The Alaska State House has voted in favor of Gov. Sean Parnell’s plan to shore up the state’s pension system.
The bill uses $3 billion from the state’s reserve funds to help pay off the $12 billion unfunded liability. It also directs the Legislature to put $500 million into the retirement system every year, until the obligation is paid off.
Rep. Cathy Muñoz, a Juneau Republican, carried the bill for the governor.
“It’s like paying off a mortgage or a credit card,” said Muñoz. “Do we take a big bite now, and pay less later? Or do we take a small bite now, and pay more later?”
The bill passed Thursday night on a 38-2 vote, with Homer Republican Paul Seaton and Fairbanks Republican Pete Higgins opposing the measure.
While the vote was decisive, two amendments were attempted that showed a philosophical divide on how the state deals with its employee pensions
Seaton unsuccessfully offered an amendment dealing with the annual payments. The bill is written so there is some flexibility with how much the state actually has to put into the retirement trust fund every year, and Seaton wanted there to be no question that the state was obligated to pay the $500 million in full.
Anchorage Republican Charisse Millett went the other way. She proposed getting rid of the required annual payment altogether.
“I’m afraid to set expectations so high that when we get into more deficit spending, and we run out of general funds and run out of the [constitutional budget reserves] and we can’t make these large payments that we’ve made empty promise,” said Millett.
Millett ultimately withdrew her amendment and voted yes on the bill.
The bill now goes to the Senate, which is still considering taking its own approach to the unfunded liability.