Legislature limits bonds for pensions, but keeps them as potential tool

Sen. Anna MacKinnon, R-Eagle River, speaks in the Alaska Senate on April 15, 2018. (Photo by Skip Gray/360 North)

Sen. Anna MacKinnon, R-Eagle River, speaks in the Alaska Senate on April 15. MacKinnon supported Senate Bill 97, which lowers the amount of bonds the state could sell to reduce its unfunded pension liability. (Photo by Skip Gray/360 North)

Alaska owes public workers $6.6 billion more in pensions than it has in assets.

The Legislature has passed a measure, Senate Bill 97, to lower the amount of bonds the state could sell to reduce this unfunded pension liability.

Current state law allows the Gov. Bill Walker’s administration to sell up to $5 billion in bonds, but the Legislature needs to appropriate that money. The bill would reduce that amount to $1.5 billion. But it signals that at least some lawmakers could support an appropriation in the future.

Sen. Anna MacKinnon, an Eagle River Republican, said the bill is a compromise for senators and House members.

“There are some in both bodies that thought we should eliminate all possibility of borrowing,” she said. 

The bonds would essentially be low-interest debt. The state could use that money to invest. If investment returns were higher than the bonds’ rate, the state would save money.

The House passed the bill on Saturday and the Senate agreed Monday to changes the House made.

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