Alaska’s state and municipal employees and public school teachers will not have access to pensions again this year. The pension program was eliminated for new hires 20 years ago.
In a 33-27 vote on May 19, the Alaska Legislature failed to override Gov. Mike Dunleavy’s veto of a bill that would have created a new pension system for public employees in Alaska. Forty votes were needed for an override.
The failure was expected. Lawmakers had passed the pension bill, House Bill 78, by a combined vote total of 33-27 last month, and there was no sign that any legislators had changed their position since that vote.
Alaska has been without a pension for new public employees since 2006, when lawmakers closed the existing pension plan to new applicants and mandated a 401(k)-style retirement system.
Though Dunleavy himself receives a public pension from his years as a teacher and school administrator, he is opposed to opening a new system for current employees. In a veto message to lawmakers on May 18, he expressed concerns about potential long-term costs and risks to the state.
“Pension obligations extend for decades, and the full cost of this bill may not be apparent until years after its enactment,” his veto message stated.
Despite the governor’s concerns, he was willing to allow the bill to become law as part of a grand compromise: If legislators approved a multibillion-dollar property tax break for the proposed Alaska North Slope gas pipeline project which he supports, he would not veto the pension bill.
That arrangement fell apart on May 18 after the House failed to advance the governor’s preferred tax-relief proposal for the gas project. The governor issued his veto that evening.
The next day, even though legislators knew an override was not in the cards, advocates and opponents spoke for a combined two hours before the final vote in a joint session of the House and Senate.
Rep. Chuck Kopp, R-Anchorage and the pension bill’s most vocal proponent, said the bill is intended to reduce the amount of staff turnover in the state. While the bill was expected to cost $73 million per year to implement, Kopp expected it would save over $240 million in training costs for new employees and overtime needed to cover positions left vacant by staff who had resigned.
Sen. Bert Stedman, R-Sitka, gave a 25-minute speech rejecting Kopp’s argument, saying in part that the lack of a pension system is not causing the vacancy problem. Stedman suggested that higher salaries may be part of the answer to the state’s vacancy issues. Alaska used to be No. 1 in the country for teacher salaries. It’s now ranked below Washington state, he said.
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