With the adjournment of the Legislature on May 12, Senator Bert Stedman, R-Sitka, talked to The Pilot during the Little Norway Festival about the session.
The legislature realized they have to restructure the Alaska Permanent Fund (APF) and Senate Bill 26 does that.
Stedman was one of 13 senators who voted in favor of the legislation. With a $2.5 billion deficit the APF has to be protected.
He has favored that idea for a long time because it would limit payouts and gives the public the opportunity to look at its structure.
The bill sets a 5.25% draw for the first three years and then would go down to 5 percent. The percentage draw will ultimately be based on a five year rolling average of the funds value. “I prefer a 4.5% average,” Stedman said.
The senator said the next challenge would be to protect the totality of the fund by enshrining it into the state constitution. If you don’t limit the payout by constitutional protections, the legislature will spend the earnings reserve to the point where the fund is depleted, particularly during fluctuating market conditions, he said.
“We have to block the Legislature, which is the appropriating body, from full access to the earnings reserve, which is all the trading profits and dividend income. This winter the number was around $15 billion we could have spent,” Stedman noted.
Of the Governor’s plan to borrow $937 million to pay tax credits owed to oil companies, Stedman said, “We should just pay the bill to the oil companies. By selling bonds, we’re just imposing liabilities on future legislators and Governors. Collectively we created the mess and we should clean it up.”
On the topic of turning the Alaska Marine Highway System into a public corporation, Stedman says, “There’s a lot of work left to do. I don’t think the labor unions have been brought into the conversation.”
The public corporation can be done with the concurrence of the Governor and the Legislature. “My concern is that the public corporation formation could make it easier for the Rail Belt legislators to reduce funding to the AMHS,” Stedman said.
Receipt authority also has to be granted to the AMHS administration to allow Federal Transportation money to flow to the Marine Highway System as it does today. Stedman added they also need appropriation authority from the Legislature to spend the money.
On the construction of the new 280-foot ferry Tazlina, Stedman said, “It was a good decision to build the ferries in Ketchikan. It showed we could build the ferries in Alaska.”
The second Alaska Class ferry completion will be delayed, causing Stedman to observe, “Since DOT rarely comes out with a project on time, why should we beat the shipyard up about it?”
The cross-gulf ferry may be too large to build in Ketchikan, Stedman said, but perhaps the shipyard could build sections of the ship and barge them south for assembly at a bigger yard. Another $40 million in capital expenditures is needed to expand the Ketchikan Shipyard for additional space for manufacturing ships. Given the jobs generated by the shipyard, that should be a high priority for the legislature. The shipyard is owned by the Alaska Industrial Development Authority and is therefore state owned.
“Hats off to the Mayor,” Stedman cheered as he congratulated Mayor Jensen for diligently working with the elected officials in Washington, D.C. and the Coast Guard to bring a USCG patrol boat to Petersburg after the Anacapa is decommissioned. It’s clear there is a good working relationship between the Borough, the U.S. Coast Guard and the D.C. delegation in Washington, Stedman said. He added that the Coast Guard has been in Petersburg since before WWII.
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