I'm not truly familiar with the S corp exemption. We asked for this table to be produced and I did not focus in on that, that particular note. Representative Hannan.

Thank you, co-chair Foster. Do you know if Maryland has an income tax on all LLCs? Mr. Richards. Through the Through the chair, Representative Hannon, we would be happy to respond to the committee with the answers to that question. I do not have it.

Okay. Well, then I'm going to give one more on the follow-up. I'd also like that from Louisiana and Texas. I believe that Texas doesn't have an income tax, but I think Louisiana does, and what I'm looking to capture— because again, we keep pointing to our property tax, which is high, but we don't have other taxes that most other oil jurisdictions in the state do. Other states and locations in the U.S., either capturing income tax from LLCs or S corp taxes.

So when we're talking about a tax regime, it's not just one in isolation from the other. So in appreciating from your point of view that our property tax is really high, I need to look at it in comparison to not just our property tax but our income tax or lack thereof. So thank you. Mr. Chairman. Okay.

Next up I've got Representative Josephson, staff in Galvin. Representative Josephson. Yes. Thank you, Mr. Chairman. Forever who— for whomever is best situated on this slide, slide 18.

When we see that, for example, same row on Louisiana and Texas, row 2. That there are exemptions enjoyed by local governments, or rather the— well, the supporters of those strategies, those developments. It then says PILT agreement. But what the governor is asking for, and I guess Glenfarm is asking for, is to not leave a PILT agreement out there to be solved by by individual municipalities, but for us to manage the entire suite of potential municipal needs— in other words, I can't know— I see that it's $0 to $1 million per year, which is remarkable, but then it says a PILT agreement, and I don't know— for all I know, that was very lucrative to local governments. But you're asking us to not allow for municipalities to individually negotiate with you on PILT agreements.

Am I right about that? Mr. Prestidge. Chair Johnston, Adam Prestidge from Glenfarm. The distinction that is important to make about the Alaska LNG project versus the projects on this page, each of these refers to an LNG facility that sits sits at one site in one jurisdiction, and so there is one municipality or one county to negotiate a tax arrangement with. That's very different from the Alaska project that spans 800 miles and covers a range of different potential taxing jurisdictions.

So that's why we— that's why this bill is structured, or this concept of the alternative volumetric tax is structured as being basically one arrangement to solve the tax arrangement for the entire project. Follow-up? Follow-up? I could see that if it was Louisiana coastal bayou or something that was— where there were just a couple effectively counties involved, but there must be— You know, I'm thinking of North Dakota and West Texas. There must be projects that span hundreds and hundreds of miles and impact lots of local governments.

Isn't that accurate? Mr. Prestidge? Representative Jostein, Chair Jostein, through the Chair, Adam Prestidge. Again, that's something that Our focus has been on LNG facilities and comparing not, not kind of small-scale pipelines that might run through multiple, multiple facilities or multiple jurisdictions, but mega, large mega projects.

Really, the only comparisons that we can make to that are other large LNG projects. All right, follow-up, follow-up. In the previous meeting, so this would have been I think Friday of last last week, there was discussion of the gas itself. It was noted that it was unprocessed and not marketable. I understand all that.

That we must get rid of the CO2, got that. Is that part of Phase 1? In other words, is the cost associated with Phase 1? And there's been concern about not knowing super transparently what that cost is. Is that an expected cost so that the product is usable along the rail belt?

Mr. Prestidge. Chair Jefson, through the Chair, Adam Prestidge. The answer is yes. There is a small amount of gas treatment that needs to happen in the Phase 1 project.

That is, it's small for two reasons. One, just the volume that needs to be processed is much smaller. The Phase 1 has a maximum, has a volume of 500 million cubic feet a day, as opposed to the 3.5 billion cubic feet a day under the full package. So you just have, your volume is smaller. Also, the gas treatment standard and the specification is a different, easier to achieve standard.

So utility grade gas specifications are easier to achieve than LNG grade. Specifications. And so it's just a much, much smaller piece of capital cost incorporated into Phase 1 that is incorporated in our project design. [Speaker:COMMISSIONER MAY] Okay. And after that, Mr. Chairman, I guess I just would note what I've said previously, and that relates to the state as equity investor.

I understand that— I assume AGDC would be our conduit 6 months after FID. And I just can't impress upon you all and the listener how important that is. And I understand some might say, well, yeah, but we're not here for that bill. That's a different issue. Well, it's, it's tomorrow.

It's that soon. And this, this reduction and abatement you're asking for partial abatement is much more intriguing to me if I see the benefit to the state treasury. Because what I've— in the 14 years here, what I see is huge, huge need in deferred maintenance and teacher salaries and trooper salaries and snowplowing, and it never ends. And all of it is virtuous. It all has its rightful place.

So my eyes will get a lot bigger if I knew if we could suffer through the required investment, and I understand that doesn't come cheap, what we stand to gain once there's export. And I just can't delink these things. Mr. Bageach. Mr. Co-chair, again, Mark Bageach.

Representative, absolutely. I actually am just proofing something as we're sitting here that I hope to share with with you. Okay, thank you. Okay, next question to Representative Stapp.

All right, I think Co-Chair Foster, through the chair to the wonderful folks at Glenfarn and Senator Bagich, Mr. Mark Bagich— never gets old saying that. Um, I have a series of questions, Co-Chair. So first of all, okay, so before us, current tax liability and property level is $500 million a year. What is the equivalent of 15 cents volumetric currently in the bill? What is that number through the Chair?

Mr. Begich. Mr. Chairman, again, Mark Begich for the record. Can we hold that for the revenue folks that are coming up? Yeah, I can shift gears. Because they are going to have lots of different numbers they will be able to give you.

Okay, follow up, Mr. Kuchar. Representative Snap. Yeah, so I guess I will shift gears to the second part is the equity option. Obviously we talked about earlier on the record the state has equity option. I read Section 5 of the bill.

Municipalities also are reserving the right for an equity option in the bill. What is the big rub on allowing municipalities to have equity option if the state already reserves the rights to have an equity option? Through the chair, Mr. Bagich. Mr. Co-chair, Representative, the issue is the way it's drafted.

What they have is— and I'll let Adam add to this if he needs to— and that is the way it's drafted is we have no problem with the state, again, holding the 5 to 25% option, then they can come in. If whatever the state doesn't acquire, then it can be open to the municipalities. That's not an issue from our end. The issue is they want to utilize dollars in the minds of the boroughs, not all of them, but in the boroughs that they are giving up in property taxes that don't exist today. So it's, it's not money.

