The state is facing projections for revenue shortfalls throughout the next decade, but Republican Gov. Sean Parnell is looking beyond the shortfalls and the next four years should he win another term.
Two issues poised to share some of the strongest scrutiny and most passionate debate during the final seven days of the 2014 Legislature are Parnell-backed priorities that focus on issues decades away.
The first is finding a fix for an $11.9 billion unfunded liability in the Public Employees’ and Teachers’ Retirement Systems, and the second is developing a plan to proceed with the proposed gasline project.
In an interview with the Juneau Empire Friday, Parnell explained his reasoning for introducing HB385, a bill containing his proposal to fix the teachers’ and state workers’ retirement systems.
Put simply, waiting isn’t an option.
“It is our obligation is to pay this debt and not put if off for future generations,” Parnell said. The only way for us to do that responsibly is for us to bite the bullet and not leave it for our great-great-grandkids.”
His proposal of a $3 billion infusion now paired with $500 million in annual payments for the next 20 years was announced in December but there have been no hearings directly on the plan.
Instead, several legislators worked with Legislative Finance Director David Teal to draft an alternative plan of lower annual payments that extend well beyond 20 years.
That proposal was defeated by a 37-3 vote in the House. Shortly after the plan was defeated, Senators as well as Teal said it was an option to put off developing a plan until next year. Parnell disagrees.
“We can do better than that,” he said. “The opportunity’s there to do something about the unfunded pension liability, and I really think we can.”
Funding big projects
Since Parnell dubbed this the “Education Session,” supporters of large increases to education funding and the base student allocation (a factor in the per-pupil state education funding formula) have pointed to a number of state megaprojects as wasteful ventures.
The capital budget currently before lawmakers includes tens of millions of dollars in mega-project proposals like the Juneau Access Project, Susitna-Watana Hydroelectric Project, Knik Arm Bridge and Toll Authority and Ambler Mining District Access Project.
That doesn’t include approximately $70 million in expected costs should legislators opt to move forward with the proposed Alaska liquefied natural gas project as is expected.
“Spending tens of millions of dollars to advance those projects to the next phase where we actually have real design work done and better cost estimates of the project ... I think that’s a worthy investment,” Parnell said.
“Until one project is really set to go to construction and we have to sink a lot of state money into it, we have to advance multiple projects in Alaskans interests,” he added.
The Juneau Access Project has a unique component in that it not only works toward Parnell’s ambition of building new infrastructure for future Alaskans, but it also would reduce the cost of ferry service in the Lynn Canal, he said.
“Anytime we can open up access for Alaskans to get from community to community, I think that’s a good thing,” Parnell said.
Raise the wage
Lawmakers have been divided in recent weeks by conflicting opinions on raising the state minimum wage by $2 over the next two years, then having it adjust for inflation every year after.
On one end of the spectrum, backers of HB384, which matches language proposed by a ballot initiative currently scheduled for this fall, say the Legislature should carry out the will of the people. Recent polling indicates as much as 70 percent of Alaska supports raising the wage.
Still, others, including the initiative’s backers, say legislators ought to do nothing and let the voters decide.
Their fear stems from 2002 and 2003 when lawmakers voted to raise the wage one year — and keep a similar initiative off that ballot — only to strip several components of the bill the following year.
“That concern is there whether it’s an initiative or whether it’s legislation,” said Parnell, a supporter of raising the wage. “It’s the difference between one year and two years.”
If the Legislature adjourns on time next Sunday and the minimum wage bill does not pass, the initiative will be on the August ballot along with the repeal effort against the SB21 oil tax plan — a hallmark of Parnell and the 2013 Legislature.
“If the (minimum wage ) bill is a good idea for an initiative then the bill’s a good idea for legislation,” Parnell said. “If people are opposed to running virtually the same bill as legislation, then there must be a political motivation involved related to elections and driving turnout.”