Alaska Considering Shifting Portion of Pension Debt to Municipalities

GASB statements 67 and 68 have lifted the veil on a portion of Alaska’s pension debt, putting a larger burden on the state to make annual payments.

As a result, state-level lawmakers are discussing the possibility of offloading some of that debt to municipalities – an idea starkly opposed by the municipalities.

More details from the Juneau Empire:

Local leaders attended a meeting last week in Juneau to discuss possible changes to the system that would assign a portion of the system’s debt to municipalities, The Ketchikan Daily News reported.

A change in national accounting standards requires the state to show the approximately $10 billion in debt on its books. The Alaska Department of Administration in September sent a memo notifying local governments that they would shoulder a portion of that burden.

“By saying it’s not (its) responsibility, the state is essentially saying it’s somebody else’s,” said Scott Brandt-Erichsen, attorney for the borough, “and we don’t agree.”

[…]

[Municipal] leaders argue that the change could change the boroughs bond debt rating and cost taxpayers in the short run.

In a Monday letter to Department of Administration Commissioner Sheldon Fisher, Alaska Municipal League Execute Director Kathie Wasserman said communities would be unwilling to take on more costs and debt from the pension system and asked the Department of Administration to oppose legislation that would negatively impact municipalities.

The issue will next be brought up in January’s policy session.

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