It's— in order to do that, there's a certain amount of money, equity, that has to be raised. If you substitute some of that equity with non-cash dollars, meaning you gave up $5 mil, so we're going to give you X percent, there's no cash transaction. So that means the equity investors have to increase the amount they have to put in, more cost to the project. We do not object at all to the fact that if any municipality wants to have prioritization before anything else after the state exercises their right to that portion and they want to invest in it, we have no problem with that. Zero problem.

But it's when you don't have cash, it doesn't add to the project and you got to pay for the project. That's why you raise equity to pay for the project. Yeah, follow-up, Mr. Co-Chair. Representative Scott. Yeah, thank you, Co-Chair Foster, through the Chair to Mr. Pigott.

So in a nutshell, basically, your fear in the bill, current language and the alternative —volumetric tax equity option at Section 5 of the bill is municipalities are basically going to say, hey, we'll forego taxes for some sort of equity interest in the thing, but we're not going to pony up any capital, therefore it's harder for you to raise equity to be able to finance the project. Is that fair? Through the chair, Mr. Bagich. Mr. Co-chair, Mr. Representative, the absolute answer is yes, that is the problem.

Okay, follow-up, Mr. Co-chair. Representative Staff. Yep, thank you, Co-chair Foster. Through the chair, Mr. Bagich, or —any of the other wonderful folks.

So do you know what these municipalities are actually asking you for? Mr. Begich. Thank you, Mr. Co-Chairman, Representative. First is the one big priority that we hear from especially the impacted, what I call construction impacted communities, is some sort of offset. As you know, the current law that has jurisdiction over this right now, because AGDC is part of the project, there is no requirement to pay to pay any dollars for construction during construction.

That has been their biggest issue that's come to us. We have that in the bill. We worked with the House Resource Committee to put a number in there. They actually raised the number, but we understand the mechanism. The second thing is they want— depends on who you talk to.

Denali has no property taxes right now, so they're very happy with however the approach is. One of the big questions that comes up is, as you know, in the original bill, not in the House resource bill, we had a ramp-up period of 10 years and a billion— 1 BCF before you start paying the tax. They were concerned that what happens if the pipeline only gets built and then you never build the export facility, therefore will they ever receive a tax dollar. We've recognized that, the House bill has recognized that. We still have a few issues with the ramp-up issue.

But generally, that was one of those big issues. The last piece is we have one borough that's very interested in equity, and you just hit on that question. So they varied a little bit. And then another community is, again, concerned about the long-term impact and wants to make sure the AVT— all 4 of the boroughs have, without question, have no issue with the volumetric tax. One has a concern based on what they believe is the revenue stream they're looking for, but most of them are pretty comfortable with the AVT.

I have a follow-up, Mr. Kocher. Representative Smith. In terms of valuation to the project, which pieces of this puzzle— I obviously, I think the pipeline itself is probably not that valuable because it's the transportation corridor, but compared to the gas treatment plant or the LNG export facility. What is the more valuable piece of the project? Through the Chair.

Mr. Bakich. Mr. Co-Chair, Representative, I'll answer it in a more broader— I'll ask Adam to maybe categorize those as highest, best. But the pipeline is actually, even though it may have a lower price in one of the pieces, is the most valuable. Because if you don't do the pipe, you can never do the rest.

And you have to de-risk the project, meaning once people see that pipe happening, pipeline, then they recognize that it is a real project. And the other two pieces, the export and treatment plant, become easier to deal with. They may be more expensive. I'll leave that to Adam. And I believe one is definitely.

But the pipe is the link. Without the pipe, nothing happens. Yeah. Let me rephrase that. Co-chair.

Representative Zapp. Yeah. Through the chair to Mr. Biggis. Yeah, obviously I know that you can't have the two pieces of the pipeline. What I'm saying is like if we're talking about equity a stake in an ownership interest in an asset or a payment in lieu of a future tax burden, then obviously not all things are created equal, right?

So the gas treatment plant or the export facility has more inherent value, therefore you should expect different type of structure if you allow this in the bill through the chair. Mr. Bigich. Mr. Co-chair and Representative, yes, I'll leave that to Adam, but to kind of prioritize those, I want to leave that as the project developer, not the person from the state. Mr. Prestidge.

This is Adam Prestidge Glen Farnon. What I want to— what I want to point out is that each of these three components of the project, even though they are independently financeable and can stand up as their own independent financial model, they are each parts of an infrastructure project that earns an infrastructure rate of return. And so when I am looking across the project and when we are modeling the entire project, We are basically trying to achieve a project that has some uniformity and some consistency across all the projects. There is a pretty well-understood range, and Gaffney Klein has been in front of this committee and has been in front of the House, and DOR has projections as well of what an equity return rate is typical for a project like this. And each of the subprojects, each of the elements of the subprojects are within similar range of kind of— profitability, if you will.

If I may, I just want to back up to one question about what the boroughs have been looking for. I want to point out that also there has been a great dialogue with the Interior delegation because we know that the inclusion of Fairbanks Spur Line into the design of the project was an important element of the project, and that is something that we as a developer have been very supportive of. We think it has been been the outcome of a great dialogue. Mr. Kocher. Mr.

Bagich. To add in more definitive, I think this will get to— based on Department of Revenue, they've estimated when you break the project up into 3, pipeline $14 billion, treatment $11 billion, and then export $21 billion. Now that's based on Department of Revenue's— Escalation. Yeah, and then their proposal, or their analysis. Does that—.

One last follow-up, maybe on that point. Mr. Richards, did you have a comment? No, thank you. I was concurring with Mr.

Bigich. Okay. Representative Stab, regarding gas treatment valuation, are you including potential of the, uh, the, uh, H.R. 1 Changes, so one big beautiful bill regarding, uh, your enhanced oil credits, 45Q. Adam.

Representative Sepp, through the chair, that is a part of the consideration. That is part of consideration, although it is not a guarantee how that is going to be achieved. It is still part of the discussions with the other partners and the producers on the project. For the record, that was Representative— Mr. Representative Stepp. Yeah, I'll just— last one here, then I'll get to revenue if we can, let everybody else go through the chair, Paul.

Yeah, so no, what I mean by that on the valuation is I'm not talking about the, like, the cost-based thing. I'm saying the gas treatment plant, because of those kind of greater federal tax structure implications, adds on it like an additional layer of value, right? So obviously I don't see that kind of in the export facility. That's just a cost, and basically project economics, but the gas treatment plant itself has a unique value to the project as opposed to other aspects don't have. Through the Chair.

Mr. Prestidge. Representative Sapp, through the Chair. That's certainly something that we recognize could be a benefit to the value of the gas treatment facility. Many things are still being finalized in negotiations, so I can't make a commitment one way or the other at this point. Yeah, makes sense.

Thanks. Okay. Line. I've got Representative Galvin, Bynum, and Josephson. Representative Galvin.

