Borough can hold $291,000 unforeseen state payment as cushion for bond debt

Wrangell has received $291,566 that it was owed by the state but never expected to receive, and could hold it as a cushion to soften the debt payments on bonds to repair school buildings and the Public Safety Building.

Borough Finance Director Mason Villarma said last week he would recommend to the assembly that it move the money into the debt service fund, keeping it there if needed to help with payments on the proposed bonds, easing the pressure on property tax payers.

Wrangell voters are being asked in the Oct. 4 municipal election to approve two bond sales for the building repairs, totaling $12 million. The borough has not issued such general obligation bonds in a dozen years, and paid off the last of that debt three years ago.

Borough officials have scheduled a town hall meeting for 6:30 p.m. Wednesday at the Nolan Center to explain and take questions about the proposed bond sales.

The state this year had so much oil revenue coming in that legislators and the governor appropriated more than $200 million to municipalities to make good on missed payments going back to 2017. Alaska law requires the state to reimburse municipalities for 60% to 70% of the annual cost of payments on school construction and maintenance bonds, but starting in 2017 the Legislature and governors short-funded the reimbursement payments.

This year’s appropriations made good on those past missed payments, giving Wrangell $291,566 it was owed but never counted on receiving from the state.

The money goes to the borough, which owns the school buildings and paid the bond debt, not to the school district. There are no state restrictions on how municipalities can spend the catch-up funds.

The largest checks went to Anchorage and the Matanuska-Susitna Borough, in particular the Mat-Su Borough which borrowed heavily to build new schools in the past decade.

Faced with low oil prices and state budget deficits, then-Gov. Bill Walker vetoed about 25% of the state’s share of school debt reimbursement for fiscal year 2017. Gov. Mike Dunleavy vetoed 50% of the payment to municipalities in fiscal year 2020, and then vetoed 100% of the money in 2021.