Alaska Governor Bill Walker on Tuesday said he’d tabled a plan to issue $3.3 billion in pension obligation bonds.
The decision to scrap the plan comes as few members of the state Senate supported the idea. Credit rating agency S&P also told the state the bond issuance could lead to a credit downgrade.
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“While we believe the financial benefits of issuing state pension obligation bonds significantly outweigh the financial risks, we recognize the need for legislative input,” Walker said in a statement.
Walker met with Senate Finance Committee members this week where they warned against proceeding with the sale out of concern about taking on more debt.
“Given their lack of support, I have decided not to proceed with the issuance at this time,” he said.
Credit ratings agency S&P Global Ratings had warned that Alaska could face a credit downgrade if it proceeded with the bond transaction.
“Not selling them now may delay the downward pressure on the rating, but absent fiscal reforms, many of the same fiscal pressures remain,” S&P’s Gabriel Petek told Reuters on Tuesday.