Thank you, Co-Chair Foster. Through the chair, looking at this slide, we're seeing comparisons to other states and a couple from other countries. And I have been presented with this concept as a world-class once in a generation project, which I think likely.

But I'm not sure that that's what I'm seeing up here. I think more of Norway or Qatar. And so I wondered if you have any comparative numbers for us, if you know of them. And top of your head is fine with regard to this sort of text. Consideration.

Mr. Prestidge. Representative Galvin, through the chair, if what you are asking for is to hear numbers or be presented numbers on comparisons to other projects, that is something that we would need to come back to the committee on. I don't have that in front of me right now. Okay, thank you. I would appreciate that because this is a little bit on a different order, if you will.

Than these that we're looking at on this slide. I have a follow-up, if I may. Representative Galvin. Great. And I also wanted to comment around Denali, and there are many other areas that don't have property taxes.

I would like for us to also remember that doesn't mean that they don't have state services like state troopers, certainly the Department of Transportation. Ensures that those roads are still in one piece. And so there will be, you know, consideration that the state is, is upkeeping things for the workers as this project proceeds. And I just want to be mindful of that regardless of whether Denali is, is on board with zero. I think that the state, you know, of course, is going to be still pitching in something.

And then my last question, if I may, and I hope it's somewhere in one of these presentations. It sounds like there's many and that you have already prepared many for other committees. And that is around workforce development and preparation. And I'm guessing this is right up your alley, but I'm excited to help learn more about that and also learn whether you either would like to partner and, you know, what we do in healthcare, for example, and even in education, many other places when they want to fill holes, they partner and they try to make sure that Alaskans are getting the education that they need in order to get into these great jobs. So do you have any comments around that area?

And if you prefer to give me another presentation later, I'm happy to defer this question. I just wanted to put that out there. Mr. Prestidge. [SPEAKING NATIVE LANGUAGE] Through the chair, First, if you allow, I want to suggest on your question about comparisons with other projects, that also might be a question that the legislative— legislature's consultant, Gaffney Klein, might be very well positioned to answer. So I just want to suggest that possibility.

On workforce development, happy to come back and provide a little bit more details about how we intend to do that, but I can tell you that we are making a lot of efforts to have many, many community outreach meetings, engagements, to work with the university, with the municipalities, to be as engaged and as aligned in developing the workforce as possible. Frankly, it is— it's in our best interest to do so. This is a labor-intensive project, and so the more that we can do to help the community be ready for this project and have a workforce that can contribute it, Quite frankly, that's in the project's interest, and so we are endeavoring to do that. On that point, Mr. Bagich. Mr. Co-chair again, Mark Bagich.

Representative, we'll also— I know you mentioned Norway, Qatar, but we'll also make Canada because that's our competition. So we'll expand on what they're doing. You can use it or not as a comparison, but we'll expand a little bit on what that all means because they are one of our main competition. Follow-up? Follow-up?

Thank you. Especially if you could also help us to appreciate the order of the project. The magnitude. The magnitude of it. If it's something similar or not.

Either way, it would be great to know that. I do understand it makes sense that they would be competition in terms of the market. Absolutely. Thank you. And then I understand that Gaffney Klein is online.

Is it okay to ask them a question? They are not online. We will have them at a presentation in the future. Great. Thank you.

And I just want to double-check they're not online, correct? Okay. So with that, no more questions? Okay. Next up I have Representative Bynum.

Yes, thank you, Co-Chair Foster. Without getting too bogged down in this slide, when I look at it off the top of my head, I think, wow, that's a pretty good spectrum of information there, but when I look specifically when Alaska, we're already, we're putting a 9.4% state income tax on that. And I'm just wanting to know, like, what is the expectation that corporations are going to be the ones that are going to be actually paying taxes? Because I know all the entities involved with this right now aren't or don't qualify for the corporate income tax. So I'm assuming there'll be partners coming in, buying investment into this.

That may be subject to that, but can you speak to that at all, or if that's something that you considered? Mr. Prestidge? Representative Bynum, through the Chair, certainly something we consider, and you're right, there will be investors who end up owning large portions of the project as they come in as the equity, and each of them is going to have a slightly different tax arrangement that they've set up, and so I think that we have to be determined on a case-by-case basis as we progress further into the financing. Okay. Representative Bynum.

Thank you, Co-Chair Foster. The reason I bring it up is because we are putting it up on there on the slide. It is an informative tool. But if the companies participating aren't going to be C corporations that are paying a share of the 9— or paying that 9.4% tax, then obviously it is problematic. Including it.

The other item is that, that we haven't talked about at all, and maybe it's been mentioned, but is there included in any of your modeling the implementation of the new tax law under the One Big Beautiful Bill and the ability to write off basically this asset right up front and instead of having to wait on that you know, depreciation factor? Because that's a massive issue. I mean, not a massive issue. It's a massive benefit under the current tax code. So I'm just wondering if that was evaluated and what kind of benefit we're going to see from that.

[SPEAKING SPANISH] To the chair, that's something that we've looked at. I'm not sure it is applicable to this project, but it's something we'd be willing to discuss with you a little bit more separately if that would be okay. Okay. And for the record, that was Mr. Prestidge. Representative Bynum.

Thank you, Co-Chair Foster, through the chair. The reason I brought it up is because we are putting on here 21% federal income tax. That might be in the case where everything is— a project is long in production and making revenue, but we are under new construction here, and I know that there are many federal tax credits which will apply. I'm certain they will under the new law, and it may change the complete financing of the project. So if it hasn't been considered, it would be interesting to know what those impacts would be.

Mr. Begich. [FOREIGN LANGUAGE] One piece I want to say, in our projections, again, Department of Revenue can go into more detail, because the upstream sale of a product, gas, which is not currently being revenue produced for the state, It's estimated to be of the $22+ billion over 30 years, $1.8 billion is upstream corporate taxes, just to add. So we understand your point. What was done with this slide is each deal is a little different in every state and every— but kind of what their maximums are, what their rates are.

But again, from this project, $1.8 billion is corporate taxes for upstream sale of product. [Speaker:MR. BOLL] Thank you. Okay. Next up in line, I've got Representative Josephson, Hannon, and Galvin. Representative Josephson, of course, is in conference committee right now.

So we'll go to Representative Hannon. Thank you. Thank you, Chair Foster. Mr. Prestidge, in response to Representative Galvin's questions about workforce, have you signed any project labor agreements for any of the trades or unions in Alaska with regard to the project? Mr. Prestidge.

Representative Galvin, through the chair, not yet. Our relationships with the labor unions, both the national unions and the local building trade councils, are very important to us, and those are something— those are part of active discussions. Representative Hammond. Follow-up. And I guess, Mr. Prestidge, I'm curious as to whether you would anticipate having them before you went to FID or those are things that you are putting off until after FID?

