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Parnell reiterates call for action on pension issue

Posted: March 22, 2014 - 8:18pm

JUNEAU — Gov. Sean Parnell on Friday reiterated his call for lawmakers to put $3 billion from savings toward paying down the state’s unfunded pension liability, saying it’s the best thing they could do to help ease pressure on Alaska’s budget.

With about a month left before the scheduled end of session, lawmakers have not yet decided how best to address the issue.

Last week, Rep. Alan Austerman, R-Kodiak, a co-chair of the House Finance Committee, said “everything” was on the table in discussions with his fellow majority members, including possible contribution increases by municipalities, extending the timeline for payments and Parnell’s proposal.

Sen. Anna Fairclough, R-Eagle River, and vice-chair of the Senate Finance Committee, said Friday that senators were still running numbers and analyzing the potential effects of different options. Sen. Kevin Meyer, R-Anchorage and Senate Finance co-chair, said he thought senators were pretty close to the governor but it was a matter of working out all the details.

The response to Parnell’s plan has been mixed. While some lawmakers support that kind of cash infusion to help lower annual payments — including members of the Senate Democratic minority, who pitched a similar idea two years ago — others are wary of taking so much from savings given the current budget environment.

Rep. Mark Neuman, R-Big Lake, falls in the latter category. Neuman, who chairs a House Finance subcommittee overseeing the state health department budget, knows future budget cuts won’t get any easier. But he said he hasn’t seen anything yet to convince him to move from the current payment plan the state is on for the pension obligation.

That plan calls for a schedule of rising payments over the next 15 years, on pace to top $1 billion a year before dropping. Under the current schedule, the payment for this year was about $630 million and is estimated to be about $700 million next fiscal year, according to Parnell’s budget office.

Parnell has said a $3-billion transfer from the state constitutional budget reserve fund, divided between the public employees’ and teachers’ retirement systems, would lower annual payments to $500 million. A draw from that reserve fund requires a three-fourths vote of the members of each the House and Senate.

In an interview Friday, he said the best thing lawmakers could do would be to join him in putting Alaska on a more secure foundation, which he believes his plan would accomplish. He said it would save the state hundreds of millions of dollars a year if lawmakers agreed to his plan or made minimal changes to it. A $1.5-billion infusion, for example, would not have the same impact when it comes to easing budget pressures as $3 billion would, he said.

While Parnell said he’s keeping an open mind to ideas, he said he didn’t think it was necessary to shift more liability over to municipalities at this time, citing concerns with the impact on local budgets.

Parnell also recently appointed a group to recommend changes to Alaska’s Medicaid program, which is another major budget driver. A report from that group is due later this year.

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