The state of Alaska won’t issue bonds to pay for public worker pensions – for now.
Gov. Bill Walker pressed pause on the sale Tuesday of up to $3.3 billion dollars of pension obligation bonds after meeting with members of the Senate Finance Committee.
While Walker’s administration has the authority to issue the bonds, the Legislature would have to appropriate money to pay them off. And senators have been skeptical of the plan. Some say it’s too risky.
Walker said it’s more important that he maintain a good working relationship with the Legislature than that he gets his way on the bonds.
“I think it does still make economic sense,” Walker said. “But I think that without the support from the Senate Finance Committee, I think it becomes challenging in some respects. And you know, relationships are important in solving problems.”
Walker said he believes the Legislature will be willing to give the proposal another look as they look for savings in next year’s state budget. Walker says a comprehensive, sustainable fiscal plan is more important than any one approach, like the bonds. But he says it was a good time to act.
“You look at these things when the interest rates are really low. And they’re very low right now,” Walker said.
Senate Finance Co-Chairwoman Anna MacKinnon of Eagle River said she’s thankful Walker listened to what committee members had to say.
“I personally appreciate that he’s put the bond sales on hold at this time,” MacKinnon said. “Allowing us to get into session, or a better conversation going forward before he goes to market to ink or finalize any of those transactions.”
Wasilla Republican Senator Mike Dunleavy has criticized Walker’s plan, saying that it was too risky and required more scrutiny from lawmakers.
Standard and Poor’s announced it expected to lower Alaska’s credit rating if the state issued the bonds. The two other rating agencies didn’t change their outlook of the state’s ratings based on the bond plans.
Pension obligation bonds have drawn criticism nationally. The Government Finance Officers Association says they involve considerable investment risk, and recommends against state governments issuing the bonds