Mr. Prestidge. Representative Hannon, through the Chair, those are elements of the project that we would certainly anticipate having solved and finalized well before FID of the project. Mr. Begich. Mr. Chairman, the issue I want to make sure is clear from the state perspective, Glenfarn is under an agreement that was inherited under 2018 that they have to do an MOU, which has already been signed by unions back in 2018 or approximately 2018, that you have to have a project labor agreement.

In this resources bill that's been moved to you, there's a requirement also embedded into that piece of legislation. Representative Hannon. Thank you, Chair Foster. So, Mr. Begich, what's your perception of when that timeline for those to be settled is. They are, again, speaking on behalf of the state, Madam— Mr. Chairman, they are in aggressive negotiations on this.

I believe they will get the settlement as described by Adam. And that was Mr. Begich. And Representative Hannon, follow-up?

I guess I'm just confused as to what that— yeah. Mr. Begich. Mr. Co-chair, before the project starts, there will probably be PLA agreements resolved and signed. Does that—.

Okay. Next question, Representative Josephson. Yes. Thank you, Mr. Chair.

Senator Begich, You talked about how the municipalities are broadly satisfied with the AVT structure. Yes. And I hear that all around. But in the Senate version, they— and I don't know if this was something the Senate recommended without their input, but I suspect they didn't object to it. They have significant impact aid during construction.

In their version of the bill. Is that right, Mr. Begich? Mr. Co-chair, Representative, the answer is yes, and I can give you why the Senate put that in. We don't support that.

I'm speaking from the state perspective. It's an aggressive number. It will add $800+ million to the construction costs, which will mean the ratepayers of Alaska will pay that across the rail belt area. But put that aside for a second. They utilize a document.

I'll let Frank talk a little more about it, but a document from the 20— pre-2018 project back in the day when Exxon— whole different economic dynamics, whole different risk structure, whole different cost structure. And oh, by the way, it was never signed. Everyone talked about it, and then the project also never happened. So I can give you big numbers, but if it doesn't happen, it's irrelevant. But I understand their position.

They put that in there. We have said on the record that that is way overboard. It's not what the communities were looking for. Now, if you ask, as a former mayor, if you told me you're going to have $800 million, I'm for it. You know, even though maybe my need is $10 million.

I mean, why would I say no to that if the legislature is going to give me money? So I understand that. And frankly, I said on the record to the Senate, that did not help our negotiations with the communities. They were not asking for that. That was put in based on an old study and an old report and a project that never happened.

Okay. And just to follow up, if I might, on the question from Rep. Stepp about 45Q tax credits, I think those were either an IJA or IRA, a Biden-era measure. And are they expiring soon? Is that the concern? That's a question from Representative Josephson to Mr. Begich.

I'll answer part of it because I was working for AGDC during that time and helped on that effort in D.C., working through Brownstein Hyatt. It's the 45Q. They're not on the list to expire, but there's a volume in appropriations that has to go along with it to make sure the credits are available. But it is available for this project. Mr. Richards.

Thank you. For the record, Frank Richards. Again, as Mark just said, they are available, but it requires that there the projects be under construction here by, I believe, 2032. So there is a timeframe, but that was again passed in a bipartisan manner by Congress, and it's actually an extension of a previous bill. So we hope that they find value in this effort and continue it beyond this.

Thank you. Okay. Next question is to Representative Galvin. Thank you. Appreciate it.

Through the co-chair Foster, I have a couple of sets of questions. The first one is more, again, I'm drilling into these workers that I'm so excited to get to work. You had mentioned that 12,000 total, that's including peripheral workers and other, I guess we'll call it the multiplier effect of such a big project. About 7,000, I believe, would be for the project alone. Is that correct?

Mr. Prestidge? Representative McGowan, through the chair, to clarify, 12,000 total direct jobs created, 7,000 for the pipeline itself, 5,000 for the other two elements of the project, the gas treatment and the LNG facility. Thank you. And for the 7,000, I presume that would be the first piece of this in Phase 1, if you will. On the 7,000 jobs, can you give me a ballpark average wage?

Mr. Prestidge? Representative Galvin, through the Chair, I can't give one ballpark average wage. Obviously there are many different roles and responsibilities to be performed. Obviously that is a key component of any project labor agreement as well. So that's something that will be primarily dealt with there.

Mr. Richards, in your research of doing this for former projects, would you have any input on this? Mr. Richards? Thank you. Through the Chair, Representative Galvin, Frank Richards. So when you look at this, the cost of this project, labor is a major component of it.

And as such, as Adam described, labor rates are being negotiated right now in discussions for the project labor agreement. So we can't necessarily give a specific number, but again, the range of skill sets are going to be necessary for this project, whether it be from the baseline welders to the operators to the laborers to the fitters to the painters to the construction people. There's a broad range. And so if you look at— Again, even on the prevailing wage scales that are in the Department of Labor pamphlet 600, you will see that there is a range scale of what those entities, those individual labor components are being paid currently on public works projects. May I please?

Senator Galvin. Thank you. Let me try this a different way. So for those who are working on the slope presently, so they are in the industry. Might be a little different because some are welders, some are not.

Some might be digging or painting and doing other things. My understanding is they are making anywhere between $150,000 and $300,000. That sound about right to you? Mr. Richards?

Through the chair, Representative Galvin, that sounds about right. Again, not just on a straight 40-hour, but overtime with rotation schedules. Thank you. And I bring this up, co-chair, because When we are looking at this, we were noticing that other states and other projects, they do not have the property burden that we do. It is true.

We have a very high property burden in our state. We also don't have any income tax. And I think it is important that our— this committee considers this understanding so that we know you know, how it is these other states are managing, right? And likely we will have half of the workers, more or less, from out of state.

And those workers who are out of state, we are one of two states in the nation that does not have income tax or any broad-based revenue like that. And so I guess I bring that up because it's our problem here at in this committee, it may not be a problem for Glenfarm necessarily because they, you know, they're just looking after their bottom line, and I appreciate that. And we're also trying to look after our bottom line, and we have a puzzle to put together. And unfortunately, part of the puzzle is that we are— we can't compare with these other states because We don't collect anywhere near the revenue that they do through income. So I just want to make sure that we put that out there on the record.

It's something that's been a bugaboo of mine for a little bit. I think sometimes for— if we consider things like our education and other pieces, there may need to be a shared investment if possible. That's not to say that the industry shouldn't also share that investment. Because that's also important. And I appreciate that Representative Hannon was trying to pull more to understand what's happening in Maryland.

