Alaska House Rejects LNG Tax Bill After Dunleavy Veto Threat

The Alaska House of Representatives voted down House Bill 381 on July 16, 2026, in a 19-19 tie, blocking a multibillion-dollar tax break intended to secure financing for the Alaska LNG project. The legislation would have replaced a 2% annual petroleum property tax with a lower tax based on gas flow through the pipeline to assist the project developer, Glenfarne.

Mike Dunleavy triggered the bill's failure by threatening a veto over a contentious provision inserted by the Alaska State Senate. This provision would have subjected privately owned oil and gas pass-through entities with over $1 million in taxable income to a corporate income tax of up to 9.4% starting in 2029. Although the Alaska LNG project itself was exempt, Dunleavy argued the tax would discourage investment from major operators like Hilcorp and create industry uncertainty.

Representative Calvin Schrage, who led the effort to craft the bill, argued the measure would have given Glenfarne a fighting chance to move forward by signaling state support to financiers. Conversely, House Majority Leader Chuck Kopp and other Republicans opposed using the energy bill as a vehicle for corporate income tax increases.

Following the House rejection, Dunleavy called for a third special session to begin on July 27 to resolve the dispute. Senate President Gary Stevens expressed skepticism that a compromise can be reached before the August 18 primary elections.