Rep. Kevin McCabe: This is how you actually get a gasline built

By REP. KEVIN MCCABE

Alaska has talked about a large-diameter gas line and LNG project for decades. Every few years the conversation comes back, and every few years it runs into the same wall.

Even now, with Glenfarne deep into advancing this project, we are seeing legislative attempts at wholesale change. These projects are among the most expensive in the world, and if we treat them like ordinary taxable property, they do not get built.

That is the starting point for this bill. It does not try to force the old system to work. It replaces it with something simpler, more predictable, and tied to real performance.

Under current law, a project like this would be taxed based on assessed value. That means large property tax bills show up long before the project produces revenue. It creates a front-loaded cost structure that discourages investment and leads to ongoing disputes over what the asset is worth on paper. That approach may work for established infrastructure. It does not work for a project that takes years to build and even longer to reach full capacity.

This bill takes a different path. During construction and the early years of operation, there are no property taxes. That is not a giveaway. It is recognition that you cannot tax production that does not yet exist. The project is given time to be built, brought online, and ramped up.

There is also a clear endpoint. Once the line reaches full operating capacity, the tax holiday ends, and it ends for good. Even if volumes drop later, the project does not return to a tax-free status. This is a one-time runway, not a permanent exemption.

After that point, the system shifts. Instead of arguing over assessed value, the state and local governments collect based on what actually moves through the pipe. The rate begins at six cents per thousand cubic feet and increases modestly each year. It is straightforward and tied directly to real activity.

The difference is simple. The old system taxes what someone thinks the project is worth. This system taxes what it actually does.

That shift brings stability. Past fights over pipeline valuation have been costly and uncertain. Here, the numbers come from measured throughput. Operators report volumes on a regular schedule, payments follow those reports, and the process is transparent. It reduces guesswork and avoids the cycle of litigation.

This is not optional. Payments are required monthly. There are penalties and interest for failure to pay, and the state retains enforcement authority. The obligation is real.

Local communities are part of this in a clear and predictable way. They receive a share of the revenue based on where the infrastructure is located. That share is tied to the physical footprint of the project using the original construction cost. It is not negotiated. It is set in law and can be relied on.

At the same time, the bill protects the rest of the system. A project of this size can distort school funding formulas and local tax limits if treated like ordinary property. This prevents that. Schools continue to be funded under existing formulas, and municipalities cannot use the project to inflate their tax capacity.

There are limits. Smaller spur lines that connect communities do not receive this treatment. They remain under the traditional property tax system. The focus stays on making the mainline project viable.

There is also a firm deadline. If the project has not begun commercial operations by January 1, 2040, this framework disappears. That ties the policy to a real project that gets built and operates, not one that sits on paper.

At its core, this is a shift from taxing potential to taxing performance. It aligns state revenue with actual production, provides a stable stream for local communities, and removes a major barrier that has kept this project out of reach.

There will be those who call this a tax break. That is easy to say, but it misses the point. A project that never gets built pays nothing. A project that is built and operating provides long-term revenue, jobs, and opportunity for Alaska.

We can keep applying a system that has not worked, or we can adopt one that reflects the scale of what we are trying to do. This bill takes the second path. It replaces uncertainty with stability and speculation with measurable results. That is a better approach, and it gives Alaska a real chance to move this project forward.

Rep. Kevin McCabe is an Alaska legislator representing District 30, Big Lake. He has lived in Alaska for 43 years, served in the US Coast Guard, as a Boeing 747 captain, and was a volunteer firefighter.

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