But I do want to add that to our conversation because if we're looking at 150,000 to 300,000, for example, for 700,000 workers, just that first part, just that first part, if we had a 4% tax, let's say, and remember, back home they're paying taxes. Likely they're paying more than 4% ish. Let's say we added a 4% tax. We'd be looking at $59 million more in revenue. So I just wanted to bring that up as another point of conversation for us because it gets tricky when we're thinking about our problem.

And our problem is making sure that we keep our state whole. And how we do that. And when I hear you say, oh, I represent the state and the state says this, well, we as a legislature also are concerned about the state and we need to pull it together so that we can make sure to have our state services. So the next question I have, if I may, Representative Foster. Representative Gelvin.

Thank you. It's about FID and Phase 1 and Phase 2. So I've heard that there are 3 phases in all. FID, if we can get this together and push it out of the legislature, you may be able to get to FID late summer, early fall. Will FID be for Phase 1 or Phase 1 and 2?

What are we looking at for that? Mr. Prestidge? Representative Galvin, through the chair, this is Adam Prestidge. Yes, when we're talking about this first FID, it is for the Phase 1 pipeline only.

The second FID would be Phase 2, which would have both the LNG export facility and the gas treatment facility at the same time. Okay, thank you. Okay, a couple things here. We're going to take a 1-minute at ease. We'll have Glen Farn and Mr. Richards, Mr. Prestidge, Mr. Begich, I'm sure, here again at the dais for questions, but I think we've gotten a lot of the questions out of the way right at this meeting.

And what my intent is, is to take an at ease— oh, also I'd like to recognize we've had with us Representative Dibert as well as Representative Underwood joining us here this afternoon. So thank you for joining us. Also came up earlier, Gaffney Klein. We do have them presenting tomorrow afternoon. So if folks want to have their questions ready for Daphne Klein tomorrow.

They'll be here. What I'd like to do is take a 1-minute break, and we have about 45 minutes left before we're going to hopefully end the day. And we'll have Mr. Zullo up with House Resources, and then after that, Department of Revenue. So with that, we're going to take an at ease, and thank you, gentlemen, for being here. Thank you.

Yeah, okay, House Finance back on record at 4:19 PM on Tuesday, May 12th, 2026, and, um, we are currently working our way through House Bill 381, which is the gas line bill, and next up we have Mr. Calvin Zulo. If you if you could please come up. And he is the staff to the House Resources Committee, and he'll be walking us through a presentation on what changes were made from the governor's version of this bill to the House Resources version. So with that, please put yourself on the record. Thanks for being here.

Thank you, Co-Chair Foster. For the record, Calvin Zulo, staff to Representative Freer, the House Resources Committee, um, and I'll proceed with my slides.

Um, up first I have some definitions. Uh, there are some acronyms that I use in this presentation, um, so this is here for your ease of reference. Uh, I'd like to start by discussing some of the committee work on the Alaska LNG project that occurred before the committee received H81. Uh, there were two 2 hearings in particular that I'd like to draw your attention to. We had the first of several hearings with Gaffney Klein on January 21st, the Committee's first hearing this session.

And in that meeting, we learned that property tax modification was likely necessary for project financing. And then the Committee also heard on February 18th from impacted borough mayors. At that hearing was the North Slope Borough, the Fairbanks North Star Borough, the Denali Borough, and the Kenai Peninsula Borough. And at that hearing, borough mayors expressed a willingness to work to achieve financing, but that there was a risk of burdening local taxpayers with heavily subsidizing the project if community benefits and impacts were not considered carefully.

The committee received HB 381 version A in late March. I believe the date was March 20th. And in early hearings on the bill, the Department of Revenue described a 6-cent per 1,000 cubic feet alternative volumetric tax as roughly a replacement for about 2 mils of state property tax, assuming those cost estimates that Glen Farn mentioned earlier. There were no considerations for community revenues in Version A. All of the AVT revenue in Version A went to the unrestricted general fund.

And there were also broad exemptions on municipal sales and use taxes. So the committee set out to craft a reasonable and politically durable proposal that could achieve community buy-in and bring the project developer and the communities close to alignment.

I'll discuss now the AVT adjustments that the committee made between version A and version T. As mentioned earlier, version A of HB 381 applied a 6 cents per 1,000 cubic feet of throughput. That's a volumetric tax on gas moving through the entire project. There was a ramp-up period and there would be no tax applied for 10 years or until there was 1 billion cubic feet per day average throughput achieved by the project, and that was not likely to be achieved until exports began. The House Resources Committee raised that AVT from 6 cents to 15 cents, anticipating inflation speculation on the costs. The co-chairs felt that 15 cents per 1,000 cubic feet was closer to replacement for 2 mils of property tax, but the co-chairs do acknowledge that this is very hard to establish without public feed information on the project or detailed cost estimates.

The committee removed the ramp-up period, so this alternative volumetric tax would be applied at first gas. And I have a note here that says that this preserves the existing abatement of property tax on AK LNG during project construction, but I have a note on that later.

Um, the House Resources Committee added a funding formula for AVT so that the revenues of that, uh, alternative volumetric tax would be distributed, um, not just to the state of Alaska but also to, um, all of the communities in the state of Alaska. So 50% of that alternative volumetric tax revenue would be distributed proportionally to the percentage of pipeline in a tax jurisdiction, to the communities along the pipeline corridor and to the state in the unrestricted— excuse me, the unorganized borough. And then 50% of the AVT revenue would be distributed based on the community assistance formula to all communities in the state by population.

Question, Representative Galvin. Thank you. On slide 3, you mentioned the different boroughs and I couldn't write fast enough. It was North Slope, Denali. Could you repeat those?

Through the chair, Representative Galvin, again for the record, Calvin Zulo staff to Representative Freer. Yes, it was the North Slope Borough, the Denali Borough, the Fairbanks North Star Borough, and then the Kenai Peninsula Borough. Kenai. And that is then back to to where the slide is right now, you're on the 50% for the state and 50% for the boroughs affected. Is that what you're referring to?

Mr. Zullo? If I may.

So the Denali borough would receive AVT revenue proportional to miles of pipeline in their tax jurisdiction, but they don't actually have a property tax in current law. So they would have a net benefit, but yes. Different, okay. But it is those 4 areas that you've outlined? And the Matanuska-Susitna borough.

And SUE? Yeah. Okay. Okay, and nothing goes through Anchorage. Okay, just wanted to double-check all that.

Thank you. Okay, that was Representative Galvin. Mr. Zullo?

[Speaker:COMMISSIONER_MILLER] The Fairbanks North Star Borough has limited exposure to the property tax reduction on the project. There are about 2 miles of pipeline that would cross through their borough boundaries. And the committee heard at that February 18th meeting that the policy priority for Fairbanks is guaranteeing access to the project through a lateral spur line. So House Bill 381 Version T requires a 4-mile a formal commitment between the project developer and the state of Alaska that a spur line will begin construction before exports begin in Phase 2 of the project. Representative Galvin, thank you.

