Local legislators were circumspect about their accomplishments in the 95-day second legislative session, gaveled out April 25.
State Sen. Bert Stedman (R – Sitka) and State Rep. Sam Kito (D – Juneau) both cited a $3 billion contribution to the Public Employee Retirement System and Teacher Retirement System, known as PERS and TRS, respectively, as among the positive steps, though they were quick to point out that legislators also extended the terms of the unfunded liability, meaning Alaska municipalities could feel a budgetary pinch down the road.
“If you stretch your mortgage out, you’re going to pay more in the long run,” Stedman said.
The liability stems from two sources, Stedman said.
“Reoccuring revenue doesn’t keep up with reoccurring expenses,” he said. “That’s gonna hit the budgets at city hall. That and the reduction of revenue sharing.”
Kito also mentioned revenue sharing, devised as a way to share the burdens of pensions between large municipalities – Fairbanks and Anchorage – and smaller municipalities like Wrangell and Petersburg.
“There is a concern for what they’ve done,” he said. “There’s apparently a legislative intent to defund or pay down the revenue-sharing fund, and this was the first step in doing that, a $50 million decrease.”
“My concern is: there are a lot of smaller communities that depend on revenue sharing,” he added. “So while larger communities like Anchorage, Fairbanks, Mat-Su, Kenai might have the tax base to be able to bear that, a lot of the smaller communities don’t have the tax base to be able to bear the loss of revenue sharing. When we did not have revenue sharing in the 90s, we saw a lot of smaller communities unincorporate, and we’d rather not see that. ”
In addition, investments set up to provide revenues for either system have repeatedly failed to meet return goals, in large part because of the lingering effects of the financial collapse, Stedman said.
“We had a financial meltdown at the turn of the century,” he said. “It was a complete collapse of the financial markets in 2008. That made it extremely difficult.”
Capital windfalls for either community were comparatively sparse, though they did include some bright spots. State Rep. Peggy Wilson, set to retire this year from the legislature, made Wrangell a priority for capital funding.
Wrangell and Petersburg each garnered more than $1 million in capital project funding. Wrangell went from having no capital budget allotments in Gov. Sean Parnell’s proposed FY 2015 budget to $1.6 million allotted. A $615,000 payout for a connection between the upper and lower water reservoirs was the largest of six funded projects. Petersburg received about $1.1 million for two projects, including $85,000 for a cemetery columbarium and $1,007,500 for police station renovations.
Another bill targeted at, and igniting opposition among, unionized employees of the Alaska Marine Highway System did pass out of the finance committee, but was referred to the Rules committee, where it was quietly scuttled. The bill would have eliminated the cost-of-living differential for the Highway System employees.
“That thing would have been dead on the floor anyway,” Stedman said. “That was politics. I didn’t support that concept.”
Both Stedman and Kito said the bill was an improper attempt to inject the legislature into the executive bargaining process.
A similar plan exists to set teacher salaries by statute, which could rob smaller communities of the ability to negotiate competitive salaries for personnel, Kito said. The legislature funded a study on the matter but removed language which would have implemented the change, according to Kito.
“I’m going to be watching that closely,” he said.
This session also represents the last session in which Kito – who is headquartered in Juneau — will represent Petersburg. Redistricting means Petersburg and Sitka will be included together. Juneau will be included with many other communities in the northern Southeast, while Wrangell will remain partnered with Ketchikan, though many communities currently in Assembly District 33 will be excluded.
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