Um, and on this slide, uh, if you will please, who's paying for that spur line? Mr. Zillow, uh, through the chair, Representative Galvin, for the record, Calvin Zillow, staff director here. Uh, that's not specified in this bill how that, how that spur line —financed. Okay, thank you.

Please proceed. Um, uh, and then, uh, that commitment is required for the tax benefits of the legislation to be implemented. Um, this language was the result of negotiations between Representative Diepert's office, the Fairbanks North Star Borough, and the project developer. Um, and then the Resources Committee heard during the amendments last week that this language would function as a contractual agreement between the project developer and the Commissioner of Revenue. So it would be further formalized.

Representative Josephson. Thank you, Mr. Chair. Mr. Zullo, the suspension of the middle of your slide 7, tax benefits project are not implemented, is that just tax benefits to the Fairbanks-North Star borough, or is the whole shoot-and-match affected by the failure to get this spur financed and completed? So the Fairbanks spur line, the commitment to make one— and again, it's the commitment to make one— is a requirement of Section 21 of the bill, which has— after that commitment is made, that puts most of the bill into effect the day after.

So after that agreement is finalized between the project developer and the Commissioner of Revenue, the day after, there's some conditional effect language in there that would trigger most of the portions of the bill. That's the AVT, that's—. It's really the bulk of the bill. Okay, that was Mr. Zullo. Any further questions?

Seeing none, Representative Bynum. Thank you, Co-Chair Foster. Through the chair, thank you for giving us this quick update. Can you remind us what the— how do we deal with the portions of the line that were going through unorganized areas? I know that you said there was this 50-50% or 50% distribution between the state and the impacted boroughs or areas where the line went.

So I'm just wondering how we dealt with the unorganized areas of the state that this might impact? [Speaker:COMMISSIONER_HART] Mr. Zulu. [Speaker:MR_ZULU] So the percentage of the pipeline proportional to the whole pipeline that is in the unorganized borough, that half of the AVT revenue, that portion of that 50% would go to the state of Alaska. Thank you. [Speaker:COMMISSIONER_HART] Okay.

Please proceed with the presentation.

Moving on to the gas treatment plant and the LNG facility, the gas treatment plant on the North Slope, or the GTP, and the LNG facility in the Kenai Peninsula Borough. This bill treats those two components of the project differently. The AVT is not applied to them, and they are placed under municipal property taxes so that the municipal property property tax rate would apply. The Committee heard from both the Kenai Peninsula Borough and the North Slope Borough in February that there was strong interest in negotiating a tax benefit to the project and seeing the project succeed, but that they both had unique and specific concerns that required further negotiation.

And Glenn Farnes' initial presentation to both this Committee and the House Resources Committee mentioned that payment in lieu of tax agreements and sort of local agreements like this for abated or reduced taxes are common industry practice.

So, to facilitate direct negotiations between the project developer and the respective boroughs on PILT agreements, the GTP and the LNG facility were excluded from the AVT. Uh, there's a section of this bill that excludes the GTP from the oil and gas property stack tax statute. The LNG facility is already placed under AS 2945 municipal property taxes under current law. Um, and then we did include a specific exemption in this legislation to allow the boroughs to modify their mill rates on the project components individually without modifying their broader mill rates. Okay.

And I've got 2 questions. Representative Galvin. Thank you. Through the chair, this slide 8, it feels like we're moving now into a different part of the phases, if you will. This feels like it might be phase 2.

Was there any conversation among your— the committee members to bifurcate this and just make sure we get down the road of Phase 1 immediately? Was there some discussion around that in the committee? Mr. Zillow. Through the chair, Representative Galvin, for the record, Calvin Zillow, staff to Representative Freer. I understand that there would be some gas treatment required in Phase 1.

That there would have to be some carbon removed from the gas as it moves down to be used by utilities. I believe that there's one field on the North Slope that has utility-grade gas just straight out of the ground, but that several other fields don't have that utility-grade gas. So there— I understand that there would be some gas treatment facility that exists on the North Slope during Phase 1. And if I may follow up— and the LNG facility, I assume that— again, you'd think I'd know more, but I don't. I haven't been tracking your committee.

Is the LNG facility specifically to export, or is that also for usage in-state? And if it's export, I assume that would be Phase 2 or 3, but I I'm not sure. Mr. Zullo, through the chair, Representative Galvin, I believe the language in the bill is inclusive of an import and an export facility. Okay.

Affiliated with the AK LNG project. So it's— it would not— I don't believe that the language in the bill would capture the conversion of the Kenai export facility that is ongoing. Thank you. Representative Josephson. Yes, we go back one slide.

I'm just curious about— this is very helpful, Mr. Zullo. First bullet point toward the bottom, you write legislature was not the appropriate venue, co-chairs believe, for negotiations. This is back before the bill was dropped. And then you write that when you first heard from Glen Thorne, they indicated that negotiating a PILT was something that industry might do, but in the final analysis— well, you'll get to it. I know that there are separate provisions in this version, version T, I guess it is, for Kenai and the North Slope.

Am I right about that? That's true. But would you call them PILTs, or are they something other than PILTs. Mr. Zula. Through the chair, co-chair Josephson, I don't believe that there are actual PILTs in this bill.

It's a little bit confusing. A payment in lieu of tax is in an agreement that you typically negotiate, like the Northwest Arctic Borough has one with the operator of the Red Dog Mine. It's usually negotiated some sort of community benefit or agreement in exchange for a significant reduction in property tax.

This legislation is designed to enable the negotiation of PILTs between the North Slope Borough and the Kenai Peninsula Borough and the project developer.

And I mean, there are some components of the alternative volumetric tax and the community benefits, uh, in the bill that look like a PILT, but I, I wouldn't necessarily call them a PILT. We are— the legislature would be imposing that on those communities. And I mean, my understanding of every other borough besides the North Slope and the Kenai Peninsula Borough and with the considerations for Fairbanks in this legislation, that they're, they're okay with where we are. We're at with this bill. But I also don't want to speak for those communities.

All right. Thank you. Okay. Representative Staff. Yeah.

Thank you, Coach Foster. Through the chair, just real quick one here. I just want to make sure that we didn't put anything in Title 29 that would be applicable to an unconverted import facility. So we don't want to exempt them from the tax structure in the event all they do is build an import facility. The way I read the bill is a bunch of conditional effects in there regarding the project definition.

So I don't think that. I'm just asking you through the chair, from your perspective.

Through the chair, Representative Stapp, for the record, Calvin Zulo staff to Representative Freer. As I understand this bill, I don't believe that it would, but I might defer I would defer that question to Legislative Legal if they are on the line. We do have Ms. Emily Nowman online. Ms. Nowman, if you could put yourself on the record.

For the record, this is Emily Nowman, Legislative Legal Services, and I apologize, I missed the question. Representative Staub. Yeah, I think Co-Chair Foster, through the Chair to Ms. Nowman, I just wanted to make sure that because we are transferring this from oil and gas production tax section to the municipal property tax section regarding the import or the export facility, facility that nothing in the, in the bill would allow you to keep the same type of tax structure on an unconverted import facility. Through the chair.

Um, through the chair to Representative Stepp, I am unsure about the answer to that question. I would, um, I hate to ping-pong you around here, but I would suggest that DOR would probably be able to answer that question better than I could. Okay, follow-up, Co-Chair? Representative Staff? I think there's some drafting errors in the bill.

Can I go ahead and knock them out with Ms. Nelmen now, or would you like me to wait? That's fine. Representative Staff? Yeah, I think, Co-Chair Foster, to the Chair, to Ms. Nelmen, thank you for being here.

Okay, just quick questions since I got you here. On page 5, sections 9 and 10, I don't understand what's happening there. It's— you add one section, except as provided, then you delete that in section 10. It looks like a duplicate section. Can you help me here through the chair?

Yes, through the chair, to representative staff, I would not describe that as a drafting error. Actually, those sections have different effective dates. So what you're seeing there is the law being put into place with the AVT taking effect, and then with the AVT being repealed, we had to repeal the conforming— or we had to repeal the references to it later in time. So that's why there's 2 sections there amending the same section. Okay, follow-up, Mr. Co-Chair.

Representative Stout. Yeah, thank you for that clarification. I don't— I suppose the repealers are at the end. So the second question I have is there are 2 different references to 2 different statutes regarding the North Slope Gas Project. One is going to be at the Constitutional Education section.

That's going to be at the bottom of page 4. Defines Alaska liquefied natural gas project as AS 3125-2010. 3.90, Which is the historic statutory definition, but most of the bill creates a new section and it defines it differently. In, again, Section 5, the bill points to different statutes. So I'm curious why we have two different statutes in law that are defining a natural gas project in two different places.

Through the chair. Ms. Nelman. Through the chair to Representative Staff, yes, I would start by saying that we draft As we are directed, so to the extent that this statute refers specifically to the AK LNG project under 3125.390, I would say the reason for that is, is that this section is specific to a project developed by the Alaska Gas Line Development Corporation. The remainder of the bill you're talking about related to the ABT gives nearly the identical definition, if not the identical definition.

Off the top of my head, it's identical. To describe the application of the AVT itself. And I— although I can't speak for the sponsor or the House Resources Committee about the purpose of that, I would say— I would offer that it's reasonable to more broadly define the natural gas project for purposes of the AVT. And the reason for that is If I could step back, you know, I've been with the legislature drafting oil and gas bills now for 15 years. I've seen many variations of this project, and if I had to guess at the intent of that, it would be to add some durability to the AVT in the event that a future natural gas line project wasn't specifically tied to AGDC.

We could have a change in the corporation of the state that is in control of that project, or perhaps the AGDC isn't involved in the project at all anymore. We don't know what a project will look like in the future. A lot of legislators— legislatures in the past thought they knew what a project— what this project was going to look like, and it's morphed and changed over time. By not specifically mentioning or cross-referencing the definition in the AGD statutes for the definitions of the alternative volume tax, we're untying this tax detached from the specific AGDC project, and I believe the intent is to make that, like I said, more durable and sustainable in case the project evolves. I will say that it's also a policy choice.

If the legislature wants to tie the AVP back to AGDC, those references can be added back into this bill, and the bill can be specific to the AGDC project. Okay, fall— Mr. Kuchar. Representative Scott. Yep, thank you. Through the chair to So I appreciate your answers, and I know you have a vast experience and you're much smarter than I am, so I might be going to ask you a dumb question, but I know you will be able to answer it in a very intelligent way.

So that was kind of my thought too, but my question is, when I read Section 5 of the bill, at the very bottom of Section 5, it says associated with the natural gas project as defined in 4359-100, that's the definition section of the bill. When I read natural gas project, it means a project that includes collectively Prudhoe Bay gas transmission line, Port Thompson Unit gas transmission line, gas pipeline, gas treatment plant, liquefied natural gas plant, and marine terminal. And I thought to myself, couldn't I have a different project that doesn't actually ship gas to South Central that includes all those things? And be applicable in the bill, or am I wrong? Through the chair, Ms. Noeman.

Um, again, for the record, Emily Noeman, Legislative Services. To Representative Gap, I'm not sure I completely followed your question. I, I will say that the definitions in 4359-100 are identical to the definitions that appear in 3925, uh, 390, I believe it is. And so if there's a project that you're concerned fits in one of those project descriptions but not the other, I don't think that's true. And I'm not sure if that's helpful.

Maybe just a quick clarification.

I guess, you know, so again, when I read the Section 5 of the bill, it basically says the definitions in the section are defined— are associated with the natural gas project as defined in 4359.100. And when I read that definition of natural gas project, I mean, it is similar to the one that is in the existing statute, but it is different unless you are referencing gas pipeline in the language. And this section doesn't actually reference gas pipeline for definition. So I guess When I read it in Section 100, if I include the terminology of gas pipeline definition, it references South Central, right? And that's Section— on page 2, gas pipeline.

But that word, that definition is actually not referenced at all in Section 5. So that's really the question, right? Because I see that in the old—. Uh-uh-uh. Okay.

Again, for the record, Emily Nowlin, Legislative Legal Services, and I hope that I'm speaking with permission of the chair here.

I believe, and it's— I'm just looking through the statute through Section 5 very quickly, that the reason that you're not seeing gas pipeline in the specific section is because— in terms of the definition line— is because this section doesn't specifically refer to a gas pipeline. Pipeline. This alternate volumetric tax equity option is designed to capture, as I understand it, the sort of top and the bottom of the project— the gas treatment plant and carbon capture facility, or the liquefied natural gas plant. And this equity option is not available for the pipeline itself. Exactly.

And I don't know if that answers your question. Follow-up, Mr. Co-chair? Representative Stephenson? So no, that's exactly what I'm referencing. Interesting because now if I have the treatment plant, the gas from the slope, I build a marine terminal on the slope and I export it from the slope, do I not qualify for this change in statute?

Because that— all that statute covers is those three things. It doesn't geographically say where they need to be. And in theory, they could all be in one place. So that's why I asked about the two separate questions. To the statute through the chair.

Ms. Nauman.

I'm just looking back down. It's a lot of flipping back and forth, as I'm sure everyone is experiencing at this moment, to see where these various project sections are defined. But if you've looked at this, I believe you mean a gas treatment plant under the definition is defined as a facility to receive natural gas from Prudhoe Bay Check. Or Point Thompson. Check.

You're right, it's not specific to where that has to be. I would say that these definitions were pulled again from 3125, so that section is also not specific. So if, to the extent that you're concerned about this, I would say this is a feature of existing law as I understand it. All right, thanks. Mr. Zullo, I think you're almost done with the presentation.

Thank you, Co-Chair Foster. I did have a note on this earlier in the presentation.

I said that this preserves the existing abatement of property tax on AK LNG project during construction.

With the GTP and the LNG facility Um, there is actually a Section 13 that would take effect, um, when, uh, the, uh, agreement— the conditional effect, um, language is agreed to in Section, uh, 21. Um, it would narrow the construction, uh, property tax exemption to apply only to taxable projects— taxable property subject to the volumetric tax imposed under under 4359.020. Um, just wanted to flag that, uh, as a feature of the bill. I hadn't realized that when I wrote this. Um, there is other conditional effect language, uh, in Section 21.

So in addition to committing to construct a spur line before Phase 2, the project developer must also commit to the State of Alaska that they will create a $40 million community impact fund to pay for the impacts of construction only of the project, not operations. 25% Of a community's actual construction impacts may be covered up front. And then this language was proposed by the project developer as a $30 million fund, but Co-Chair Fuller amended that to $40 million conceptually as we adopted this amendment. And then finally, the project developer must also commit to negotiate a project labor agreement with qualified Alaskan labor. This was based on language that was included in the Alaska Gas Line Inducement Act.

And then the project developer, as you heard earlier today, has discussed that negotiations are ongoing.

The Resources Committee considered 29 amendments to HB 381 in committee. Those are all available on BASIS. The committee adopted 11 amendments and 5 of those amendments were amended conceptually as they were adopted. Some other notable amendments included establishing a funding stream from the state AKLNG revenues to a constitutional educational fund. This is of course conditional on the creation of a constitutional education fund.

And then 20% of AKLNG royalty revenue, that's royalty revenue on the gas of the natural gas that's exported is directed to the Renewable Energy Grant Fund and away from the Affordable Energy Fund, which was created by SB 138 in 2014 and has not been functional.

And that completes my presentation. Co-chair Foster, I'm available for questions. Okay. I think we'll go to questions for Mr. Zulo, and I'm going to mix up the schedule a little bit. I think maybe when we do come back to tomorrow's meeting, um, maybe it'd be nice if we could just have Mr. Prestidge, Mr. Bagich, Mr. Richards maybe just kind of walk us through what parts of the changes— we, we kind of hit on this at one of our other meetings— what parts that they found agreeable and which parts they had concerns over.

And I would just like to maybe try to highlight that a little bit more and allow the committee to ask questions. And so before we go into the DOR presentation tomorrow, we will maybe do that first, just at least give the committee an opportunity to do that. So with that, do we have any questions for Mr. Zullo with regard to his presentation today? Representative Hannon. Thank you, Co-Chair Foster.

Mr. Zullo, I'm just I was just looking at your slide 11 and that section on the conditional language for the education fund, and there are 3 or 4 points under— I guess we are going to call it a waterfall, a distribution of revenue. So first is a payment to the permanent fund, which has a statutory citation so we can calculate it. Payments to municipalities— so I'm on page 4, up in the top lines, 2, 3, 4, 5, 6. The second is payments to municipalities, reserves, and communities in the unorganized borough, and then the statute. Is there a percentage or a cap on that before it gets to the third, which is 20% to the renewable energy fund?

Mr. Zullo. Through the chair, Representative Hannon, for the record, Calvin Zullo, staff to Representative Freer, that refers to payments under 4359.040, which I believe is the AVT revenue that is reserved for municipalities. Representative Hannan. Thank you, Chair Foster. Mr. Zuluch, so could you walk me out for that?

Is that a— because you are much more familiar with the bill than I am and you sat through all the hearings and I fast-forwarded forwarded through many of them. So is that limited in scope, or is it to their total expenses, or— what I'm trying to figure out is when we get, you know, the renewable energy is specified as a percentage, but could it be down to it's only got $1 million and that's 20% of $1 million, or is there a limit on the volumetric tax to the municipalities and communities in the Mr. Zulu. I don't believe there is a limit to the volumetric tax. So of the 50% of the AVT revenue that is proportional by pipeline, some of that would be state revenue.

The 50% going to the community assistance fund would, would be protected. And then the, of the 50% that's proportional, the revenue that would go to municipalities as this language is envisioned, would continue to go to municipalities. But I don't have— I don't think there's like a limit on the actual revenue to municipalities under that. Thank you. Okay.

Representative Josephson. Yes, slide 9. Mr. Zulu, could you explain the last sentence for me? I'm not— I'm not understanding what you're trying to convey there. Mr.

Zillow. Through the chair, uh, Co-chair Josephson, um, thank you. Uh, so as the bill was being amended, uh, last week, um, on Wednesday, uh, as the amendment was originally written, it just placed the gas treatment plant and the LNG facility in Alaska Alaska Statutes 2945, the municipal property taxes. There was not a specific exemption included to Alaska Statutes 2945 that allowed the North Slope Borough, say, to set a different mill rate on the gas treatment plant than they did on other taxable property under the municipal property tax statutes. And so the committee heard from Senator Bayich that this was a concern, and so Amendment 28 I believe G.36 was conceptually amended to include that exemption to 2945 so that the mill rate could be adjusted on those two components of the project.

Okay. Thank you. Further questions for Mr. Zullo? Okay. Seeing none, as I stated earlier, it would be great if we could just have Mr. Prestidge and folks come up maybe tomorrow if possible and just give us their thoughts on the new version of the bill.

And now that we've got a better idea of what happened from the first version to the second version, and then we'll go to the DOR presentation. We also have Gaffney Klein, so we'll have a full, full schedule for that. Let's see here, what else I also wanted to mention. I also noted earlier that we have the co-chair of House Resources here, Representative Freer, and also the other co-chair, Representative Dybert, is also here as well. And so let's see here.

We're going to go ahead and adjourn out for the day. But I just want to announce that our next meeting is scheduled for tomorrow at 9:00 AM. And at that meeting, we'll hear public testimony for both House Bill 258. That's a statewide bay and neuter program. And then we'll also have before us House Bill 260, that's construction project wages and liability.

So if there's nothing else to come for the committee, we'll be adjourned at 4:55 PM. Thank you.